ONCE THE SUBSTANTIVE CONDITIONS ARE SATISFIED A BENEFIT CANNOT BE DENIED DUE TO A TECHNICAL ERROR

[Mr. M. GOVINDARAJAN]

In M/S SHREE KR ENGINEERING WORKS VERSUS UNION OF INDIA THE COMMISSIONER OF CGST, THE ADDITIONAL/JOINT COMMISSIONER (APPEALS) OF CGST, JODHPUR (RAJ.) - 2024 (6) TMI 114 - RAJASTHAN HIGH COURT, the petitioner filed a refund claim with the Department on the unutilized input tax credit in making zero rated supply for 11 months spreading  over in two financial years 2020-21 and 2021- 22.   The refund amount claimed by the petitioner is Rs.1.11 crore.  But actual claim is Rs.1.0047 crore which has been sanctioned to the petitioner.  The petitioner, on realizing that he has claimed lesser amount than the original amount, he claimed supplementary claim to the tune of Rs.10.2 lakhs.  The petitioner claimed this refund under the ‘any other’ category within the statutory period laid down under Section 54(1) of the CGST Act.  The Department refused to refund the said amount on a ground that the category under which such supplementary claims were lodged was not applicable in the case of the petitioner.

The petitioner filed the present writ petition before the High Court challenging the refusal order by the Department.  In the petition the petitioner prayed the following-

• To give directions to the Department to permit him to file the refund claim application for the period Dec. 2018 under “Any Other” category on GST portal; and/or in alternate Petitioner may kindly permitted to file physical Refund Application for the month of December 2018 before the concerned Authority.
• To quash and set aside the orders of the Department dated 24.05.2020 and 21.07.2020.
• To give directions to the Department to consider his refund application.
• To permit the petitioner to file his GSTR RED- 01A/RFD-01 for the period of December 2018.
• any other and/or other appropriate writ, order or direction which this Hon’ble Court consider just and proper in the facts and circumstances of the Case may kindly be passed in favor of the petitioner.

The petitioner submitted the following before the High Court-

• the ‘refund amount’ means the maximum refund that is admissible
• while showing the category of refund application, the petitioner has shown "any other" as the category because refund applications for these 11 months had already been made under Clause 7(c) i.e. accumulated ITC category for export of goods without payment of tax and the same had been sanctioned and paid by CGST officers.
• Since petitioner already filed refund application under Clause 7(c) i.e. accumulated ITC category at first point of time, for the same month and same period, another/supplementary application for the refund of the differential amount of refund (not claimed by the petitioner on account of arithmetical error on the part of the petitioner) cannot be filed on the portal and therefore there was no option for the petitioner to submit the application under the category ‘any other’.

The Department contended that the petitioner is responsible for the error committed by the employee of the petitioner in claiming the refund of lower amount than the maximum admissible amount.

The High Court heard the submissions made by both the parties to the writ petition.

The High Court observed that the parties to the present writ petition were agreeable that the controversy involved in this case is covered by the decision passed by Gujarat High Court in MESSRS SHREE RENUKA SUGARS LTD. VERSUS STATE OF GUJARAT - 2023 (7) TMI 938 - GUJARAT HIGH COURT.

The High Court analyzed the facts of the case and observed that this is nothing but technical error and for such technical error, the claim of the petitioner cannot be rejected without examining the same by the respondent authority on its own merits and in accordance with law.  The High Court relied on the judgment of Supreme Court in UNION OF INDIA & ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. - 2021 (9) TMI 626 - SUPREME COURT in which the Supreme Court held that it is settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system.

The Supreme Court in SAIYAD MOHAMMAD BAKAR EL-EDROOS (DEAD) BY LRS. VERSUS ABDULHABIB HASAN ARAB AND ORS. - 1998 (4) TMI 563 - SUPREME COURT, held that procedure cannot operate to defeat the ends of justice, it must stand to the aid of justice.  It further held that a procedural law is always in aid of justice, not in contradiction or to defeat the very object which is sought to be achieved. A procedural law is always subservient to the substantive law. Nothing can be given by a procedural law what is not sought to be given by a substantive law and nothing can be taken away be the procedural law what is given by the substantive law.

The High Court observed that even if the petitioner had entered wrong scheme code, it was only an irregularity and not illegality.  The High Court held that the joint acceptance of its applicability, the present petition was disposed of with liberty to the petitioner to furnish manually the refund applications for refund of the left-out amount. However, it is open for the respondent authorities to scrutiny the claim of the petitioner for refund of the amount in accordance with law and to take appropriate decision on the applications which may be made by the petitioner. The High Court directed that this exercise be undertaken by the respondents within a period of three months from the date of receiving the certified copy of this order.