2019 (5) TMI 561 - HC - GST

Re-credit of amount in the Electronic Credit Ledger after rejection of refund claim - non filing of appeal against rejection order - GST PMTO3 has already been issued - whether the petitioner is entitled to recredit of the amount of ₹ 17,55,13,818/on the basis of Form GST RFDPMT 03 issued by the respondents in its Electronic Credit Ledger? HELD THAT - Subrule (2) of rule 93 of the CG ST Rules provides that where any amount claimed as refund is rejected under rule 92, either fully or partly, the amount debited, to the extent of the rejection, shall be recredited to the Electronic Credit Ledger by an order made in FORM GST PMTO3. The Explanation thereto says that for the purposes of the rule, a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal. In the present case, it is an admitted position that the petitioner has not filed any appeal, and hence, the question of the appeal being rejected does not arise. Filing of an undertaking - HELD THAT - Insofar as giving an undertaking in writing to the proper officer that the petitioner shall not file an appeal is concerned, the learned counsel for the petitioner has stated before this court that the petitioner shall not file an appeal against the order rejecting its refund. Moreover, with a view to comply with the requirements of the Explanation to rule 93 of the CG ST Rules, it would also file an undertaking as required. The amount has not been recredited not on account of non compliance with the provisions of the Explanation to rule 93 of the CG ST Rules, but since there is no mechanism for recrediting the amount to the Electronic Credit Ledger. In either case, the court is of the view that the petitioner is entitled to the alternative relief prayed for in the petition. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Refund of unutilized input tax credit under Section 54(3) of the CGST Act.
2. Rejection of refund claims and deficiencies pointed out by the third respondent.
3. Application of Rule 93 of the CGST Rules for recrediting the rejected refund amount.
4. Lack of mechanism for recrediting the amount to the Electronic Credit Ledger.
5. Entitlement of the petitioner to recredit the amount of ?17,55,13,818.

Analysis:
1. The petitioner sought refund of unutilized input tax credit under Section 54(3) of the CGST Act for zero-rated supplies, inverted duty structure, supplies to SEZ without tax payment, and exports without IGST payment. The refund claims were filed manually due to online procedure issues, totaling ?17,55,13,818.

2. The third respondent issued deficiency memos for the refund applications, requiring rectification. The petitioner complied with rectifications but did not receive acknowledgments. Despite providing all information, the refund orders were not issued, affecting the petitioner's working capital. Subsequently, the refund claims were rejected for not filing fresh applications within the prescribed time.

3. Rule 93 of the CGST Rules allows recrediting of rejected refund claims to the Electronic Credit Ledger. The petitioner sought recredit based on Form GST RFDPMT 03. The respondents argued that the recredit is subject to the claimant not filing an appeal against the rejection order.

4. The petitioner, not intending to appeal, requested recredit. The status report revealed a lack of mechanism for recrediting the amount online. The court acknowledged the absence of a mechanism and the petitioner's compliance with the rule's requirements.

5. The court held that the petitioner is entitled to recredit the amount of ?17,55,13,818 to the Electronic Credit Ledger based on Form GST RFDPMT 03. The petitioner must file an undertaking and, if online recrediting is not feasible, manually take credit by a specified date. The petition was allowed with no costs, and direct service was permitted.