2021 (2) TMI 140 - HC - GST

Refund of unutilised input tax credit - interest for delayed payment of refund - Circular No.14/14/2017-GST dated 6.11.2017 or notification No. 48/2017-Central Tax dated 18.10.2017 - HELD THAT - We are in complete agreement with the views expressed by the Department in Para 5 of the affidavit inasmuch as the circular is absolutely clear and the Department cannot insist upon an assessee to retrospectively comply with the circular. Consequently the said circular operates prospectively from the date of the notification and not retrospectively since the circular came into effect from 06.11.2017. The said notification would have no application for the transactions entered into prior thereto - It is also clarified by the learned counsel for the Revenue that in the circumstances of the present case there is no chance for supplier seeking refund thereof and consequently there is no opportunity of double claim for unutilised input tax credit. To govern the procedure for claiming refund on such supplies circular No.14/14/2017-GST dated 06.11.2017 was issued which also provided certain safeguards to prevent any dual claims of refunds. In view of the categorical assertion made by the learned counsel representing the Revenue that the aforesaid circular and notification would have no application to transactions entered into prior to the aforesaid circular and since admittedly the transactions for refund of unutilised input tax credit claimed pertains to the period July to October 2017 consequently there is no lawful impediment in justifying denial of refund of unutilised input tax credit to the petitioner. The impugned order dated 03.01.2020 is set aside and directions are issued to respondent No.2 to effect refund of unutilised input tax credit along with statutory interest that may be payable thereof within a period of two weeks from the date of the service of the certified copy of this order on the respondents - Application allowed.

Summary

Issues:
Challenge to impugned order for refund of unutilised input tax credit under CGST Act, 2017.
Interpretation of circular No. 14/14/2017-GST dated 06.11.2017 for refund applications.
Applicability of circular and notification on transactions prior to their issuance.

Analysis:
The petitioner, M/s Mega Jewels Private Ltd., filed a writ application challenging the order passed by the Additional Commissioner (Appeals) seeking refund of unutilised input tax credit under Section 54(3) of the CGST Act, 2017. The Department relied on circular No. 14/14/2017-GST dated 06.11.2017 to deny the refund, citing non-compliance with its requirements. The petitioner approached the High Court seeking relief as the Tribunal was not yet constituted. The respondent argued that the appeal should be made to the Appellate Tribunal once constituted. However, the Court found the petitioner was not remediless and rightly approached the Court for relief.

The respondent filed an affidavit explaining the difference in procedures for claiming refund by EOU units and normal exporters. The Court agreed with the Department that the circular operates prospectively from the date of notification, not retrospectively, and cannot be enforced for transactions before its issuance. It was clarified that there was no chance for a supplier to claim a double refund, as the circular provided safeguards against such claims. The Court concurred with the Revenue's counsel that the circular and notification did not apply to transactions from July to October 2017, justifying the denial of the refund to the petitioner.

Consequently, the High Court allowed the writ application, setting aside the impugned order dated 03.01.2020. Directions were issued to the Deputy Commissioner, CGST, to refund the unutilised input tax credit along with statutory interest within two weeks from the date of service of the order on the respondents. The judgment clarified the application of circulars and notifications in refund cases and upheld the prospective nature of such directives.