2021 (7) TMI 787 - HC - GST

Refund of GST - Allegation of fake input tax credit - petitioner was unable to discharge its GST liability in the third half of the year 2020-21 due to financial constraints - Rule 90 of Central Goods and Services Tax Rules - HELD THAT - It is settled law that a petitioner who files a petition invoking the extra ordinary writ jurisdiction has to come to Court with clean hand. Further, a petitioner who seeks equity must do equity. In commercial/appellate jurisdiction, a Court may have to grant relief if all the ingredients of a statutory provision are satisfied. But this is not so in a writ jurisdiction where relief may be denied to a petitioner on the ground that he has not approached the Court with clean hands, even when he satisfies all the ingredients of a statutory provision. In the present case, none of the findings given in the impugned order like premises of the petitioner being found locked during inspection; the partner of the petitioner not responding to the Summons; and L1 L2 suppliers having issued fake and bogus invoices and passed on fake Input Tax Credit, have been dealt with leave alone challenged. Consequently, this Court is of the view that it would not be appropriate to entertain the present writ petition. Petition dismissed.

Summary

Issues:
Challenge to rejection order for GST refund for the period of April 2020-May 2020.

Analysis:
The petitioner filed a writ petition challenging the rejection order for a GST refund amounting to ?2,05,05,890 for April-May 2020 due to financial constraints. The petitioner claimed entitlement to the refund within sixty days of filing Form GST-RFD-01 under Section 54(7) of the CGST Act, 2017. The petitioner argued that the respondent should grant the refund as per Rule 90 of the CGST Rules, which mandates issuing an acknowledgement within fifteen days; otherwise, further proceedings would be without jurisdiction. However, serious findings of fake Input Tax Credit were made by the respondent, including issues with suppliers and mismatched HSN codes. The respondent contended that the petitioner did not respond adequately to the investigation, and the claim was liable to be rejected due to the findings of fake invoices and non-existent suppliers.

The court emphasized the importance of approaching with clean hands in extraordinary writ jurisdiction and the requirement of equity for seeking relief. While commercial courts may grant relief if statutory provisions are met, in writ jurisdiction, relief may be denied if the petitioner does not approach the court with clean hands. Since the petitioner did not challenge or address the findings in the rejection order, the court deemed it inappropriate to entertain the writ petition. The court dismissed the petition, granting liberty to the petitioner to pursue appellate remedies. The court also reminded counsel to be careful in their filings and highlighted the need for accuracy in submissions.

In conclusion, the court dismissed the writ petition challenging the rejection order for a GST refund, emphasizing the importance of approaching the court with clean hands and following statutory provisions. The petitioner was granted the liberty to pursue appellate remedies while cautioning counsel to be diligent in their filings.