2022 (11) TMI 1307 - HC - GST

Refund of input tax credit - accumulated credit due to inverted rate of GST - stipulation of lapsing of credit and cut-off date for refund in Notification No.20/2018-CT (Rate) dated 26.07.2018 - Section 54 of the CGST Act, 2017 - HELD THAT - As rightly contended by the learned counsel for the petitioner, it is the specific contention of the petitioner that the input tax credit in relation to the goods that were lying in stock with the petitioner and which were not cleared as on 31.07.2018 would not lapse and that the petitioner would be entitled to refund of the same in view of the notifications and circulars of the respondents, in particular, the Notification dated 26.07.2018 and that the clarified Circular dated 24.08.2018 have not been considered or appreciated by the respondents in their proper perspective, which has resulted in erroneous conclusion in rejecting the refund claim of the petitioner. It is also significant to note that the petitioner has produced all relevant documents along with the claim for refund including documents produced in the present petition comprising of details of stock, Chartered Accountant Report, etc., for the purpose of establishing that the stock was available with the petitioner and the same was not cleared as on 31.07.2018. The impugned order passed by the adjudicating authority and the impugned order passed by the Appellate Authority without taking into account or properly or correctly considering or appreciating the material on record is set aside - petition allowed by way of remand.

Summary

Issues:
Petition seeking writ of mandamus to set aside order, sanction refund, challenge lapsing of credit, and seek other relief.

Analysis:
1. The petitioner sought various reliefs through the petition, challenging the Order-In-Appeal dated 11.02.2020. The petitioner had applied for a refund under Section 54 of the CGST Act, 2017, which was rejected by the respondents. The petitioner then appealed to the Appellate Authority, but the appeal was also dismissed, leading to the present petition before the High Court.

2. The petitioner contended that the input tax credit in relation to goods not cleared by 31.07.2018 should not lapse, as per the notifications and circulars issued by the respondents. The petitioner submitted documents to support this claim, including stock details and a Chartered Accountant report. However, the respondents passed the impugned order without considering these submissions, leading to the erroneous rejection of the refund claim.

3. The petitioner's counsel cited relevant decisions and emphasized that the High Court of Gujarat's judgment in a similar case has not been stayed by the Apex Court. On the other hand, the respondents' counsel supported the impugned order and argued against the merits of the petition.

4. The High Court, after considering the contentions of both parties, found merit in the petitioner's argument. It observed that the impugned orders did not properly consider the material on record, including notifications, circulars, and judgments relied upon by the petitioner. The Court noted that the adjudicating authority failed to provide valid reasons for not following the Gujarat High Court's judgment.

5. Consequently, the High Court allowed the petition, setting aside the impugned orders and remitting the matter back to the adjudicating authority for reconsideration. The Court directed the authority to reevaluate the refund claim in light of the petitioner's submissions and relevant legal provisions within three months. The petitioner was also granted liberty to submit additional documents for consideration during the reassessment process.