2023 (1) TMI 289 - HC - GST

Supplementary refund of unutilized input tax credit pertaining to Compensatory Cess on inputs used in relation to zero-rated supplies - periods February, 2018 to June, 2018 - refund application(s) being filed manually - Compliance with the provisions of Section 54 read with formula prescribed under Rule 89(4) with reference to claim made under Section 16 of the IGST Act. HELD THAT - In the instant case, the authority concerned, having adjudicated the application for refund based on transactions of all the three units taken together as per the calculation made by the petitioner itself, had no scope for him to again entertain further claim made on the self-same transactions by computing such refund taking into consideration unit-wise figures, more so when the returns have been furnished by disclosing consolidated figures. Such fresh claim in the garb of supplementary refund would tantamount to review of decision already taken by the Assistant Commissioner-opposite party No.6 and the petitioner had already accepted such grant of refund based on claim set up on its own calculation. The claim for refund of unutilized input tax credit as found in the provisions of Section 16(3) of the IGST Act and Section 16(1) read with Section 54(1) of the GST Act is subject to manner, condition and restriction as prescribed . Section 2(87) of the GST Act defines the term prescribed to mean prescribed by rules made under this Act on the recommendations of the Council . Section 164 of the GST Act empowers the Government to frame rules. Refund of unutilized input tax credit has been provided under Section 54. Corresponding rules are found in Rule 89 of the GST Rules, which is in conformity with the powers conferred under Section 164 of the GST Act. The petitioner did not choose to avail the opportunity of personal hearing as instructed in the aforesaid notice/intimation, but challenged the same before this Court by way of writ petition. This Court is, therefore, of the opinion that the petitioner is not deprived of availing alternative remedy to question the legality of decision taken by the Assistant Commissioner-opposite party No.6 who returned the supplementary application(s) for refund. In the present case, it is not the sole reason to discard manual filing of supplementary refund application based on Circular No. 125/44/2019-GST dated 18.11.2019, but the authority concerned had returned such application assigning different reasons also. Such a decision of Assistant Commissioner, GST Central Excise, Jharsuguda Division could be challenged in appeal under Section 107 of the GST Act. This Court does not find any merit in the nature of challenge made in the writ petitions and declines to read down Rule 89(4) of the Central Goods and Services Tax Rules, 2017/the Odisha Goods and Services Tax Rules, 2017 - Petition dismissed.

Summary

Issues Involved:
1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019.
2. Legality of the orders dated 13.08.2020, 10.09.2020, and 13.11.2020 returning the manually filed supplementary refund applications.
3. Entitlement to file refund applications unit-wise versus consolidated for a single GSTIN.
4. Adherence to Rule 89(4) of the CGST/SGST Rules.
5. Requirement of personal hearing before rejecting refund applications.

Issue-wise Detailed Analysis:

1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019:
The petitioner challenged Circular No. 125/44/2019-GST as being ultra vires the parent Act, arguing that it restricted the ability to file supplementary refund claims manually. The court held that the Circular is valid and not arbitrary, as it aligns with the statutory provisions. The court emphasized that the statute does not envisage filing supplementary refund applications after an original refund claim has been processed.

2. Legality of the Orders Returning Manually Filed Supplementary Refund Applications:
The Assistant Commissioner returned the supplementary refund applications on several grounds, including the lack of provision for filing supplementary claims after an original claim has been processed and the requirement for electronic filing post-26.09.2019. The court upheld these orders, stating that the petitioner had already been granted refund based on consolidated figures for all units under a single GSTIN, and there is no statutory provision supporting supplementary claims unit-wise.

3. Entitlement to File Refund Applications Unit-wise versus Consolidated for a Single GSTIN:
The petitioner sought refunds based on unit-wise calculations, arguing that the consolidated refund was less due to the higher input tax credit ratio in one unit. The court held that since the petitioner chose to register all units under a single GSTIN and filed consolidated returns, it cannot later claim refunds unit-wise. The statutory provisions and rules support a single refund application per GSTIN, not unit-wise.

4. Adherence to Rule 89(4) of the CGST/SGST Rules:
The petitioner argued that Rule 89(4) should be read down as it restricts the right to claim refunds. The court found Rule 89(4) to be intra vires, stating that it is framed in conformity with the powers conferred under Section 164 of the CGST/SGST Act. The court emphasized that the rule provides a formula for refund which must be followed, and the petitioner cannot seek a different method post-facto.

5. Requirement of Personal Hearing Before Rejecting Refund Applications:
The petitioner contended that the Assistant Commissioner should have provided a personal hearing before rejecting the supplementary refund applications. The court noted that the petitioner had the opportunity to challenge the decision through an alternative remedy under Section 107 of the GST Act, which includes provisions for personal hearings. The court found no procedural impropriety in the Assistant Commissioner's actions.

Conclusion:
The court dismissed the writ petitions, holding that:
- Rule 89(4) is intra vires and does not require reading down.
- The petitioner cannot claim supplementary refunds unit-wise after having filed and received refunds based on consolidated figures.
- The reasons provided by the Assistant Commissioner for returning the supplementary refund applications are valid.
- The petitioner has an alternative remedy through appeal under Section 107 of the GST Act.
- The court declined to issue a writ of mandamus to allow the petitioner to file refund applications electronically for previous periods, as the original claims were already processed and accepted.