2023 (4) TMI 404 - HC - GST

Seeking refund of accumulated input tax credit alongwith interest - petitioner claims that it has accumulated Input Tax Credit on account of an inverted duty structure - whether the benefit of Order-in-appeal dated 03.01.2022 can be denied to the petitioner and the refund amount be withheld solely on the ground that the respondent has decided to file an appeal against the said order? HELD THAT - Concededly, the respondent has not filed any appeal against the order-in-appeal dated 03.01.2022, and there is no order of any Court or Tribunal staying the said order. Indisputably, the order-in-appeal dated 03.01.2022 cannot be ignored by the respondents solely because according to the revenue, the said order is erroneous and is required to be set aside. The said issue is covered by the earlier decision of this Court in MR. BRIJ MOHAN MANGLA VERSUS UNION OF INDIA ORS. 2023 (3) TMI 327 - DELHI HIGH COURT where it was held that Admittedly, the appeals have not been filed by the respondents as yet. The time for preferring the appeal has also expired. However, the learned counsel for the respondent submits that the appeals would still be in time as in terms of the circular dated 03.12.2019, the time for the Department to prefer an appeal has been extended till three months after the date on which the Tribunal is constituted. The respondents are directed to forthwith process the petitioner s claim for refund including interest - petition allowed.

Summary

Issues involved:
The issues involved in the judgment include a refund claim for accumulated Input Tax Credit, rejection of refund applications by the respondent, appeal against the rejection orders, entitlement to refund, and the respondent's decision to challenge the appellate order.

Refund Claim for Accumulated Input Tax Credit:
The petitioner, engaged in manufacturing Handpump parts chargeable to GST @ 5%, claimed a refund of accumulated Input Tax Credit amounting to Rs. 23,10,333 for the period September 2017 to March 2018, and Rs. 14,46,417 for the period April 2018 to March 2019. The total refund claimed was Rs. 37,56,750 due to an inverted duty structure.

Rejection of Refund Applications:
The respondent issued deficiency memos pointing out deficiencies in the petitioner's applications and sought clarifications. The respondent also requested a Chartered Accountant's certificate confirming that the tax incidence was not passed on. Subsequently, Show Cause Notices were issued, questioning the classification of products, the need for brass in manufacturing, and the registered place of business. The petitioner responded to these notices, but the applications were rejected by a separate order.

Appeal Against Rejection Orders:
The petitioner filed separate appeals against the rejection orders, which were disposed of by a common order. The Appellate Authority allowed the appeal, acknowledging the petitioner's existence and finding errors in the earlier observations. Despite the success in the appeal, the refund was not disbursed.

Entitlement to Refund:
The central question before the Court was whether the petitioner could be denied the benefit of the appellate order solely because the respondent intended to challenge it. The Court noted that there was no appeal filed against the order-in-appeal, and thus, the refund could not be withheld based on the respondent's decision to appeal.

Respondent's Decision to Challenge Appellate Order:
The respondent expressed intent to challenge the appellate order, but the Court emphasized that the order-in-appeal could not be disregarded without a stay order from a higher authority. The Court referred to a previous decision to support this stance.

Judgment:
In conclusion, the Court allowed the petition and directed the respondents to process the petitioner's refund claim with interest. However, the respondents were not barred from challenging the appellate order, and in case of a successful challenge, they could take lawful action for recovery of disbursed amounts.