2023 (11) TMI 1112 - HC - GST

Refund of unutilized Input Tax Credit (ITC) - zero-rated supply - Clubbing of invoices - HELD THAT - Admittedly the refund claim was for an aggregate amount of Rs. 10,09,000/-. The refund has been allowed only for Rs. 6,86,121/-. There has also been deduction on account of an invoice being no. EXP/2021-22/005 for Rs. 4,76,626/- - In such view of the matter the Appellate Authority in clubbing the refund claim of the petitioner with the invoice no. EXP/2021-22/005 dated 28 February, 2022 and in passing the impugned order has acted contrary to law. The clubbing or taking into account of this particular bill was without authority of law. Even if a portion of the claim was rejected, the simultaneous recovery was impermissible. The portion of the order whereby Output Tax Invoice no. EXP/2021- 22/005 for Rs. 4,67,626/- has been denied and simultaneously recovered and/or adjusted is set aside - matter is remanded back to the Appellate Authority to consider the claim only in respect of the aforesaid amount of Rs. 4,76,626/- in accordance with law and positively within a period of eight weeks from the date of communication of this order. Petition allowed by way of remand.

Summary

Issues involved:
The judgment involves a challenge against an order passed under Section 107 of the West Bengal Goods and Services Tax Act, 2017 regarding the refund of unutilized Input Tax Credit (ITC) on account of zero-rated supply without payment of tax under section 54(3) of the Act.

Refund Claim and Show Cause Notice:
The petitioner filed an application for refund of unutilized Input Tax Credit (ITC) on account of zero-rated supply without payment of tax under section 54(3) of the Act. A show cause notice was issued to the petitioner for not allowing the entire refund amount claimed, to which the petitioner duly replied.

Appellate Authority's Order:
The Adjudicating Authority rejected the entire claim for refund after being unsatisfied with the petitioner's reply. The petitioner filed a statutory appeal against this decision, which was disposed of by an order dated 23 May, 2023.

Grounds of Appeal:
The petitioner contended that the Appellate Authority erred in law by deducting credit for an amount in respect of output tax pertaining to a specific invoice, EXP/2021-22/005, which was impermissible under the law. It was argued that clubbing this particular invoice in the refund application was unreasonable and without legal authority.

Legal Submissions:
The petitioner argued that there was no provision under the Act allowing the authority to reject a claim and then recover the amount from the petitioner. Despite the deduction for the specific invoice, the Appellate Authorities modified the order to allow the petitioner to obtain a refund for the remaining balance amount.

Judgment and Remand:
The Court found that clubbing the refund claim with the specific invoice EXP/2021-22/005 and simultaneously recovering the amount was contrary to law. The portion of the order denying and recovering the amount for this invoice was set aside. The matter was remanded back to the Appellate Authority to reconsider the claim in respect of the specific amount within eight weeks.

Conclusion:
The Court allowed the writ petition with specific directions for the Appellate Authority to review the claim in accordance with the law and expedite the payment of the admitted refundable amount. The decision emphasized that the Appellate Authority should not be influenced by any previous observations on the case's merits while reconsidering the issue.