2024 (9) TMI 667 - HC - GST

Refund of unutilized Input Tax Credit with statutory interest - Prohibition on grant of refund under Section 142(3) of the GST Act - period from 1st April 2017 to 30th June 2017 - HELD THAT - The petitioner was having unutilized Input Tax Credit of Rs.2,42,15,906/- under the VAT Act for the period from 1st April 2017 to 30th June 2017, which was carried forward by filing the Form GST TRAN 1 and the amount was credited in the Electronic Credit Ledger under the provisions of Section 140 of the GST Act - The petitioner, thereafter, taking benefit of the order passed by the Hon ble Supreme Court to open the GST portal, filed the revised Form GST TRAN 1 showing the Input Tax Credit under the VAT Act as Nil and thereafter, filed Form DRC-03 reversing the Input Tax Credit in the Electronic Credit Ledger on 27th April 2022. Hence, the petitioner has not availed any credit amount, which was carried forward to GST by reversal of the Input Tax Credit. This Court, in the case of R. N. Laboratories Pvt. Ltd. 2024 (4) TMI 764 - GUJARAT HIGH COURT , in similar facts, wherein the Commissioner of VAT has granted the refund of unutilized Input Tax Credit under the VAT Act which was carried forward to the GST in the Electronic Credit Ledger and later on reversed, directed the respondents authorities to give refund along with interest from the date of eligibility from 1st April 2017 to the date of payment relying upon the provisions of Section 38 of the VAT Act. The petitioner has already reversed the credit in the Electronic Credit Ledger and there is no dispute with regard to outstanding unutilized Input Tax Credit under the VAT Act as per the audit assessment done by the respondent authorities, the respondents - authorities are directed to process the application dated 24th February 2023 filed by the petitioner for refund of Rs.2,42,15,906/- and pass necessary orders for refund along with statutory interest payable under the provisions of Section 38 of the VAT Act, as held by this Court in the aforesaid decision. Such exercise shall be completed within 12 weeks from the date of receipt of the copy of this order. Petition disposed off.

Summary

Issues:
Refund of unutilized Input Tax Credit under the VAT Act and GST Act, Revision of Form GST TRAN 1, Prohibition on grant of refund for carried forward Input Tax Credit under the GST Act, Entitlement to refund after reversal of Input Tax Credit in Electronic Credit Ledger, Verification of refund claim by authorities.

Analysis:
The petitioner filed a petition under Article 226 of the Constitution of India seeking a refund of unutilized Input Tax Credit of Rs.2,42,15,906/- under the VAT Act, carried forward to the GST regime. The petitioner also requested the authorities to rectify the assessment order to convert the carry forward credit into cash refund. The petitioner realized the error in carrying forward the credit post-GST implementation and filed a revised Form GST TRAN 1 to rectify the mistake, which was adjudicated as 'Nil' by the GST authorities. The petitioner then sought a refund of the excess credit, but the authorities did not grant it, leading to the petition.

The petitioner argued that as per Section 142(3) of the GST Act, the refund of Input Tax Credit should be in cash and in compliance with the VAT Act. The petitioner contended that once the revised Form GST TRAN 1 showed 'Nil' credit, the prohibition on refund for carried forward credit under the GST Act should not apply. The petitioner relied on past court decisions and VAT Rules to support the claim for refund within the statutory time frame.

The respondents, on the other hand, argued that they could not issue a refund without pending proceedings under the VAT Act. They contended that the mere reversal of credit in the Electronic Credit Ledger did not automatically entitle the petitioner to a refund. They requested directions to verify the claim before granting a refund.

The Court noted that the petitioner had reversed the credit in the Electronic Credit Ledger and had not utilized the carried forward credit. Citing a previous judgment, the Court directed the authorities to process the petitioner's refund application and grant the refund of Rs.2,42,15,906/- along with statutory interest under Section 38 of the VAT Act within 12 weeks. The Court disposed of the petition accordingly, with no costs imposed.