9911796707
TMI Blog2024 (11) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... credit has accumulated on account of credit of tax or inputs being higher than the rate of tax on output supplies other than fully exempt supplies. Admittedly, the education service provided by the petitioner and other educational institution falls in category of fully exempt supply and therefore, the petitioner would not be entitled to the input tax credit. Sub-clause (ii) of section (3) applies to the inverted rate structure only whereas, in the zero rated supply, Nil Rated supply or exempted supply, the same would not be applicable as the very basis of inverted rate structure would not be applicable as the entire GST paid on the inputs would be liable to be refunded in such cases. The legislature has rightly provided that the tax credit which has accumulated on account of rate of tax on inputs being higher than the output tax would not cover the supplies having Nil rate or exempted supplies to entitle the service provider or the manufacturer to avail the refund of the input tax credit. When the provisions of Section 54 (3) of the GST Act provides for refund in terms of the first proviso to section 54 (3) categories which are governed by clauses (i) and (ii) and there is no const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply for registration and file GST returns with effect from 1st July 2017 to avail Input Tax Credit; and or (g) grant interim/ad interim reliefs as prayed for in clause (e) above and/or; (h) Grant such further reliefs as this Hon ble Court may deem fit and proper; 2. Brief facts of the case are that the petitioner is providing exempted education services but, at the same time, the petitioner uses various taxable inputs, capital goods and input services and GST on such inputs, capital goods and input services is borne by the petitioner which adds to the cost to the petitioner. It is the case of the petitioner that the petitioner is entitled to the refund of the GST borne by it on inputs, capital goods and input services. However, as per the provision of section 54 (3) (ii) of the Central Goods and Service Tax Act, 2017 [ CGST Act for short], the petitioner is not subjected to the GST and as education service is exempted, the petitioner is not entitled to get the refund of the input tax credit. 3. Learned advocate Mr. Abhishek Rastogi submitted that when the petition was filed, heavy reliance was placed on the decision of this Court in case of VKC Footsteps India Pvt. Ltd vs. Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided by the petitioner and other educational institution falls in category of fully exempt supply and therefore, the petitioner would not be entitled to the input tax credit. Sub-clause (ii) of section (3) applies to the inverted rate structure only whereas, in the zero rated supply, Nil Rated supply or exempted supply, the same would not be applicable as the very basis of inverted rate structure would not be applicable as the entire GST paid on the inputs would be liable to be refunded in such cases. 7. Therefore, the legislature has rightly provided that the tax credit which has accumulated on account of rate of tax on inputs being higher than the output tax would not cover the supplies having Nil rate or exempted supplies to entitle the service provider or the manufacturer to avail the refund of the input tax credit. In view of the above and more particularly, as held by the Hon ble Apex Court in case of VKC Footsteps India Pvt. (supra) as under: 105. Parliament engrafted a provision for refund Section 54 (3). In enacting such a provision, Parliament is entitled to make policy choices and adopt appropriate classifications, given the latitude which our constitutional jurispruden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile discrimination against particular persons or classes. 47. But, with all this latitude certain irreducible desiderata of equality shall govern classifications for differential treatment in taxation laws as well. The classification must be rational and based on some qualities and characteristics which are to be found in all the persons grouped together and absent in the others left out of the class. But this alone is not sufficient. Differentia must have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its governmental power, has, of necessity, to make laws operating differently in relation to different groups or classes of persons to attain certain ends and must, therefore, possess the power to distinguish and classify persons or things. It is also recognised that no precise or set formulae or doctrinaire tests or precise scientific principles of exclusion or inclusion are to be applied. The test could only be one of palpable arbitrariness applied in the context of the felt needs of the times and societal exigencies informed by expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Hotels and Investments Limited and Others v. Union of India , Justice MN Venkatachaliah (as the learned Chief Justice then was) held that: 20 It is now well settled that a very wide latitude is available to the legislature in the matter of classification of objects, persons and things for purposes of taxation. It must need to be so, having regard to the complexities involved in the formulation of a taxation policy. Taxation is not now a mere source of raising money to defray expenses of Government. It is a recognised fiscal tool to achieve fiscal and social objectives. The differentia of classification presupposes and proceeds on the premise that it distinguishes and keeps apart as a distinct class hotels with higher economic status reflected in one of the indicia of such economic superiority. The presumption of constitutionality has not been dislodged by the petitioners by demonstrating how even hotels, not brought into the class, have also equal or higher chargeable receipts and how the assumption of economic superiority of hotels to which the Act is applied is erroneous or irrelevant. 108. In Spences Hotel Pvt Ltd. v. State of West Bengal, a two judge Bench, speaking through J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3), legislated within the fold of the GST regime to prescribe a refund. While doing so, it has confined the grant of refund in terms of the first proviso to Section 54 (3) to the two categories which are governed by clauses (i) and (ii). A claim to refund is governed by statute. There is no constitutional entitlement to seek a refund. Parliament has in clause (i) of the first proviso allowed a refund of the unutilized ITC in the case of zero-rated supplies made without payment of tax. Under clause (ii) of the first proviso, Parliament has envisaged a refund of unutilized ITC, where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. When there is neither a constitutional guarantee nor a statutory entitlement to refund, the submission that goods and services must necessarily be treated at par on a matter of a refund of unutilized ITC cannot be accepted. Such an interpretation, if carried to its logical conclusion would involve unforeseen consequences, circumscribing the legislative discretion of Parliament to fashion the rate of tax, concessions and exemptions. If the judiciary were to do so, it would run the risk ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
