9911796707
TMI Blog2024 (1) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... of Input Tax Credit to avoid cascading effect of various taxes. The CGST Act therefore provided the transitional arrangement for carry forward and availing of credit of eligible indirect taxes paid on the Goods Services under the erstwhile regime. Rule 117 of the Rules provides that if a registered person has to claim Transitional Credit under Section 140 of the CGST Act, a declaration in Form GST TRAN-1 was required to be filed within 90 days of the appointed day i.e. on or before 28.09.2017. As per the provisions of Section 140 of the CGST Act read with Rule 117 of the Rules, the transitional credit, closing balance of credit of taxes lying and shown in last return filed by the assessee prior to introduction of CGST i.e. as on 30.06.2017 will be carried forward as credit in Electronic Credit Ledger as on 01.07.2017. in view of the above, GST regime, the credit balance as on of the unutilized input tax credit in erstwhile regime as on 30.06.2017 shall be available as opening balance of unutilized input tax credit as on 01.07.2017. As per provisions of Section 140(1) of the CGST Act, a registered person shall be entitled to take, in his electronic credit ledger, the amount of CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shah and learned advocate Mr. Utkarsh Sharma for respondents. 3. Having regard to the controversy in a narrow compass, with the consent of the learned advocates for the respective parties, the matter was taken up for hearing. 4. By this petition, under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs:- 11 (a). That this Hon'ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or direction, calling for the papers and proceedings leading to the Order-in-Appeal Nos. AHM-EXCUS- 002-APP-210 211-18-19 dated 22.03.2019 passed by the Commissioner (Appeals) of Central Good and Service Tax, Ahmedabad(Annexure L) and Order dated 28.05.2019 passed in the application for Rectification of Mistake (ROM) (Annexure N) and after looking into the same and the legality thereof, this Hon'ble Court be pleased to quash and set aside the said Order dated 22.03.2019 and 28.05.2019; (aa) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of certiorari or any other appropriate Writ, order or directions calling for papers and proceedings lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner filed the refund claims of unutilized ITC on inputs or input service used in making zero rated supply in prescribed Form GST RFD-01A on the common GST Portal for the month of July 2017 on 25.01.2018 and for the month of August 2017 on 06.02.2018. Upon filing these applications, the common portal generated a proof of filing refund claims for the month of July 2017 and August 2017 through ARN Receipts. 5.3. At the relevant time, there was difficulty in filing all the documents/evidences for refund claim in electronic common portal and therefore, the Petitioner submitted necessary documents in the prescribed Form viz. GST RFD-01A to respondent No. 3in terms of Circular No. 17.17.2017 GST dated 15.11.2017. As per Rule 89 of the CGST Rules, the Petitioner computed the following 3 amounts for considering eligible amount of refund of unutilized amount of ITC of input and input service used in manufacture of zero rated supplies: (i) Computation of refund as per statement 3A i.e. unutilized amount of Net ITC proportionate to zero rated supply of adjusted turnover; (ii) Balance lying in the Electronic Credit Ledger of the Petitioner at the end of the period for which the refund c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough Transitional Credit was credited on 19.09.2017, but it pertained to 01.07.2017 and therefore, there was balance of Input Tax Credit lying unutilized in Electronic Credit Ledger. The petitioner contended that they filed the refund claims in terms of Circular No. 17/17/2017 dated 15.11.2017. 5.8. Respondent No. 3 preferred the appeals challenging the Refund Order Nos. 02/Final/2017-18 dated 28.03.2018 and 05/Final/2017-18 dated 20.04.2018 before the Ld. Commissioner (Appeals) of CGST and Central Excise. The Revenue inter alia contended that the Petitioner was eligible for refund of unutilized amount of ITC of input and input service lying in Electronic Credit Ledger. Since the Petitioner utilized the entire amount of IGST, CGST and SGST against liability of tax on outward supply, there was no balance lying in Electronic Credit Ledger and therefore, respondent No. 3 wrongly sanctioned the refund claims. 5.9. The petitioner vide letter dated 11.01.2019 filed rejoinder/written submission to the appeal. The petitioner inter alia contended that when the refund amount was calculated as per the formula given in the Statement 3A, the system automatically computed eligible amount of ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Ld. Adjudicating Authority that the Petitioner challenged the Order-In-Appeal dated 22.03.2019 before this Court, whereby this Court vide order dated 25.07.2019 issued the notice and ordered the respondents not to take any coercive action for recovery of refunded amount. 5.14. The pre-show cause notice was culminated into issuance of the protective show cause notice, whereby the Additional Commissioner of CGST Ahmedabad North, proposed to recovery of erroneously alleged amount of refund sanctioned to the Petitioner. 5.15. The Joint Commissioner of CGST Ahmedabad North vide Order in- Original No. 45/JC/MT/GST/2020-21 dated 18.02.2021 confirmed and ordered for recovery of erroneously refunded amount under Section 73 of the CGST Act, 2017 along with interest. The respondent imposed penalty as envisaged under Section 73(9). The request made by the Authorized representative of the Petitioner to keep the protective Show Cause Notice in abeyance since the matter was sub judice before this Court, was not accepted on the premise that Section 73(10) of the CGST Act provided specific time limit for adjudication of the Show Cause Notice. As per Section 73(10) the Show Cause Notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner (Appeals) that there was no unutilized input ITC of input or input services used for outward supply is factually incorrect. It was, therefore, submitted that the Commissioner (Appeals) ought to have dismissed the appeal filed by the department for recovery of the erroneous refund along with interest by the impugned order dated 22.03.2019. It was further submitted that the impugned order passed by the Commissioner (Appeals) is contrary to the provisions of Section 107(11) of the CGST Act, which provides for issuance of show cause notice, where appellate authority is of the opinion that the tax was erroneously refunded and no order could have been passed requiring the assessee to pay such tax without giving opportunity of hearing. It was, therefore, submitted that the impugned order dated 28.05.2019 passed by the Commissioner (Appeals) is in violation of the principles of natural justice. 9. It was further submitted that the show cause notice dated 22.10.2020 issued by respondent No. 4 relying upon the provisions of Section 73(10) of CGST Act, whereby time limit for issuance of the order under Section 73(9) was 3 years from the due date of furnishing the annual return for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Act. Learned advocate Mr. Sharma referred to and relied upon the following averments filed on behalf of respondent nos. 1 to 3 (7) As per section 54 of CGST Act, 2017, it is clear that refund of tax under GST will be made and processed in such form and manner as prescribed. In this regard, section 164 of CGST Act, 2017 provides the government the power to make rules for carrying out the provisions of the Act. Further section 168 of CGST Act, 2017 provides the Board power to issue instructions or directions if it considers it necessary or expedient for the purpose of uniformity in implementation of GST Act. (8) In accordance with this, the government has notified sub-rule (4) and (5) of rule 89 of CGST Rules, 2017 wherein two scenario are mentioned in which refund of unutilized input tax credit is allowed. These two scenarios are zero rated supplies made without payment of tax and inverted tax structure. It has been prescribed in sub-rule (4) and (5) of rule 89 of CGST Rules, 2017 that the amount of refund under these scenarios is to be calculated using the formulae given in the said subrules. The formula uses the phrase 'Net ITC' and defines the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the claimant has total unutilized input tax credit of Rs. 12,82,45,035/ at the end of August-2017. However, the claimant has claimed refund of IGST credit of Rs. 13,02,96,326/-, CGST credit of Rs. 1,91,92,723/- and SGST credit of s .1,91,92,723/-. The claimant had claimed total refund of Rs. 16,86,81,772/- for the August, 2017. Thus it appeared that the claimant had claimed excess refund claim of ITC. In view of the above, it appeared that the claimant had filed refund claim of Rs. 13,02,96,326/- of unutilized ITC of IGST for the relevant period i.e. August-2017. Further, it was observed that the unutilized input tax credit of IGST available at the end of August-2017 is only Rs. 7,60,86,883/-. Thus it appeared that the claimant has claimed excess refund of Rs. 5, 42 ,09,443/ - [( Rs. 0.13, 2 ,96,326/-)-( Rs. 7,60,86,883/-)] of IGST input tax credit is inadmissible and liable for rejection. (12) Thus it is evident that there was not sufficient unutilized Input Tax Credit available with the claimant for the refund under Sub-section (3) of Section 54 of CGST Act, 2017. As such the claimant's contention regarding computation of the refund claim as per the formulae does not ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed in September 2017, However the claim pertains to the months of July 2017 and August 2017. As such the credit claimed through TRANS-1 cannot be taken as basis for refund claim of the earlier periods. As per Board Circular No. (37/11) / 2018 - GST dated 15th March, 2018, it was clarified as the transitional credit pertains to duties and taxes paid under the existing laws viz., under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994, the same cannot be said to have been availed during the relevant period and thus, cannot be treated as part of 'Net ITC'. 12. Relying upon the above averments, it was submitted that the Commissioner (Appeals) has rightly allowed the appeal filed by the department are required to be upheld as there was no balance available in the electronic credit ledger in the months of July and August, 2017 so as to grant the refund as mandatory under Section 54(3) of the CGST Act. It was, therefore, submitted that the Commissioner (Appeals) after referring to Circular No. 59/33 (2018-GST dated 04.09.2018) has rightly allowed the appeals filed by the department by setting aside the order in originals sanctioning the refund to the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. (4) The application shall be accompanied by (a) such documentary evidence as may be prescribed to establish that a refunds due to the applicant; and (b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person. Rule 89. Application for refund of tax, interest, penalty, fees or any other amount: (4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und shall get debited in accordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in the electronic credit ledger to the extent of the claim. The common portal shall generate a proof of debit (ARN Acknowledgement Receipt Number) which would be mentioned in the FORM GST RFD-01A submitted manually, along with the print out of FORM GST RFD- 01A to the jurisdictional proper officer, and with all necessary documentary evidences as applicable (as per details in statement 3 or 5 of Annexure to FORM GST RFD-01), within the time stipulated for filing of such refund under the CGST Act. 2.5 The registered person needs to file the refund claim with the jurisdictional tax authority to which the taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central Tax and the Commissioner of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which came into effect from 01.07.2017, which intended to subsume all indirect taxes including the Central Excise Act, 1944, the Finance Act, 1994 (Service Tax Act) and Value Added Tax Act. As per the scheme of the GST all the three Acts provide for seamless flow of Input Tax Credit to avoid cascading effect of various taxes. The CGST Act therefore provided the transitional arrangement for carry forward and availing of credit of eligible indirect taxes paid on the Goods Services under the erstwhile regime. In this regard, Section 140 of the CGST Act is therefore enacted for the transition of the various credit of indirect taxes in different Act as under:- i) Closing balance of credit of erstwhile taxes in the last return filed prior to the introduction of GST: ii) Un-availed credit taxes paid on capital goods procured in the erstwhile regime. iii) Credit of taxes paid on stock of raw materials, work-in-progress and finished goods as on 30.06.2017. iv) Credit relating to goods exempted under the earlier regime which are taxable under the GST regime. v) Credit of in transit goods and services on which taxes are paid in the erstwhile regime and such goods and services are received i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner and approved by the authority in the month of September, 2017 as if such credit was available as on 01.07.2017 as an opening balance in the electronic credit ledger. Reliance placed by the Commissioner (Appeals) on Circular No. 59/33/2018-GST dated 04.09.2018 to the effect that the balance in the electronic ledger of the claimant on the end of the tax period for which, the refund claim is being filed after the return for the said period has been field literally interpreted so far as the first two months of GST regime i.e. July, 2017 and August, 2017, for which there is a provision of Section 140(1) would have direct impact and therefore, the Commissioner (Appeals) committed an error by in relying upon Circular No. 59 dated 04.09.2018, which would not be applicable in the facts of the case as the petitioner is entitled to get the benefit of carried forward of CENVAT credit as on 01.07.2017 in view of the provisions of Section 140(1) read with Section 54(3) of the CGST Act, 2017 read with Rule 89(4) and 117 of the Rules. 21. It is not in dispute that the petitioner was entitled to the refund on the zero rated supplies and only ground for allowing the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
