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TMI Blog2024 (12) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... rayed to quash and set aside the Orders-in-Appeal dated 19th February, 2019 passed by the Commissioner (Appeals), CGST & CE, Ahmedabad and the consequential Order-in-Original dated 29th April, 2021 passed by the Additional Commissioner, CGST & Central Excise, Ahmedabad-North and show-cause notice dated 15.10.2020 for giving effect to the Order-in-Appeal. 6. The brief facts of the case are as under : 6.1. The petitioner is engaged in business of manufacture and supply of passenger cars, parts, components and engines thereof. The petitioner also exports goods without payment of Integrated Goods and Services Tax (for short 'the IGST') under the Letter of Undertaking (for short 'the LUT') in terms of Section 16 of the Integrated Goods and Services Tax Act, 2017 (for short 'the IGST Act'). 6.2. It is the case of the petitioner that prior to the coming into force the Goods and Service Tax regime, the petitioner was registered under the provisions of the Central Excise Act, 1944 and was discharging appropriate central excise duty on clearance of final products from its factory premises. For use in the manufacture of final products, the petitioner was procuring various inputs and input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ledger. 6.7. For the month of September, 2017, subsequent to utilisation of the ITC for payment of tax, the petitioner had accumulated IGST, SGST and CGST Credit. 6.8. During the aforesaid period, the petitioner also opted to export the goods manufactured without payment of IGST under the LUT and therefore, the ITC for the said period was accumulated and consequently, the petitioner filed refund claim of accumulated ITC under Section 54 of the CGST Act read with Section 16 of the IGST Act for each month as under : Month Integrated Tax (In Rs.) Central Tax (In Rs.) State/UT Tax In Rs.) Total (In Rs.) July 2017 82,45,674 1,10,14,544 1,10, 14,544 3,02,74,762 August 2017 24,22,46,089 6,69,02,644 6,69,02,644 37,60,51,377 September 2017 76,58,08,834 30,18,80,220 30,18,80,220 136,95,69,274 6.9. The respondent No.6-Assistant Commissioner, CGST sanctioned the refund by separate orders dated 3rd May, 2018 for July, 2017, 16th May, 2018 for August, 2017 and 31st May, 2018 for September, 2017 in Form GST RFD-06 which was inclusive of provisional refund amount initially sanctioned to the petitioner. The details of the orders are as under : Final refund order/ RFD-06 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show-cause notice dated 15.10.2020 was issued by the respondent No. 5 proposing to recover the amount of refund sanctioned for the aforesaid tax period along with interest. The petitioner filed reply to the show-cause notice stating that the Order-in-Appeal has yet to attain finality and therefore, recovery proceedings pursuant to the same cannot be initiated, however, the show-cause notice was adjudicated by the Order-in-Original dated 29th April, 2021 confirming the recovery of the refund of Rs. 53,34,51,903/- under Section 73 of the CGST Act with interest. 6.15. The petitioner by letter dated 08.09.2021 requested the respondent No. 5 not to initiate any proceedings for coercive recovery as the petitioner did not have any opportunity of preferring the Appeal against the Order-in-Appeal dated 19th February, 2019 and the petitioner is in process of preferring the Writ Petition before this Court, however, ignoring such request, the respondent No. 5 by letter dated 05.10.2021 directed the petitioner to immediately pay the amount alleged to be erroneously refunded along with interest. By reply dated 14.10.2021, the petitioner again requested that due to non-constitution of the GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y-Refund Rs.2,80,70,787/- Sr.No. Particulars July 2017 (In INR) A. Opening balance of Electronic Credit ledger (ECL) - 163,15,92,468 - B. ITC availed during tax period 1,36,86,453 1,82,82,319 1,82,82,319 C. Total ITC available in ECL (A+B) 1,36,86,453 164,98,74,787 1,82,82,319 D. Total tax liability for tax period 66,04,96,602 219,38,492 2,19,38,492 E. Tax paid utilizing the balance available under ECL 1,36,86,453 64,68,10,149 (Towards IGST) 2,19,38,492 1,82,82,319 (36,56,173 paid in cash) F. Balance ITC carried forward - 98,11,26,146 - August-Refund Rs. 24,15,27,719/- Sr. No. Particulars August 2017 (In INR) A. Opening balance of Electronic Credit ledger (ECL) - 98,11,26,146 - B. ITC availed during tax period 39,81,78,094 10,99,67,378 10,99,67,378 C. Total ITC available in ECL (A+B) 39,81,78,094 109,10,93,524 10,99,67,378 D. Total tax liability for tax period 41,10,90,145 1,79,83,468 1,79,83,468 E. Tax paid utilizing the balance available under ECL 39,81,78,094 1,29,12,051 (Towards IGST) 1,79,83,468 1,79,83,468 F. Balance ITC carried forward - 106,01,98,005 9,19,83,910 SEPTEMBER-Rs.26,39,00,463/- Sr.No. Particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of CGST Act. 1. Zero-rated supply" has been defined under Section 16 of the Integrated Goods and Service Tax, 2017 (IGST), which reads as under:- "Section 16. Zero rated supply.- (1) "zero rated supply" means any of the following supplied of goods or services or both, namely:- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit" Section 54 of the CGST Act provides for refund of tax sub-Section 3 of Section 54 refers to the of refund of any unutilized input tax credit at the end of tax period, which reads as under:- "Section 54 Refund of tax (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, any claim such refund in the return furnished under section 39 in such manner as may be prescribed (2) ...... (3) Subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax under bond or letter of undertaking; (D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) "Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period; (F) "Relevant period" means the period for which the claim has been filed" 15. In terms of the above provisions of refund, refund application is required to be filed through electronic portal. Section 168 of the CGST Act empowers the Central Board of Indirect Taxes and Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d unutilized of credit of ITC on account of zero-rated supply of goods are provided. Relevant formula as prescribed for computing unutilized amount of ITC in para 3 of the said circular is as under:- "3. System validations in calculating refund amount 3.1 Currently, in case of refund of unutilized input tax credit (ITC for short), the common portal calculates the refundable amount as the least of the following amounts: a) The maximum refund amount as per the formula in rule 89(4) or rule 89(5) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the "CGST Rules") [formula is applied on the consolidated amount of ITC, i.e. Central tax + State tax/Union Territory tax +Integrated tax+Cess (wherever applicable)]; b) The balance in the electronic credit ledger of the claimant at the end of the tax period for which the refund claim is being filed after the return for the said period has been filed; and c) The balance in the electronic credit ledger of the claimant at the time of filing the refund application. 3.2 After calculating the least of the three amounts, as detailed above, the equivalent amount is to be debited from the electronic credit ledger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 earstwhile regime as on 30.06.2017 shall be available as opening balance of unutilized input tax credit as on 01.07.2017. 19. Therefore, 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 CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day i.e. 01.07.2017. The petitioner, is therefore, entitled to get the benefit of amount of CENVAT credit of eligible duties carried forward in the return in GST Form TRAN-1, which was verified and approved by the GST authority. 20. Therefore, the adjudicating authority has rightly sanctioned the refund to the petitioner considering the closing balance of CENVAT credit carried forward as per GST Form TRAN-1 filed by the petitioner as on 01.07.2017. However, the Commissioner (Appeals) appears to have a very pedantic literal approach of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the provisions of Section 140 (1) of the CGST Act. 22. In view of the above analysis and foregoing reasons, the petition succeeds and is accordingly allowed. The impugned order dated 22.03.2019 passed by the Commissioner (Appeals) is hereby quashed and set aside. As a result, the consequential notice and orders for recovery of the refund sanctioned and paid to the petitioner by the adjudicating authority are also quashed and set aside. Rule made absolute to the aforesaid extent. No order as to costs." 7. In view of the above, this petitions adopting the same reasoning succeed and are accordingly allowed. The order dated 07.03.2019 passed by the Commissioner (Appeals), show cause notice dated 02.12.2020 and orders in original for recovery dated 16.02.2021 and 07.03.2019 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs." 10. In view of the above, adopting the same reasoning, these petitions would also succeed and are accordingly allowed. In the facts of the case, the provisions of Section 54 of the CGST Act would be applicable as the respondent-Authorities could not have adopted an hyper-technical approach by depri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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