" Substantive benefit of refund claim cannot be denied on technical reasons"
Hon'ble Delhi CESTAT t in the case of Vaibhav Global Limited Vs Commissioner, Central Goods and Service Tax, Customs & Central Excise (CESTAT Delhi) [Service Tax Appeal No. 51118 of 2019-SM dated January 18, 2022]
Posted on : 25/07/2022
" Refund shall be granted even, the error in filing of 3B return for export of service "
Hon'ble Madras High Court in the case of M/s. Abi Technologies Vs Assistant Commissioner of Customs.
read with,
Hon'ble Supreme Court case Commissioner of Sales Tax, U.P. Vs. Auriya Chamber of Commerce, Allahabad reported in 1986(25) E.L.T.8
Posted on : 16.08.2022
" Assessee entitled to claim GST Refund of zero-rated exports of unutilised ITC arising from Inverted Duty Structure "
The Hon’ble Madras High Court in the case of VSM Weavess India (P.) Ltd. v. Assistant Commissioner [Writ Petition No. 960, 964 and 968 of 2024 dated January 10, 2024]
Held that, the refund claim for zero rated exports does not disentitle the Petitioner from claiming a refund for unutilized ITC. Further, if all the conditions are fulfilled as per Section 54 of the Central Goods and Service Tax Act, 2017 (“the CGST Act”) read with Rule 96 of the Central Goods and Service Tax Rules, 2017 (“the CGST Rules”) the GST refund claim cannot be rejected on the ground that debit entries were not made. Hence, the matter was remanded back.
Facts:
VSM Weavess India (P.) Ltd. (“the Petitioner”) were engaged in a textile manufacturing and used viscose yarn as a raw material for the manufacture of viscose fabrics. The tax paid on viscose yarn exceeded the tax payable on supplies. Therefore, this resulted in unutilized ITC as a result of the inverted duty structure (“IDS”) where the raw material was taxed at 12%, whereas the final product was taxed at 5%.
The Petitioner contended that export of sales is zero rated and hence are entitled to refund under the Integrated Goods and Services Tax (“IGST”). Earlier, the Petitioner had applied for and had received refund under the IGST. Therefore, the Petitioner applied for refund with regard to unutilized ITC arising from the IDS. The application was rejected by the Assistant Commissioner (ST) (“the Respondent”) by issuing three separate deficiency memos (“Impugned Deficiency Memos”) based on the following reasons:
refund claimed and received earlier pertained to zero-rated supplies,
debit entries for claims were not made, and
non-submission of supporting documents,
Hence, aggrieved by the Impugned Deficiency Memos, the present writ petition was filed by the Petitioner.
Issue:
Whether the Petitioner is entitled to Refund with regard to unutilized ITC arising from the IDS?
Held:
The Madras High Court in Writ Petition No. 960, 964 and 968 of 2024 held as under:
Opined that, the refund claimed and received earlier pertained to zero rated supplies and not unutilized ITC. Under Section 54 of the CGST Act, refund may be claimed either for unutilized ITC on account of an IDS or in respect of zero-rated exports. Therefore, the refund claim for zero rated exports does not disentitle the Petitioner from claiming a refund for unutilized ITC. Hence, the first reason for rejection was untenable.
Observed that, as long as such conditions are fulfilled under the Section 54 read with Rule 96 of the CGST Rules, a refund claim cannot be rejected on the ground that debit entries were not made.
Held that, the last reason mentioned in the Impugned Deficiency Memos related to non-submission of supporting documents. It is possible that ITC may accumulate both in respect of input goods that are not affected by IDS and by the purchase of input goods that are so affected. Therefore, it is necessary for the Petitioner to submit all necessary documents to establish that its claim for refund is confined to input goods that are affected by an IDS. Hence, the deficiency memos were quashed, the matter was remanded for re-consideration.
Directed that, the Petitioner may submit any further supporting documents in respect of its refund claim within two weeks from the date of receipt of a copy of this order. Upon receipt thereof, the Respondent was directed to take such documents into account, provide a reasonable opportunity to the Petitioner and dispose of the refund applications by a reasoned order in accordance with applicable law within four weeks therefrom.
Posted on : 11.01.2024
Page updated
Report abuse