Just a moment...

Report
FeedbackReport
×

By creating an account you can:

Logo TaxTMI
>
Feedback/Report an Error
Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
+ Post an Article
Post a New Article
Title :
0/200 char
Description :
Max 0 char
Category :
Co Author :

In case of Co-Author, You may provide Username as per TMI records

Delete Reply

Are you sure you want to delete your reply beginning with '' ?

Delete Issue

Are you sure you want to delete your Issue titled: '' ?

Articles

Back

All Articles

Advanced Search
Reset Filters
Search By:
Search by Text :
Press 'Enter' to add multiple search terms
Select Date:
FromTo
Category :
- 0 - Views

Higher GST charged by the Vendor: ITC as well as refund available to the recipient

Date 27 Dec 2023
Written By
Recipient Entitled to GST Refund Due to Incorrect Input Rate; Court Cites Section 54(3)(ii) of CGST Act 2017
In a case involving the Goods and Services Tax (GST), a supplier mistakenly charged an 18% GST rate instead of the correct 5% on an input product. The recipient was initially denied an inverted duty refund, as it was argued they should have also charged 18% on their output. However, the Madras High Court ruled that under Section 54(3)(ii) of the CGST Act, 2017, the recipient is entitled to a refund since the input tax paid was higher than the output tax rate. The court emphasized that the department cannot require the recipient to pay a higher duty than legally prescribed. - (AI Summary)

Consider the situation where the input product was chargeable only at the rate of 5% and assesses supplier mistakenly charged higher rate of 18% GST on input for final product, which is chargeable to lower rate of GST of 5%. Inverted duty refund was denied on the ground that –

1. Assesse should also have collected 18% GST, at par with the rate of tax paid by the supplier for the input product.

2. Since the input product is chargeable only at the rate of 5%, however, it has been wrongly made at the rate of 18% by the vendor of the assesse. Therefore, the assesse cannot invoke Section 54(3) of CGST Act.

It was held in the case of THE COMMERCIAL TAX OFFICER-GD-III VERSUS M/S. SUZLON ENERGY LIMITED, THE ASSISTANT COMMISSIONER (APPEAL) - 2023 (11) TMI 1016 - MADRAS HIGH COURT, that in terms of Section 54(3)(ii) of the CGST Act, 2017 if the rate of tax on input charged and paid is actually higher than the rate of tax on output, assesse can claim the refund. Accordingly, the assesse was considered entitled for refund in terms of the provision of the Section 54(3)(ii) of the Act and no merit was found in the contention of the Dept. that since the supplier had wrongly paid 18% IGST on the input, the assesse-respondent should have paid 18% duty on output. It was ordered that the Dept. cannot insist or advise the assesse to pay excess rate of duty than the duty prescribed in the law.

The judgement of the Hon'ble Division Bench of this Court in M/S. MODULAR AUTO LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI - 2018 (8) TMI 1691 - MADRAS HIGH COURT also supports the case where it has been held as follows:

“16. In the instant cases, it is not in dispute that whatever the portion of Service Tax component which was collected from the assesses by BIL was only the amount on which the CENVAT credit has been claimed by the assesses. Therefore, unless and until the assessment made on BIL was revised, which obviously could have been done, at this juncture, on account of the expiry of the period of limitation, the interpretation given by the Commissioner (Appeals) as well as the Tribunal with regard to the nature of invoice raised on the assesses is unsustainable. Furthermore, we find that the reason assigned by the Tribunal in paragraph 6.2 stating that the activity performed by the BIL for monitoring of production activities of the assesses cannot by any stretch of imagination be considered as an input service or in relation to the manufacture of final products of the assesses, is a statement, which is unsubstantiated by any record. At best, it can be taken as a personal opinion of the Tribunal, which could not have been a reason to reverse the credit availed by the assesses.

17. What is important to note that the assesses specific case is that there has been a service by BIL to the assesses in the matter of retrieval of data and service tax has been collected and paid by BIL and the correctness, legality or otherwise of the tax paid by the subject providers cannot be called in question by the Central Excise Officer having the jurisdiction over the assesses availing the credit. This question has not been considered. If the impugned orders are allowed to stand, then it would in effect mean that the jurisdictional assessment officers of the assesses are sitting in the judgment over the assessment made on BIL, over which, they have no jurisdiction.

0 answers
Sort by

Old Query - New Comments are closed.

Hide

No Replies are present for this Article

Recent Articles