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2021 (8) TMI 387 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues: (i) Whether the licence fee and spectrum usage charges paid for grant of telecom licence and allotment/use of spectrum constituted a supply under the GST law; (ii) whether such payments were regulatory fees outside the tax net or consideration for a taxable service; (iii) whether the services fell within the service rate notification and were taxable for the relevant period; and (iv) whether the refund rejection order was vitiated for being non-speaking.

Issue (i): Whether the licence fee and spectrum usage charges paid for grant of telecom licence and allotment/use of spectrum constituted a supply under the GST law.

Analysis: The definition of supply under Section 7 of the Central Goods and Services Tax Act, 2017 specifically includes licence, rental and lease. The order treated the grant of licence and allocation of spectrum as a permission given by the Government in furtherance of the appellant's telecom business and held that the activity squarely fell within the statutory concept of supply. Reference was also made to the treatment of similar services under the earlier service tax regime and to the service description in the classification scheme for licensing services relating to telecommunication spectrum.

Conclusion: The payments were held to constitute a supply of service under GST.

Issue (ii): Whether such payments were regulatory fees outside the tax net or consideration for a taxable service.

Analysis: The order rejected the contention that the charges were merely regulatory in nature. It relied on the structure of the licence arrangement, the percentage linkage to adjusted gross revenue, and the statutory definition of consideration under Section 2(31) of the Central Goods and Services Tax Act, 2017. On that basis, it concluded that the payments were made in response to and in relation to the supply of licence and spectrum-related service, and therefore represented consideration for tax purposes.

Conclusion: The payments were held to be consideration for a taxable service and not a mere regulatory exaction.

Issue (iii): Whether the services fell within the service rate notification and were taxable for the relevant period.

Analysis: The order held that Heading 9973 and sub-heading 997338 covered licensing services for the right to use other natural resources including telecommunication spectrum. It further held that the applicable rate was available under Notification No. 11/2017-Central Tax (Rate), and that Notification No. 27/2018-Central Tax (Rate) was clarificatory in nature and therefore reflected the legislative intent for the disputed period as well. On that reasoning, the rate adopted by the appellant was treated as correct and the classification challenge failed.

Conclusion: The services were held taxable under the service rate notification for the disputed period.

Issue (iv): Whether the refund rejection order was vitiated for being non-speaking.

Analysis: The order accepted that the impugned order was not fully elaborate, but held that the issue had been discussed and the taxability of the service was specifically identified under the relevant notification and classification entry. It concluded that the refund could not be granted merely on the ground of alleged lack of discussion, since the substantive basis for rejection was available in the record and in the appellate findings.

Conclusion: The challenge based on alleged non-speaking nature of the order was rejected.

Final Conclusion: The refund claims were not found admissible, and the appellate challenge failed in full.

Ratio Decidendi: A licence or spectrum allotment fee, when statutorily linked to a permission to carry on business and specifically covered by the service classification and rate notification, constitutes taxable consideration under GST and does not become refundable merely because the order below is briefly reasoned.

Telecom spectrum charges treated as taxable GST consideration under the service classification and rate notification.
Licence fee and spectrum usage charges paid for telecom licence grant and spectrum allotment were treated as a taxable supply under GST because the statutory definition of supply covers licence-related permissions and the payments were linked to the business right conferred by the Government. The charges were also held to be consideration for a taxable service, not a mere regulatory exaction, as they were connected to the licence arrangement and computed by reference to adjusted gross revenue. The service was classified under Heading 9973 / sub-heading 997338 and found taxable under the relevant rate notification for the disputed period. The refund rejection was not invalid merely because the order was brief, and the refund claims failed.

Supply of service - Consideration - Regulatory fee vs taxable service - Licensing services for right to use other natural resources including telecommunication spectrum (HSN 997338) - Classification under Heading 9973 - residuary rate entry - Applicability of rate notification and clarificatory amendment - Reverse charge mechanism - Non-speaking orderSupply of service - Licensing services for right to use other natural resources including telecommunication spectrum (HSN 997338) - Grant of licence and allotment of spectrum by DoT (license fee and spectrum usage charges) constitutes a supply of service under GST law. - HELD THAT: - The Commissioner (Appeals) found that the terms 'licence' and 'lease' are specifically included within the definition of supply in Section 7 and outward supply in Section 2(83) of the CGST Act; the action of Government in granting a licence to establish, maintain and work telegraphs under Section 4 of the Telegraph Act amounts to permitting use of telecommunication spectrum. The adjudicator relied on the entry in the GST classification scheme (HSN sub-heading 997338) describing "Licensing services for right to use other natural resources including telecommunication spectrum" and observed that the purpose of obtaining the licence and spectrum by the appellant was for furtherance of its business, thereby satisfying the commercial nexus required under the statutory definition of supply.The grant of licence and allotment of spectrum is a taxable supply of service.Consideration - License Fee (LF) and Spectrum Usage Charges (SUC) paid by the appellant constitute 'consideration' for the supply. - HELD THAT: - Applying the definition of consideration in clause (31) of Section 2 of the CGST Act, the authority held that LF and SUC - being payments made in respect of, in response to or for inducement of the grant of licence and allocation of spectrum - fall within the statutory meaning of consideration. The Unified Licence terms (including percentage of Adjusted Gross Revenue and payment schedule) were noted to establish the existence of consideration and the contractual mechanism by which such payments arise.LF and SUC are consideration liable to attract GST.Regulatory fee vs taxable service - Classification under Heading 9973 - residuary rate entry - Applicability of rate notification and clarificatory amendment - The charges are not 'regulatory fees' immune from GST; the payments fall under the service classification HSN 997338 and are leviable at the rate applicable under Notification No. 11/2017 as clarified by subsequent amendment. - HELD THAT: - The authority rejected the appellant's contention that LF/SUC are sovereign regulatory exactions akin to tax; it observed that the payments are revenue linked and therefore not mere sovereign regulatory levies. The adjudicator examined the rate notification structure: Heading 9973 (leasing or rental services) and the Annexure which includes sub heading 997338 for licensing of natural resources including spectrum. The appellate officer treated the residuary heading and the subsequent amendment (Notification No. 27/2018) as clarificatory of legislative intent and applicable to the disputed period, concluding that the service falls within the notified classification and rate framework. The authority also noted prior service tax entries and CBIC clarification treating spectrum related periodic payments as taxable.LF and SUC are taxable services classified under HSN 997338 and attract GST as per the rate notification applicable for the period.Reverse charge mechanism - The appellants' payment of GST under the HSN Head 9973 on reverse charge basis was held to be in order for the service in question. - HELD THAT: - On review of the tax invoices and the manner of payment, the Commissioner (Appeals) accepted that the appellant paid GST under the appropriate HSN heading and under reverse charge, which corresponds with the classification of the service as 'grant of licence' and 'allocation of spectrum' falling in Heading 9973/997338. The authority found the invoicing and remittance under the prescribed mechanism consistent with the statutory scheme.The reverse charge treatment and HSN classification adopted by the appellant were appropriate and do not vitiate taxability.Non-speaking order - Although the impugned order was characterized as non-speaking, the Commissioner (Appeals) found that the appellant's submissions were considered and that sufficient legal basis exists to uphold the rejection of the refund. - HELD THAT: - The appellate authority agreed with the appellant that the original order lacked detailed reasoning but held that the substantive issues - taxability, classification and applicability of rate notifications - had been addressed in the appeal and that the findings supporting taxability were grounded in statutory definitions, notification entries and parliamentary intent as reflected in GST Council minutes. Consequently, the lack of elaboration in the original order did not warrant interference with the substantive rejection of the refund claims.The characterization of the original order as non speaking did not entitle the appellant to refund; the appeal was dismissed on merits.Final Conclusion: The appeals are dismissed; the Commissioner (Appeals) upheld the Orders in Original rejecting the refund claims for the stated periods, holding that licence fee and spectrum usage charges are taxable supplies classified under HSN 997338 and attract GST at the rates applicable under the notifications for the disputed periods.

2021 (8) TMI 386 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues:
Refund application under Central Goods and Services Tax Act, 2017 - Disbursement of refund amount - Less payment received by the appellant - Appeal against the Order-in-Original - Technical problem leading to short disbursement.

Analysis:
The appellant filed a refund application for the period April 2018 to March 2019, amounting to Rs. 6,02,713/- of ITC on Export of Goods & Services without payment of tax. The adjudicating authority sanctioned a refund claim of Rs. 5,94,924/- out of the total claim, rejecting Rs. 7,789/-. However, during disbursement, only Rs. 4,73,792/- was disbursed, resulting in a shortfall of Rs. 1,21,132/-. The appellant appealed against the Order-in-Original, claiming the refund amount was not disbursed as per the sanction order and highlighting the shortfall of Rs. 1,21,132/-, along with interest. A virtual personal hearing was conducted where the Authorized Representative reiterated the appellant's written submission, emphasizing the discrepancy in the refund amount received. The appellant expressed no further grievances during the hearing.

Upon reviewing the facts and submissions, the Additional Commissioner noted the discrepancy in the disbursement of the refund amount. The adjudicating authority had sanctioned Rs. 5,94,924/-, but only Rs. 4,73,792/- was disbursed, leading to the appellant receiving Rs. 1,21,132/- less than the sanctioned amount. The appellant provided a copy of the payment order to support their claim. Following this, the jurisdictional officer confirmed that a technical problem during the calculation and saving process resulted in the short disbursement of Rs. 1,21,132/-. Considering the comments from the jurisdictional officer and the appellant's grounds for appeal, the Additional Commissioner concluded that the appellant was indeed entitled to the shortfall amount due to the technical issue in the system.

In light of the above findings, the Additional Commissioner allowed the appeal filed by the appellant, recognizing the shortfall in the refund amount received and attributing it to a technical problem in the system. Consequently, the appellant was deemed entitled to the less receipt payment of Rs. 1,21,132/-, rectifying the discrepancy caused by the technical issue during the disbursement process.

Appellant granted refund shortfall due to technical glitch under Central Goods and Services Tax Act
The Additional Commissioner allowed the appellant's appeal regarding a refund application under the Central Goods and Services Tax Act. The appellant had received a disbursement of only Rs. 4,73,792 out of the sanctioned Rs. 5,94,924, resulting in a shortfall of Rs. 1,21,132 due to a technical problem. The jurisdictional officer confirmed the error, attributing it to a system issue. Consequently, the appellant was granted the entitled shortfall amount of Rs. 1,21,132, rectifying the discrepancy caused by the technical problem during disbursement.

2021 (8) TMI 50 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Court remands GSTR-3B refund claims case for fair hearing & compliance with COVID-19 extensions
The case involved the rejection of refund claims for non-filing of GSTR-3B electronically, alleged violation of natural justice principles, non-receipt of notices, and compliance with extended COVID-19 deadlines. The court found that the orders were passed without proper opportunity for the appellant to be heard, disregarding the pandemic-related deadline extensions and principles of natural justice. The matter was remanded for a fair hearing and reasoned order, directing the appellant to submit their arguments. All four appeals were disposed of accordingly.

Refund of tax paid on zero-rated supplies to SEZ units under Section 54(1) of the CGST Act - effect of physical filing of GSTR-3B pursuant to insolvency direction on discharge of tax liabilities and reflection in electronic ledgers - principles of natural justice and requirement of opportunity of hearing before rejection of refund - extension of time for compliance by Notification No. 35/2020 and amended Notification No. 55/2020 - Rule 92(3) of the CGST Rules - no rejection of refund without opportunity of being heard - remand for de novo consideration and requirement of a reasoned/speaking orderRefund of tax paid on zero-rated supplies to SEZ units under Section 54(1) of the CGST Act - effect of physical filing of GSTR-3B pursuant to insolvency direction on discharge of tax liabilities and reflection in electronic ledgers - Whether the adjudicating authority could reject the appellant's refund claims on the ground that tax was not reflected as paid into the Government account because GSTR-3B had been filed physically pursuant to NCLT direction. - HELD THAT: - The adjudicating authority rejected the refund applications on the sole basis that, because GSTR-3B returns were filed physically (as permitted by an insolvency order), the corresponding debits/credits were not reflected in the portal-ledgers and thus there was no payment in the Government account. The Commissioner (Appeals) noted these factual findings in the impugned orders but did not adjudicate the substantive entitlement to refund on merits. Given that the rejection was founded on the ledger reflection issue and that the appellant had not been heard before passing the orders, the appellate authority concluded that the matter requires fresh consideration by the adjudicating authority with opportunity to the appellant to place on record submissions and documents addressing the effect of physical filing and payment discharge. [Paras 7, 10]Remanded to the adjudicating authority for fresh adjudication on the ledger/payment issue after giving the appellant an opportunity to submit its case and for the authority to pass a reasoned order.Principles of natural justice and requirement of opportunity of hearing before rejection of refund - extension of time for compliance by Notification No. 35/2020 and amended Notification No. 55/2020 - Rule 92(3) of the CGST Rules - no rejection of refund without opportunity of being heard - Whether the impugned orders complied with the requirement of hearing and applicable time extensions before rejecting the refund claims. - HELD THAT: - The appellant alleged non-receipt of show-cause notices on account of COVID-19 lockdown and reliance on Government notifications extending time-limits. The appellate authority examined the record and accepted that the orders were passed without affording a proper opportunity of being heard, that the relevant periods fall within the extended timelines under Notification No. 35/2020 and its amendment No. 55/2020, and that Rule 92(3) mandates that no refund application be rejected without giving the applicant an opportunity of being heard. On these bases the Commissioner (Appeals) held that denial of hearing and summary rejection was procedurally improper. [Paras 8, 9, 10]Matter remitted to the adjudicating authority to grant proper opportunity of hearing in accordance with Rule 92(3) and the time extensions and to pass a speaking order after considering the appellant's submissions.Final Conclusion: All four appeals are disposed of by remitting the matters to the adjudicating authority for de novo consideration: the adjudicating authority shall afford the appellant the opportunity of being heard (allowing submission of its averments), consider the effect of physical filing of returns and the applicability of the time-extension notifications, and thereafter pass reasoned/speaking orders on the refund claims.

2021 (2) TMI 341 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues:
1. Appeal against cancellation of GST registration due to non-filing of returns and interest liability.

Analysis:
The appeal was filed under Section 107 of the Central Goods and Service Tax Act, 2017 against the order cancelling the GSTIN due to non-filing of returns for six months and rejection of the revocation application for not discharging interest liability on late tax payments. The appellant contended that interest had been paid and requested registration revocation. A virtual personal hearing was conducted where the appellant's representative reiterated submissions on filing returns and tax payments. The Additional Commissioner reviewed written and oral submissions to decide the appeal.

The Commissioner examined the case records and submissions, noting the rejection of the revocation application for non-payment of interest. The appellant, in response, provided evidence of interest payment and requested registration revocation. Relevant provisions under Rule 23 of the CGST Rules, 2017 regarding revocation or cancellation of registration were considered, emphasizing the requirement to pay all due amounts, including interest, for revocation.

Referring to Circular No.99/18/2019-GST, which clarified the process for revocation post-cancellation due to non-filing of returns, the Commissioner found the appellant had now complied with the provisions. Consequently, the Commissioner ordered the appellant to file a revocation application through the Common portal and directed the proper officer to verify payment details, return filings, and CGST Act compliance before considering the revocation application.

In conclusion, the appeal was disposed of by ordering the appellant to file the revocation application as per prescribed procedures and instructing the proper officer to review the application post-compliance verification with the CGST Act and rules.

This detailed analysis of the judgment highlights the issues involved, the arguments presented, the legal provisions considered, and the final decision made by the Commissioner in response to the appeal against the cancellation of GST registration.

Successful Appeal Revoking GST Registration Cancellation
The appeal against the cancellation of GST registration due to non-filing of returns and interest liability was successful. The Commissioner ordered the appellant to file a revocation application through the Common portal and directed verification of payment details, return filings, and compliance with the CGST Act before considering the revocation application. The appellant's compliance with Circular No.99/18/2019-GST led to the decision in their favor, emphasizing the need to fulfill all requirements for revocation.

Revocation of cancellation of registration - Failure to furnish returns - Payment of tax, interest, penalty and late fee as condition precedent - Compliance with Rule 23 of the CGST Rules, 2017 - Verification of payment particulars and returns by the proper officer - Application of Circular No.99/18/2019-GSTRevocation of cancellation of registration - Failure to furnish returns - Payment of tax, interest, penalty and late fee as condition precedent - Application of Circular No.99/18/2019-GST - Whether revocation of the appellant's cancelled GST registration could be considered after compliance with the conditions in rule 23(1) of the CGST Rules, 2017. - HELD THAT: - The adjudicating authority had rejected the appellant's application for revocation on the ground that interest liability on late payment of taxes had not been discharged. The appellant produced evidence of payment (Form GST DRC-03 and challan) and asserted that returns had been filed and interest paid. Rule 23(1) of the CGST Rules, 2017 and the first proviso thereto make furnishing of outstanding returns and payment of amounts due (including interest, penalty and late fee) a pre condition for filing an application for revocation where cancellation arose from non furnishing of returns. Circular No.99/18/2019 GST was noted as clarifying that returns due up to date of cancellation must be furnished and amounts paid before revocation can be considered. The Commissioner (Appeals) found that the appellant had complied with these requirements and that revocation may therefore be considered by the proper officer. [Paras 6, 7, 9, 10]The appellant's compliance with the conditions in rule 23(1) having been demonstrated, the registration may be considered for revocation.Verification of payment particulars and returns by the proper officer - Compliance with Rule 23 of the CGST Rules, 2017 - What further action the adjudicating authority must take on the application for revocation. - HELD THAT: - The Commissioner (Appeals) directed the appellant to file the revocation application in the prescribed form through the common portal. The proper officer was directed to consider the revocation application after due verification of the payment particulars, the filing of returns and compliance with the provisions of the CGST Act and the rules thereunder. This amounts to remitting the matter to the proper officer for fresh consideration on verification of compliance rather than deciding revocation on merits at the appellate stage. [Paras 10, 11]The appeal is disposed by directing the appellant to file FORM GST REG 21 and the proper officer to decide the revocation application after verification of payments, returns and statutory compliance.Final Conclusion: The Commissioner (Appeals) allowed the appeal in the limited sense that the appellant, having produced evidence of compliance with the preconditions in rule 23(1), was permitted to file the prescribed revocation application and the proper officer was directed to consider and decide the revocation after due verification of payment particulars, filing of returns and compliance with statutory provisions.

2021 (6) TMI 43 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Appeal Rejected Due to Natural Justice | Refund Claim Inadmissible | ITC Components Excluded
The appeal was rejected as the principle of natural justice was deemed to have been followed, and the refund claim for unutilized Input Tax Credit was found to be inadmissible based on the relevant statutory provisions. The adjudicating authority's decision to reject the refund claim was upheld, citing the validity of the rules excluding certain ITC components from the refund calculation as per judicial precedents and legislative amendments.

Principle of natural justice - refund of unutilised input tax credit on account of inverted duty structure - definition of Net ITC in Rule 89(5) - challenge to vires of Rule 89(5) (ultra vires contention) - power to make rules and retrospective effect under Section 164 - strict interpretation of exemption/refund provisionsPrinciple of natural justice - Whether the adjudicating authority complied with the principle of natural justice in rejecting the refund application. - HELD THAT: - The adjudicating authority issued a show cause notice in FORM RFD-08, provided an opportunity for personal hearing and directed the appellant to file a reply. The appellant contacted the department seeking deferment and filed a request for adjournment but did not appear on the scheduled date; the authority proceeded to pass the order after the time available to the appellant to file a reply had expired. All submissions made by the appellant have been taken up at length in the appeal and the record shows that sufficient time and opportunity were afforded to file a reply and to appear. On these facts the adjudicating authority is found to have furnished the opportunity contemplated by the rules and the principle of natural justice is held to have been observed. [Paras 7]Principle of natural justice was complied with and the contention of its breach is rejected.Refund of unutilised input tax credit on account of inverted duty structure - definition of Net ITC in Rule 89(5) - challenge to vires of Rule 89(5) (ultra vires contention) - power to make rules and retrospective effect under Section 164 - strict interpretation of exemption/refund provisions - Whether the refund claim for June, 2019 is admissible, and whether Rule 89(5) (as amended) is contrary to Section 54(3)(ii) of the CGST Act. - HELD THAT: - The claim was made under the proviso to Section 54(3)(ii) for accumulation on account of inverted duty structure. Rule 89(5), as amended by Notification No. 26/2018, defines Net ITC to exclude certain credits (thereby excluding input services from Net ITC) and prescribes the formula for refund. The Central Government possesses rule making power including retrospective effect under Section 164(3), and the amendment to Rule 89(5) was effected under that power. The Tribunal/bench relied on the reasoning in M/s. Tvl. Transtonnelstroy Afcons v. Union of India (Madras High Court) which upheld that Section 54(3)(ii) and the amended Rule 89(5) are intra vires and that exclusion of input services from the Net ITC for the purpose of refund is a valid classification. Refund provisions being analogous to exemptions require strict construction. The appellant also failed to produce segregated documents to substantiate a claim that input goods (as distinct from input services) formed the basis of the accumulated credit despite opportunities to do so. Applying the aforesaid legal principles and facts, the adjudicating authority's conclusion that input services cannot be included in Net ITC for computing the refund and consequent rejection of the claim is sustained. [Paras 8, 10, 11, 13, 14]Rule 89(5) as amended is intra vires Section 54(3)(ii); input services are not includible in Net ITC for refund computation and the refund claim for June, 2019 is inadmissible and rightly rejected.Final Conclusion: The appeal is dismissed. The adjudicating authority complied with principles of natural justice, Rule 89(5) (as amended) is held intra vires Section 54(3)(ii), input services are not includible in Net ITC for refund on account of inverted duty structure, and the rejection of the refund claim for June, 2019 is upheld.

2021 (6) TMI 42 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Court rules excess IGST payment as tax, not deposit; refund application time-barred under Section 54
The court upheld the rejection of the appellant's refund application, ruling that the excess IGST paid was considered a tax, not a deposit. The court found the refund application to be time-barred under Section 54 of the CGST Act, as it was filed beyond the two-year period from the relevant date. The court determined that the principle of natural justice was followed as the appellant was given an opportunity to be heard through a show cause notice and personal hearing. As a result, both appeals filed by the appellant were rejected.

Nature of payment - mistaken payment of tax versus deposit - limitation under Section 54 of the CGST Act, 2017 (refund within two years from the relevant date) - relevant date for refund - date of payment of tax - refund under Section 77 of the CGST Act read with Section 19 of the IGST Act - procedure for refund - Rule 89 of the CGST Rules, 2017 - service and opportunity to be heard - communication through common GST portal / principle of natural justiceNature of payment - mistaken payment of tax versus deposit - IGST as tax - Excess IGST paid by the appellant is a payment of tax and not a deposit or pre-deposit. - HELD THAT: - The appellant had discharged the liabilities for September and October 2017 by debiting the cash/credit ledger and filing GSTR-3B showing IGST liability; the payments were therefore applied against tax heads. The ledger amounts were utilised to meet tax liabilities and the excess amounts were debited against IGST head, which is a tax under the IGST Act. On this factual and legal basis, the excess sums cannot be treated as a mere deposit/pre-deposit but constitute tax paid, and the appellant's contention that the sums are refundable deposits not attracting limitation is not supported by the statutory scheme. [Paras 6]The disputed excess amounts are tax paid (IGST) and not deposits; they are not exempt from the limitation provisions by being labelled 'deposit'.Limitation under Section 54 of the CGST Act, 2017 (refund within two years from the relevant date) - relevant date for refund - date of payment of tax - procedure for refund - Rule 89 of the CGST Rules, 2017 - refund under Section 77 of the CGST Act read with Section 19 of the IGST Act - The refund applications filed on 11-2-2020 for the tax periods September 2017 and October 2017 are time-barred under Section 54 of the CGST Act, 2017. - HELD THAT: - Section 54 requires refund claims to be made within two years from the relevant date, which, in cases not otherwise specified, is the date of payment of tax. The appellant filed refund applications on 11-2-2020; the claims for September and October 2017 thus fell beyond the two-year period and were liable to be rejected as time-barred. The appellant's alternate plea that the claims should be governed by Section 19 of the IGST Act read with Section 77 of the CGST Act and are not time barred was rejected: refunds governed by Section 77/Section 19 must still follow the refund procedure in Section 54 and Rule 89, and the limitation prescribed therein applies. The appellant also filed the refund in the category of excess payment rather than the category contemplated for supplies treated as inter-State under Rule 89(2)(j). [Paras 7]The refund claims are barred by the two year limitation under Section 54 and therefore liable to be rejected as time barred.Service and opportunity to be heard - communication through common GST portal / principle of natural justice - The adjudicating authority complied with principles of natural justice by issuing the show cause notice and communicating the order through the common GST portal; there was no failure of service or denial of hearing. - HELD THAT: - The record shows issuance of show cause notices in Form GST RFD 08, the appellant's reply in Form GST RFD 09, and that the adjudicating authority made comments on the common portal which were reflected on the taxpayer's portal. The jurisdictional Assistant Commissioner supplied a screenshot and confirmed communication; the appellant was also granted a personal hearing. On these facts, there was no breach of natural justice in respect of communication of the show cause notice or the rejection order. [Paras 8]No infirmity in service or opportunity to be heard; principles of natural justice were observed.Final Conclusion: The Commissioner (Appeals) upheld the adjudicating authority's rejection of the two refund claims as time barred under Section 54 of the CGST Act, 2017, finding the excess IGST to be tax (not deposit) and that there was no failure of service or denial of hearing; both appeals were dismissed.

2021 (7) TMI 1166 - COMMISSIONER OF GST (APPEALS), JAIPUR GST

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Appeal rejected due to time-barred refund application under CGST Act.
The appeal was rejected, and the impugned order was upheld as the refund application was time-barred under Section 54 of the CGST Act, 2017. The appellant's arguments regarding the relevant date and the Limitation Act were dismissed, with the adjudicating authority emphasizing the clear and specific statutory provisions of the CGST Act. The appellant's reliance on notifications related to the COVID-19 pandemic for certain months was also deemed insufficient to overcome the time limitation for the refund claim.

Time bar for refund claims under Section 54 of the CGST Act, 2017 - relevant date for limitation in refund matters - availability of remedy by adjustment under Section 34(2) and Section 39(9) of the CGST Act, 2017 - inapplicability of general limitation statutes where statute provides specific relevant date - effect of notifications extending limitation periodTime bar for refund claims under Section 54 of the CGST Act, 2017 - relevant date for limitation in refund matters - inapplicability of general limitation statutes where statute provides specific relevant date - Whether the refund application filed on 15-05-2020 for excess tax paid in the period July, 2017 to March, 2018 is time barred under Section 54 of the CGST Act, 2017. - HELD THAT: - The adjudicating authority found, and this Authority concurs, that Section 54 prescribes the time limit to file a refund application - namely, within two years from the relevant date as defined in Section 54(14). The appellant's contention that the limitation should be reckoned from the date of filing the annual return (5-12-2019) or by invoking the Limitation Act was rejected because the CGST Act furnishes an express definition of "relevant date" for refund claims and where a statute provides the relevant date, recourse to other general limitation laws or inferences from earlier enactments is unnecessary and impermissible. The record shows the appellant did not avail the statutory alternative remedy of adjustment under Section 34(2) / Section 39(9) during the prescribed period and the refund application filed on 15-05-2020, in relation to the stated months of 2017-18, is beyond two years from the applicable relevant date. The claim is therefore time barred and not maintainable. [Paras 7, 9]Refund application for the period July, 2017 to March, 2018 is time barred under Section 54 and the appeal on this ground is dismissed.Effect of notifications extending limitation period - proof of date of payment for temporal benefit under notification - Whether the appellant's contention that the time limit for refund was extended by Notification No. 35/2020 (as amended) saves the refund claim for February-March, 2018. - HELD THAT: - The appellant relied on notifications extending the time limit for filings. The Authority observed that the appellant failed to specify dates of payment or disputed amounts for February and March 2018 in the additional submissions and did not demonstrate that those months fell within any extended limitation period relied upon. On the available record and submissions, the notification did not operate to render the claim maintainable and the limitation bar remained effective in respect of the refund claim. [Paras 8, 9]The plea based on extension notifications does not procure relief; the refund claim for the months in question remains time barred.Final Conclusion: The appeal is dismissed: the refund application filed on 15-05-2020 for excess tax paid in July, 2017 to March, 2018 is barred by time under Section 54 of the CGST Act, 2017, and the contention based on notifications extending limitation does not avail the appellant.

2021 (7) TMI 1165 - COMMISSIONER OF GST (APPEALS), JAIPUR GST

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Issues Involved:
1. Whether the application for refund filed by the appellant is time-barred as per Section 54 of the CGST Act, 2017.
2. Whether the refund claim for the tax period of March 2018 is inadmissible.
3. Whether the principles of natural justice have been followed in the instant case.

Issue-wise Detailed Analysis:

(a) Time Barred Application:
The appellant argued that the relevant date for filing the refund application should be the end of the financial year in which the claim for refund arises, as per the unamended clause (e) of Explanation 2 to Section 54 of the CGST Act, 2017. The appellant cited various case laws, including West U.P. Sugar Mills Assn. v. State of U.P. and Govinddas v. Income Tax Officer, to support the contention that amendments should not have retrospective effect. However, the adjudicating authority clarified that the clause (e) was substituted by Section 23 of the CGST (Amendment) Act, 2018, which changed the relevant date to the due date for furnishing the return under Section 39 for the period in which the claim for refund arises. Thus, the application for the period July 2017 to February 2018 was deemed time-barred as it was filed on 13-6-2020, beyond the due date of 20-3-2020. The refund application for March 2018 was within the extended due date of 31-8-2020.

(b) Inadmissibility of Refund for March 2018:
The adjudicating authority rejected the refund claim for March 2018 on the grounds that the refund amount calculated as per Rule 89(5) of the CGST Rules, 2017, resulted in a negative figure. The appellant's contention that the refund should be considered for the entire period from July 2017 to March 2018 was dismissed. The adjudicating authority upheld the rejection of the refund for March 2018, stating that the formula provided in Rule 89(5) was correctly applied.

(c) Principles of Natural Justice:
The appellant claimed that the principles of natural justice were violated as they were not given adequate time to respond to the Show Cause Notice (SCN) and were not afforded an opportunity to be heard. The adjudicating authority countered this by stating that the appellant was issued an SCN in Form RFD-08 and was given an opportunity for a personal hearing, which the appellant did not attend. Moreover, the adjudicating authority responded to the appellant's queries via email. Therefore, it was concluded that the principles of natural justice were followed, and the appellant's contention lacked merit.

Conclusion:
The adjudicating authority found no infirmity in the rejection of the refund claim. The appeal was dismissed, and the impugned order was upheld as proper. The refund application for the period July 2017 to February 2018 was time-barred, and the refund for March 2018 was inadmissible as per the applicable rules. The principles of natural justice were deemed to have been followed in the proceedings.

Refund appeal dismissed due to time-barred claim & negative refund amount calculation
The appeal was dismissed by the adjudicating authority, upholding the rejection of the refund claim. The application for the period July 2017 to February 2018 was considered time-barred as it was filed beyond the due date. The refund claim for March 2018 was rejected due to a negative refund amount calculated under the relevant rules. The adjudicating authority found that the principles of natural justice were followed, despite the appellant's claims to the contrary.

Time bar under Section 54 (relevant date for refund) - substitution of clause (e) of Explanation 2 to Section 54(14) - effect of amendment - computation of admissible refund under Rule 89(5) of the CGST Rules, 2017 - principles of natural justice (audi alteram partem and speaking orders) - extension of due date by notification for filing refundTime bar under Section 54 (relevant date for refund) - substitution of clause (e) of Explanation 2 to Section 54(14) - effect of amendment - Application for refund for the period July, 2017 to February, 2018 is time barred under Section 54 of the CGST Act, 2017 as amended. - HELD THAT: - The substituted text of clause (e) of Explanation 2 to Section 54(14) prescribes the due date as the due date for furnishing of return under section 39 for the period in which the claim for refund arises. Substitution obliterated the earlier provision and the amended clause governs applications filed after amendment. Applying the substituted clause, the due date for refund for the period July, 2017 to February, 2018 expired prior to the filing of the application on 13-6-2020; hence that portion of the claim is time barred. The notifications extending due dates were considered and, on the statutory matrix, the application for July-February fell outside the permitted filing period while March 2018 was within the extended time limit. [Paras 7]Refund claim for July, 2017 to February, 2018 is time barred and is not admissible.Computation of admissible refund under Rule 89(5) of the CGST Rules, 2017 - Refund claim for the tax period March, 2018 is inadmissible as the computation under Rule 89(5) results in a negative/ non-admissible amount. - HELD THAT: - The adjudicating authority applied the formula in Rule 89(5) of the CGST Rules, 2017 to the returns and figures for March, 2018 and found that the admissible refund worked out to a negative amount; on that basis the authority rejected the refund for March, 2018. The appellate authority examined the record and endorsed the application of Rule 89(5) and the conclusion that no refund was admissible for March, 2018. [Paras 8]Refund claim for March, 2018 is inadmissible as determined under Rule 89(5).Principles of natural justice (audi alteram partem and speaking orders) - Adjudicating authority complied with principles of natural justice in issuing the show cause notice and providing opportunity for hearing. - HELD THAT: - The adjudicating authority issued FORM RFD-08 show cause notice, allowed opportunity for personal hearing and replied to appellant's communications. The appellant did not attend the stipulated hearing date nor file a reply before the adjudicating authority; the appellate authority found that the procedure envisaged by Rule 92(3) and the requirement of an opportunity to be heard were satisfied. Consequently, there was no breach of natural justice warranting interference. [Paras 9]No violation of principles of natural justice is made out; the procedure was followed.Final Conclusion: The appeal is rejected. The refund claim for July, 2017 to February, 2018 is time barred; the claim for March, 2018 is inadmissible on application of Rule 89(5); and no breach of natural justice was found in the proceedings.

2021 (4) TMI 323 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues:
Refund claim rejection without notice and opportunity of being heard.

Analysis:
The appellant filed a refund application under Section 54 of the CGST Act, 2017 for accumulated ITC of Rs. 1,44,072 for the period of October to December 2018. The adjudicating authority rejected the claim citing lack of transactions on the common portal for the given period, leading to the refund rejection and re-crediting in the electronic credit ledger. The appellant contended that the rejection violated principles of natural justice as no notice was provided, and no opportunity of being heard was granted.

The appellant submitted various documents, including GSTR-3B, GSTR-1, and a letter of undertaking, to support their refund claim. Additionally, the appellant complied with the deficiency memo (GST RFD-03) issued by the Assistant Commissioner, providing all requested documents. However, the impugned order rejecting the refund was issued without a show cause notice in Form GST-08 and without granting the appellant an opportunity to be heard, contrary to Rule 92(3) of the CGST Rules, 2017.

The Commissioner noted that the impugned order lacked proper issuance of notice and opportunity for the appellant to present their case. Referring to Rule 90(3) of the CGST Rules, 2017, which requires communication of deficiencies to the appellant for rectification, the Commissioner found that the proper officer did not follow the prescribed procedure. The Commissioner also highlighted Circular No. 17/17/2017-GST, which mandates the filing of a fresh refund application after the issuance of a deficiency memo.

Considering the legal provisions and procedural lapses, the Commissioner decided to remand the matter back to the Adjudicating Authority. The Commissioner directed the Adjudicating Authority to provide the appellant with a proper opportunity to be heard and to issue a reasoned order. The appellant was instructed to submit their arguments before the Adjudicating Authority. Consequently, the appeal was disposed of in the manner outlined above.

Commissioner remands matter to Authority for procedural lapses, ensuring appellant's right to be heard.
The Commissioner remanded the matter back to the Adjudicating Authority due to procedural lapses, directing the Authority to provide the appellant with a proper opportunity to be heard and issue a reasoned order. The appellant was instructed to submit their arguments, and the appeal was disposed of accordingly.

Refund of accumulated input tax credit on zero-rated supplies - opportunity of being heard / principle of natural justice in refund proceedings - requirement of issuance of FORM GST RFD-08 before rejecting refund - procedure on deficiency memo and refiling of refund application - duty to pass a reasoned and speaking orderOpportunity of being heard / principle of natural justice in refund proceedings - requirement of issuance of FORM GST RFD-08 before rejecting refund - refund of accumulated input tax credit on zero-rated supplies - Adjudicating authority's rejection of the refund claim without issuance of FORM GST RFD-08 and without providing opportunity of being heard. - HELD THAT: - The Commissioner (Appeals) examined the record and the provisions of Rule 92(3) read with its proviso and found that where the proper officer is satisfied that refund is not admissible, a notice in FORM GST RFD-08 must be issued and an opportunity to reply afforded before passing an order in FORM GST RFD-06. The impugned RFD-06 rejected the appellant's refund on the ground of no transactions on the portal for the period, but no RFD-08 was issued and no hearing accorded. The appellate authority accepted the appellant's contention that documents were furnished in response to a deficiency memo yet the rejection was passed without the statutorily mandated show-cause process and hearing, thereby violating the principle of natural justice and the procedural requirements under the CGST Rules. [Paras 6, 7, 9]Rejection of the refund without issuance of FORM GST RFD-08 and without hearing was unsustainable; the matter is remanded for compliance with procedural requirements and to afford opportunity of being heard.Procedure on deficiency memo and refiling of refund application - duty to pass a reasoned and speaking order - refund of accumulated input tax credit on zero-rated supplies - Whether the adjudicating authority should follow the deficiency-memo procedure (including refiling where required) and pass a reasoned order on the refund claim. - HELD THAT: - The Commissioner (Appeals) noted Rule 90(3) and Circular No. 17/17/2017-GST which provide that where deficiencies are communicated, the proper officer may require rectification and refiling of the refund application. The appellate authority observed that the adjudicating authority had issued a deficiency memo but thereafter rejected the earlier-filed refund claim without following up the refiling requirement and without issuing a speaking order. In view of these procedural lapses and the need for a reasoned decision, the matter was remanded to the adjudicating authority to allow the appellant to submit his contentions and for the authority to pass a reasoned order after following the prescribed deficiency/refiling procedure where applicable. [Paras 8, 9]Matter remanded to the adjudicating authority to follow the deficiency/refiling procedure where applicable and to pass a reasoned, speaking order after affording the appellant an opportunity to present submissions.Final Conclusion: The appeal is disposed of by remitting the matter to the Adjudicating Authority for compliance with Rule 90/92 and relevant circulars: afford the appellant the opportunity of being heard, consider submissions and documents, and thereafter pass a reasoned order on the refund claim for October, 2018 to December, 2018.

2021 (8) TMI 230 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues: (i) Whether licence fee and spectrum usage charges paid to the Department of Telecommunications constituted a supply of service under the GST law and were consideration for such supply; (ii) whether such payments were covered by the service-rate notification and liable to GST for the relevant period; (iii) whether the refund rejection order was non-speaking and liable to be interfered with.

Issue (i): Whether licence fee and spectrum usage charges paid to the Department of Telecommunications constituted a supply of service under the GST law and were consideration for such supply.

Analysis: The order held that licence and spectrum allotment were covered by the statutory definition of supply, since licence is expressly included within supply and the payments were made in relation to business activity. It further held that the Government's grant of permission to operate telecom services and use spectrum was a taxable service and that the payments were consideration within the meaning of the Act.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (ii): Whether such payments were covered by the service-rate notification and liable to GST for the relevant period.

Analysis: The order held that the service fell under the classification for licensing services for the right to use natural resources, including telecommunication spectrum. It found that the relevant rate notifications covered the service, and treated the later amendment as clarificatory of the existing legislative intent rather than a new levy confined to a later date.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (iii): Whether the refund rejection order was non-speaking and liable to be interfered with.

Analysis: The order accepted that the impugned order lacked detailed reasoning, but held that this did not alter the substantive taxability of the service and did not justify refund.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Final Conclusion: The refund claims were held to be untenable and the appeals were rejected.

Ratio Decidendi: Licence fee and spectrum usage charges paid for telecom licence and spectrum access constitute consideration for a taxable licensing service under GST, and the applicable rate notifications cover such supply for the disputed period.

Telecom licence and spectrum charges treated as taxable licensing service under GST; refund challenge failed.
Licence fee and spectrum usage charges paid for telecom licences were treated as consideration for a taxable licensing service under GST because the grant of permission to operate telecom services and use spectrum fell within the statutory concept of supply. The applicable rate notifications were held to cover the service for the disputed period, with the later amendment treated as clarificatory of existing legislative intent rather than creating a new levy. Although the refund rejection order lacked detailed reasoning, that defect did not displace the underlying taxability or justify refund, and the appeals were rejected.

Supply of service (including licence) - Consideration for supply - Regulatory fee versus taxable consideration - Classification under HSN Heading 9973 (licensing services for right to use telecommunication spectrum) - Applicability of rate notification and clarificatory amendment - Reverse charge mechanism - Non speaking orderSupply of service (including licence) - Grant of licence and allocation of spectrum by DoT constitutes a supply of service under GST. - HELD THAT: - The authority held that the terms 'licence' and 'outward supply' are specifically encompassed within the GST definitions and that granting permission to establish, maintain and work telegraphs and allocation of spectrum falls within service classification. Prior service tax entries and clarifications (including Circular No.192/02/2016) recognising periodic payments such as spectrum user charges and licence fees as taxable were noted. The supply is in furtherance of the appellant's business since licence and spectrum enable the appellant to carry on telecommunication services to customers; therefore GST liability attaches. [Paras 7]Licence and spectrum allocation are taxable supplies of service.Regulatory fee versus taxable consideration - License Fee (LF) and Spectrum Usage Charges (SUC) are not mere sovereign regulatory exactions but are consideration for taxable supply, and therefore not exempt as a regulatory fee. - HELD THAT: - The authority rejected the appellant's characterization of LF and SUC as sovereign regulatory fees or taxes. It observed that the charges are a percentage of Adjusted Gross Revenue (AGR), fluctuate with revenue and are thus directly connected to the business of the licensee. The grant of permission and allotment of spectrum was treated as a service falling under the relevant HSN, and the nature of the charges (percentage of AGR) indicates they are consideration for that service rather than a compulsory exaction outside the GST net. [Paras 7]LF and SUC are consideration for taxable services and not non taxable regulatory exactions.Consideration for supply - Payments of LF and SUC qualify as 'consideration' within the meaning of GST law. - HELD THAT: - Relying on the statutory definition of 'consideration', the authority found that LF and SUC satisfy the elements of consideration since payments are made in respect of and in response to the grant of licence and spectrum. The licence provisions in the Telegraph Act contemplate grant on 'conditions and in consideration of such payments', supporting the finding that these payments are consideration for the supply of a service. [Paras 9]LF and SUC constitute consideration for supply under GST.Classification under HSN Heading 9973 (licensing services for right to use telecommunication spectrum) - Applicability of rate notification and clarificatory amendment - The services are classifiable under HSN Heading 9973 (sub heading 997338) and taxable under the rate notification; the later clarificatory amendment is applicable to the disputed period. - HELD THAT: - The authority examined Notification No.11/2017 and the annexed scheme of classification, locating 'Licensing services for right to use other natural resources including telecommunication spectrum' under SAC 997338. It held that rates notified at the heading level apply to sub headings and that the amendment effected by Notification No.27/2018 was clarificatory of legislative intent, not a substantive retrospective imposition. The Authority referred to GST Council minutes and precedent on clarificatory notifications to conclude that the rate structure as discussed covered the disputed period and the appellant's payment under reverse charge at HSN 9973 was appropriate. [Paras 9]The supply is classifiable under HSN 997338 and the rate notification (including the clarificatory amendment) applies to the period in question.Non speaking order - Although the impugned order was non speaking in form, the substantive legal position favoured taxation of the payments and the appeal was dismissed on merits. - HELD THAT: - The authority agreed with the appellant that the original adjudication order lacked detailed reasoning. However, after considering the appellant's submissions in appeal, the authority addressed the central legal questions (supply, consideration, classification and applicable rate) and found the payments taxable. Consequently, notwithstanding deficiencies in the impugned order's form, the appeals were dismissed because the substantive findings supported rejection of the refund. [Paras 9, 11]Impugned order may be non speaking in form, but the substantive conclusion that taxability attaches to the payments stands; refund rejected.Final Conclusion: Appeals dismissed. The Commissioner (Appeals) held that licence grant and spectrum allotment are taxable supplies (classified under HSN 997338), LF and SUC are consideration for those services, the rate notification (including the clarificatory amendment) applies to the disputed periods, and therefore the refund claims for October 2017 and January 2018 were correctly rejected despite formal deficiencies in the original orders.

2021 (4) TMI 322 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues:
Revocation of GST registration due to non-filing of returns for a continuous period of six months, rejection of application for revocation of cancellation of registration, compliance with relevant provisions and circulars, revocation of cancellation of registration.

Revocation of GST Registration:
The appeal was filed under Section 107 of the Central Goods and Services Tax Act, 2017 against the cancellation of GSTIN due to non-filing of returns for six months. The appellant requested revocation of GST registration after being unable to file returns post-cancellation. During the virtual personal hearing, the appellant's representative highlighted that all returns up to June 2020 were filed, along with payment of tax, penalty, and interest. The adjudicating authority rejected the application for revocation as the appellant did not reply to the show cause notice within the specified time.

Compliance with Provisions:
The appellant had applied for revocation of registration twice, but both applications were rejected. The appellant submitted returns up to June 2020 and GSTR-1 up to March 2020. The relevant provisions under Rule 23 of the CGST Rules, 2017 were discussed, emphasizing the requirements for revocation of cancellation of registration. The circular issued by the Central Board of Indirect Taxes & Customs clarified the conditions for filing a revocation application post-cancellation due to non-filing of returns.

Judgment and Order:
After reviewing the case records, written submissions, and oral arguments, the Commissioner found that the appellant had now complied with the necessary provisions. The Commissioner ordered the appellant to file the revocation application through the common portal. The proper officer was directed to consider the revocation application upon verification of payment details, return filings, and compliance with the CGST Act and rules. Consequently, the appeal was disposed of in favor of the appellant, allowing for the consideration of revocation of the GST registration.

This detailed analysis of the judgment highlights the issues of revocation of GST registration, compliance with legal provisions, and the final order for the revocation application to be considered by the proper officer.

Appeal successful in reinstating GST registration after compliance with filing requirements
The appeal was filed against the cancellation of GST registration due to non-filing of returns for six months. The appellant demonstrated compliance by filing returns and making payments. The Commissioner ordered the appellant to submit a revocation application through the portal for further verification, leading to a favorable disposition allowing consideration for revocation of GST registration.

Revocation of cancellation of registration - failure to furnish returns as bar to revocation - requirement to furnish returns and pay tax, interest and penalty before filing revocation - power of proper officer to reject revocation application after show cause and verification - verification of filing of returns and payment particulars prior to revocation - administrative clarification under Circular No. 99/18/2019-GSTFailure to furnish returns as bar to revocation - requirement to furnish returns and pay tax, interest and penalty before filing revocation - administrative clarification under Circular No. 99/18/2019-GST - Application for revocation could be considered only after compliance with the condition of furnishing the returns and payment of dues where cancellation arose from non-filing of returns. - HELD THAT: - The Commissioner (Appeals) examined the adjudicating authority's rejection of the revocation application on the ground that the appellant did not reply to the show cause notice. The appellate authority reproduced and applied Rule 23 of the CGST Rules, 2017 which provides that where registration is cancelled for failure to furnish returns, no application for revocation shall be filed unless such returns are furnished and amounts due in terms of such returns are paid; and noted the clarification in Circular No. 99/18/2019-GST that returns due till the date of cancellation must be furnished before filing for revocation. Having found that the appellant has now filed the returns and paid tax, interest and penalty up to the relevant period, the court held that the statutory precondition for consideration of revocation is satisfied. [Paras 6, 8, 9, 10]The appellate authority held that the appellant has complied with the condition of furnishing returns and payment of dues and therefore the statutory bar under Rule 23 no longer prevents consideration of revocation.Revocation of cancellation of registration - power of proper officer to reject revocation application after show cause and verification - verification of filing of returns and payment particulars prior to revocation - Whether the proper officer should reconsider the appellant's revocation application and the scope of such reconsideration. - HELD THAT: - The appellate authority directed that the appellant may file the revocation application through the common portal and ordered the proper officer to consider the revocation application. The consideration is to be subject to verification of the payment particulars, filing of returns and compliance with the provisions of the CGST Act and Rules. This does not amount to an adjudication on merits of revocation; rather, it remits the matter to the proper officer to undertake the prescribed verification and then decide the application under the procedure and timelines set out in Rule 23. [Paras 10, 11]The matter is remitted to the proper officer to consider the revocation application after verification of returns filed and payments made, and to pass orders in accordance with law.Final Conclusion: Appeal disposed by directing the appellant to file the revocation application on the common portal and by remitting the matter to the proper officer to consider and decide the revocation after verifying filing of returns and payment particulars in accordance with Rule 23 and relevant circular guidance.

2021 (1) TMI 1221 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Refund claims for input services & capital goods denied under CGST Act; inverted duty structure rules.
The appellate authority upheld the rejection of refund claims for input services and capital goods under the amended Rule 89(5) and Section 54(3) of the CGST Act, 2017. The appeals were dismissed, affirming that refund of ITC on input services and capital goods is not admissible under the inverted duty structure.

Refund of unutilised input tax credit due to inverted duty structure - definition of Net ITC excluding input services and capital goods - validity of Rule 89(5) as amended by Notification No.26/2018-C.T. - source-based restriction on refund entitlement - strict interpretation of refund/exemption provisions against the claimant - power to make retrospective rules under Section 164Refund of unutilised input tax credit due to inverted duty structure - definition of Net ITC excluding input services and capital goods - validity of Rule 89(5) as amended by Notification No.26/2018-C.T. - strict interpretation of refund/exemption provisions against the claimant - Refund of input tax credit attributable to input services and capital goods under the inverted duty structure is not admissible - HELD THAT: - The amended Rule 89(5) (Notification No.26/2018-C.T.) defines "Net ITC" as input tax credit availed on inputs during the relevant period, thereby excluding input services and capital goods from the Net ITC for purposes of refund on account of inverted duty structure. The Central Government had power under Section 164 to make the amendment, including retrospective effect. The Madras High Court in M/s. Tvl. Transtonnelstroy Afcons v. Union of India upheld that Section 54(3)(ii) legitimately restricts refund to unutilised credit accumulated on account of the rate of tax on input goods being higher than output tax rate, and that Rule 89(5) as amended conforms with Section 54(3)(ii). Refund provisions are analogous to exemptions and must be construed strictly; therefore any ambiguity is resolved in favour of revenue. The appellant's contention that Section 54(3) permits refund of ITC on services and that rules cannot curtail the statutory right is rejected because the amendment to Rule 89(5) is intra vires and imposes a permissible source-based restriction on refund entitlement and quantum. Applying these principles, the adjudicating authority correctly excluded ITC on input services/capital goods from refund computation and rejected the claimed amounts for the periods in question. [Paras 16, 17, 18, 21]Impugned orders rejecting refund claims in respect of ITC on input services/capital goods are upheld and the appeals are dismissed.Final Conclusion: The appeals are dismissed; the rejection of the refund claims for Aug., 2018 and March, 2019 insofar as they relate to input services and capital goods is upheld under Section 54(3) read with the amended Rule 89(5).

2021 (6) TMI 41 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Validity of Amended Rule 89(5) CGST Rules Upheld: Input Tax Credit Exclusion Confirmed
The adjudicating authority upheld the validity of the amended Rule 89(5) of the CGST Rules, 2017, as per Notification No. 26/2018-C.T., dated 13-6-2018, finding it in line with Section 54(3)(ii) of the CGST Act, 2017. The exclusion of Input Tax Credit (ITC) on input services and capital goods from the 'Net ITC' for refund purposes was deemed valid. Consequently, the appellant's refund claims were rejected, and all nine appeals filed by the appellant were dismissed.

Inverted duty structure - refund of unutilised input tax credit - Net ITC - validity of Rule 89(5) of the CGST Rules - scope of Section 54(3) of the CGST Act - ultra vires challenge to delegated legislation - rule-making power and retrospective effect under Section 164 - strict construction of exemption/refund provisionsValidity of Rule 89(5) of the CGST Rules - scope of Section 54(3) of the CGST Act - ultra vires challenge to delegated legislation - rule-making power and retrospective effect under Section 164 - Amendment to Rule 89(5) by Notification No. 26/2018-C.T., dated 13-6-2018 is intra vires Section 54(3) of the CGST Act and may be given retrospective effect. - HELD THAT: - The adjudicating authority examined the statutory scheme of Section 54(3) and the amendment to Rule 89(5) effected by Notification No. 26/2018-C.T., dated 13-6-2018. Relying on the rule-making power under Section 164(3), which permits retrospective rules not earlier than the commencement of the Act, and on judicial precedent (notably the reasoning in the batch decision of the Madras High Court in Tvl. Transtonnelstroy Afcons), the authority held that the substituted Rule 89(5) falls within the legislative scheme and does not transgress Section 54(3). The courtly reasoning accepted that Section 54(3)(ii) legitimately restricts refund entitlement to unutilised credit that accumulates on account of inputs (goods) and that the rule is a valid classification; consequently the ultra vires challenge to the rule was repelled. [Paras 12, 16]Amendment to Rule 89(5) is intra vires Section 54(3) and validly applied, including with retrospective effect as permitted by Section 164.Net ITC - inverted duty structure - refund of unutilised input tax credit - strict construction of exemption/refund provisions - The expression "Net ITC" in amended Rule 89(5) excludes input services and capital goods for the purpose of computing refund under the inverted duty structure formula, and that exclusion is consistent with Section 54(3). - HELD THAT: - The authority construed the amended definition of "Net ITC" in Rule 89(5) as limited to input tax credit on inputs (goods) during the relevant period, excluding input services and capital goods for the formulaic computation of refund under inverted duty structure. The decision noted precedent reasoning that refund provisions are to be construed strictly (analogy to exemption jurisprudence) and endorsed the view that Section 54(3)(ii) permits a source-based restriction limiting refund to credit accumulated by reason of inputs (goods) being taxed at higher rates. Consequently, Rule 89(5)'s definition and application were held to accord with the Act rather than being an impermissible curtailment. [Paras 17, 18]For the purposes of Rule 89(5) and refund under inverted duty structure, "Net ITC" does not include input services or capital goods; that interpretation is upheld.Refund of unutilised input tax credit - inverted duty structure - The appellant's refund claims were rightly rejected because the appellant failed to produce documents establishing ITC on inputs (goods) as distinct from input services/capital goods, and therefore the impugned orders are upheld. - HELD THAT: - After addressing the legal validity of the amended rule and its construction, the authority applied the law to the facts: the appellant's refund claims included ITC attributable to input services and capital goods, which are excluded from "Net ITC" under Rule 89(5). Moreover, the appellant did not produce documentary evidence showing ITC on inputs (goods) sufficient to satisfy the formulaic requirement despite opportunities to do so. On both legal and evidentiary grounds the adjudicating authority's rejection of the refund claims was found to be without infirmity and was therefore maintained. [Paras 7, 20]Refund claims rejected; impugned orders upheld for want of entitlement under amended Rule 89(5) and for failure to substantiate inputs-based ITC.Final Conclusion: All nine appeals are dismissed and the impugned orders rejecting the appellant's refund claims are upheld: the amended Rule 89(5) is validly made and construed to exclude input services and capital goods from "Net ITC" for inverted duty structure refunds, and on the facts the appellant failed to establish entitlement under that rule.

2021 (8) TMI 95 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues: (i) whether license fee and spectrum usage charges paid to the Government for telecom licence and spectrum use constituted supply under GST law and were chargeable to tax; (ii) whether such payments were consideration for supply; (iii) whether the refund claim was maintainable under section 54 of the Central Goods and Services Tax Act, 2017 and the relevant rules; (iv) whether the correct service classification and rate supported levy of GST on the impugned payments; and (v) whether there was violation of natural justice or any bar arising from pending litigation.

Issue (i): whether license fee and spectrum usage charges paid to the Government for telecom licence and spectrum use constituted supply under GST law and were chargeable to tax.

Analysis: The appellate authority treated the grant of licence and allocation of spectrum as a supply because "licence" is included within the statutory definition of supply and the activity was viewed as service connected with business operations. It relied on the reverse charge entry for services supplied by Government to a business entity and on the service-tax era treatment of licence fee and spectrum-related charges. On that basis, the authority held that the impugned amounts attracted GST.

Conclusion: The issue was decided against the appellant.

Issue (ii): whether such payments were consideration for supply.

Analysis: The authority held that the payments were not merely regulatory exactions but amounts paid in relation to the permission granted for telecom operations and spectrum use. It read the licence conditions and revenue-sharing structure as showing a direct nexus between the payments and the permission granted, and concluded that the element of consideration was present.

Conclusion: The issue was decided against the appellant.

Issue (iii): whether the refund claim was maintainable under section 54 of the Central Goods and Services Tax Act, 2017 and the relevant rules.

Analysis: The authority held that the refund was not covered under the category claimed and that the statutory scheme did not permit refund of input tax credit accumulated on input services in the manner asserted. It found the refund application to be legally unsustainable on the ground that the claimed category was improper.

Conclusion: The issue was decided against the appellant.

Issue (iv): whether the correct service classification and rate supported levy of GST on the impugned payments.

Analysis: The authority held that the proper classification was under the leasing and rental services heading, specifically licensing services for the right to use telecommunication spectrum. It further concluded that the applicable rate notification covered the service and that the appellant had used the wrong heading while paying tax, but that the underlying levy remained valid.

Conclusion: The issue was decided against the appellant.

Issue (v): whether there was violation of natural justice or any bar arising from pending litigation.

Analysis: The authority found that show-cause notices and opportunities of hearing had been given and rejected the contention of denial of hearing. It also held that the matter being sub judice did not justify sanction of refund at that stage and regarded the refund claim as premature in view of the pending writ proceedings.

Conclusion: The issue was decided against the appellant.

Final Conclusion: The appellate authority upheld rejection of the refund claims and held that the impugned payments were taxable under GST, with no procedural or statutory defect warranting interference.

Ratio Decidendi: Where a statutory licence and spectrum allotment are treated as taxable Government services for consideration under the GST framework, the related refund claim fails if the classification and levy are upheld and the refund sought is outside the statutory refund scheme.

GST on telecom licence and spectrum charges upheld, while the refund claim failed outside the statutory scheme.
Telecom licence fee and spectrum usage charges were treated as taxable Government services under GST because the grant of licence and access to spectrum was viewed as a supply made for consideration, with a direct nexus between the payment and permission to operate. The authority upheld classification under licensing and rental services for the right to use telecommunication spectrum, and found the applicable rate notification covered the levy. It also rejected the refund claim under section 54 as falling outside the claimed statutory category, and found no denial of hearing or bar arising from pending litigation. On that basis, the refund rejection was sustained.

Supply (including licence) in the course or furtherance of business - Consideration for supply - Reverse charge liability for services supplied by the Government to a business entity - Classification under Service Rate Notification (HSN Heading 9973 v. 9984) - Refund under Section 54 of the CGST Act - Effect of circulars/clarifications on levy - Prematurity of refund where taxability is sub judice - Principles of natural justice (audi alteram partem)Supply (including licence) in the course or furtherance of business - Reverse charge liability for services supplied by the Government to a business entity - License Fee and Spectrum Usage Charges paid to the Department of Telecommunications constitute supply of service liable to GST. - HELD THAT: - The provisions of the CGST Act (definitions of 'supply' and inclusion of 'licence') and historical treatment under the service tax regime establish that grant of licence and allocation/use of spectrum fall within services (HSN Heading 9973). The authority held that the grant of permission and allocation of spectrum enables the appellant to carry on its telecommunication business and therefore the activity is a supply in the course or furtherance of the appellant's business. Notification prescribing reverse charge for services by the Government to a business entity applies, thereby fastening statutory liability to pay GST on the recipient.Payments of LF and SUC are taxable supplies of service and taxable on reverse charge basis.Consideration for supply - Licence Fee and Spectrum Usage Charges constitute 'consideration' within the meaning of the CGST Act. - HELD THAT: - In light of the licence provisions in the Telegraph Act and the unified licence terms (AGR linked payments, definitional provisions and payment schedules), the amounts paid as LF and SUC meet the statutory definition of consideration. The authority concluded that there exist service provider and service recipient relationships and the payments are made in respect of the supply, satisfying the elements of 'consideration' under the Act.LF and SUC are consideration for the supply and therefore form the taxable base under GST.Classification under Service Rate Notification (HSN Heading 9973 v. 9984) - The correct classification of the activity is under HSN Heading 9973 (leasing/rental/licensing of natural resources including spectrum) rather than HSN Heading 9984. - HELD THAT: - The authority examined the Service Rate Notification and the scheme of classification and concluded that licensing services for the right to use telecommunication spectrum fall within Heading 9973 (and sub heading 997338). Consequently, the appellant's payment coded under 9984 was held to be an incorrect classification; the service attracts the rates and treatment applicable to the correct heading under the Notification framework.LF and SUC are classifiable under HSN Heading 9973 and not under 9984; the rate/notification regime applicable to 9973 governs their taxability.Refund under Section 54 of the CGST Act - The appellant's refund claim as filed was not maintainable under the category relied upon; refund of the claimed amount was rejected. - HELD THAT: - The authority noted that Section 54(3) and the Rules provide for refund of unutilised input tax credit on inputs and that there was no legal provision backing refund of input tax credit accumulated on input services in the manner claimed by the appellant. Consequently, the refund claim as presented was found not to fall within the prescribed categories under Section 54 and Rule 89.The refund claim is not covered under the category invoked and is not allowable; the impugned rejection is upheld.Effect of circulars/clarifications on levy - Circulars or past clarifications may be referred to for understanding taxability but cannot override statutory provisions; here the historical circulars confirm the activity is a service and do not negate GST liability. - HELD THAT: - While circulars under the erstwhile service tax regime (including the cited circular clarifying taxability of periodic payments like SUC) were considered, the authority relied on CGST statutory provisions and notifications to determine taxability. The circulars were treated as supportive of the conclusion that the activity is a service; they do not, by themselves, create or extinguish levy contrary to statute.Circulars do not exempt the levy; statutory provisions and notifications govern taxability and support taxation of LF and SUC.Prematurity of refund where taxability is sub judice - Granting the refund was inappropriate while the taxability issue was the subject of pending litigation before a higher court; the claim was premature. - HELD THAT: - The authority observed that the appellant had concurrently filed litigation before the High Court on the taxability issue. Where the same question of taxability is sub judice in a Higher Court, the adjudicating authority considered it inappropriate to sanction refund at that stage and treated the refund application as premature.Refund was not to be sanctioned pending the outcome of the Higher Court proceedings; the claim was premature.Principles of natural justice (audi alteram partem) - The adjudicating process did not violate principles of natural justice; adequate opportunity was provided. - HELD THAT: - The authority reviewed the procedural history (issuance of show cause notices, scheduling of hearings and the opportunity for personal hearing including virtual hearing in appeal) and concluded that the appellant was given appropriate opportunity to present its case. The assertion of denial of hearing was rejected on the record.There was no breach of natural justice in the proceedings; the impugned orders do not suffer from procedural infirmity on this ground.Final Conclusion: The appeals are dismissed. The adjudicating authority's rejection of the refund claims for the specified periods is affirmed: LF and SUC were held to be taxable supplies (classifiable under HSN 9973) with consideration payable by the appellant, the refund claim as presented was not maintainable, refund was premature while taxability remains sub judice, and no breach of natural justice is found.

2021 (7) TMI 1214 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Appellate authority remands case for re-examination of Input Tax Credit eligibility & refund claim, directs personal hearing and reasoned order.
The appellate authority remanded the case back to the adjudicating authority for re-examination of the eligibility of Input Tax Credit (ITC) and the refund claim. The adjudicating authority was directed to provide a personal hearing to the appellant and issue a reasoned speaking order. The appeal was disposed of in favor of the appellant for further review and consideration.

Eligibility for input tax credit - refund under Section 54 - refund of accumulated ITC due to inverted tax structure - cancellation of registration and its effect on input tax credit - requirement of notice and opportunity to reply under Rule 92(3) - natural justice - opportunity of being heard - remand for fresh examination and speaking orderEligibility for input tax credit - refund of accumulated ITC due to inverted tax structure - cancellation of registration and its effect on input tax credit - requirement of notice and opportunity to reply under Rule 92(3) - natural justice - opportunity of being heard - Whether the remaining portion of the refund claim (disallowed by the adjudicating authority on account of invoices of M/s. Astha Trading Company) ought to be examined afresh and adjudicated after giving the appellant an opportunity of being heard. - HELD THAT: - The adjudicating authority issued FORM GST RFD-08 enquiring into admissibility of part of the refund claimed on account of ITC relating to invoices of M/s. Astha Trading Company and thereafter sanctioned a part of the claim in FORM RFD-06 while treating the disputed amount as a "Wrong ITC Claim." The appellant contended that supplies were received, requisite documents (tax invoices, e way bills, transport and weighment documents) exist, supplier had filed returns for the relevant month, and that denial on account of later cancellation of the supplier's registration is not a ground to deny bona fide ITC without establishing fraud, collusion or other disqualifying circumstances. Relevant statutory provisions and rules (including the conditions in Section 16 for entitlement to ITC, the power of retrospective cancellation under Section 29, the refund scheme under Section 54, and the procedure and requirement of notice and reply under Rule 92(3)) were considered. In view of these facts and the submissions about lack of personal hearing and the need for detailed examination of eligibility of ITC, the Commissioner (Appeals) concluded that the matter requires fresh consideration by the adjudicating authority so that the disputed eligibility can be examined on merits, the appellant may place relevant documents and averments on record, and a reasoned speaking order be passed after affording opportunity of hearing, consistent with the proviso that no refund shall be rejected without giving the applicant an opportunity of being heard. [Paras 11, 12, 13]The matter is remanded to the adjudicating authority to examine in detail the eligibility of the contested ITC and the balance refund claim, to afford the appellant an opportunity of being heard, to accept relevant averments and documents, and to pass a reasoned speaking order.Final Conclusion: The appeal is disposed of by remanding the case to the adjudicating authority for fresh examination of the disputed ITC/refund claim and for passing a reasoned order after giving the appellant an opportunity to be heard; the appellant is directed to furnish relevant averments and documents before the adjudicating authority.

2021 (7) TMI 1116 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Issues:
1. Rejection of refund claim by the Adjudicating Authority.
2. Alleged procedural irregularities in issuing show cause notice.
3. Discrepancy in re-crediting the amount to the Electronic Cash Ledger.
4. Dealing with the amount paid through DRC-03 separately.

Analysis:
1. The appeal was filed against the impugned order rejecting the refund claim of the appellant. The appellant contended that the amount deposited through DRC-03 was for the appeal allowed by the Commissioner (Appeals)-II, State Tax, Haridwar. The Adjudicating Authority held that the appellant had not debited the Electronic Cash Ledger as required by Section 49(3) of the CGST Act, 2017, thus rejecting the refund claim.

2. The appellant raised concerns about the show cause notice being issued without a Document Identification Number (DIN), citing Circular No. 128/47/2019-GST mandating the use of DIN for transparency. However, the Adjudicating Authority found no merit in this argument, stating that the online system of the GSTN portal allows for easy verification of records, rendering the absence of DIN insignificant.

3. The appellant highlighted the failure to re-credit the amount to the Electronic Cash Ledger post the refund order. Despite the acknowledgment by the Assistant Commissioner that the amount was eligible for re-credit, the appellant claimed non-compliance. The Commissioner of CGST agreed that the amount should be re-credited but no action was taken, leading to dissatisfaction on the appellant's part.

4. The Adjudicating Authority addressed the separate issue of the amount paid through DRC-03, dated 3-6-2020, stating it was eligible for re-credit. However, the appellant raised concerns over the non-re-credit of the amount to the Electronic Cash Ledger, emphasizing the lack of resolution despite raising the issue with the Assistant Commissioner and the Commissioner of CGST.

In conclusion, the appeal was rejected by the Adjudicating Authority, upholding the decision to reject the refund claim based on the failure to debit the Electronic Cash Ledger as required by law. The procedural irregularities in issuing the show cause notice were deemed insignificant due to the verifiability of records on the GSTN portal. The discrepancy in re-crediting the amount to the Electronic Cash Ledger remained unresolved, causing dissatisfaction on the part of the appellant. The issue of the amount paid through DRC-03 was acknowledged as eligible for re-credit, but the failure to re-credit led to further contention.

Adjudicating Authority upholds rejection of refund claim for failure to debit Electronic Cash Ledger. Procedural issues deemed insignificant.
The appeal was rejected by the Adjudicating Authority, upholding the decision to reject the refund claim due to the failure to debit the Electronic Cash Ledger as required by law. Procedural irregularities in issuing the show cause notice were considered insignificant. The discrepancy in re-crediting the amount to the Electronic Cash Ledger remained unresolved, causing dissatisfaction. The amount paid through DRC-03 was acknowledged as eligible for re-credit, but the failure to re-credit led to further contention.

Refund of tax paid pursuant to appellate order - filing refund claim in the category of appeals - requirement of debit from Electronic Cash Ledger under Section 49(3) - re-credit to Electronic Cash Ledger - validity of departmental communication issued without DINRefund of tax paid pursuant to appellate order - filing refund claim in the category of appeals - requirement of debit from Electronic Cash Ledger under Section 49(3) - Whether the impugned order rejecting the refund claim filed in the category of appeals was justified on the ground that the amount had not been discharged by debiting the Electronic Cash Ledger at the time of filing the appeal. - HELD THAT: - The adjudicating authority rejected the refund claim on the basis that, although the appellant had deposited the amount into the Electronic Cash Ledger, he had not discharged the tax and penalty liability by debiting the Electronic Cash Ledger in consonance with Section 49(3) of the CGST Act, 2017, and therefore no amount had been expended or debited when the appeal was filed. The Commissioner (Appeals) examined the records, noted that RFD-01 was filed for refund of the amounts deposited pursuant to the appellate order, but found de jure that no liability had been discharged by debiting the ledger and that the amount remained available for use in the Electronic Cash Ledger. On this basis the Commissioner concluded that the Assistant Commissioner had correctly rejected the refund claim as wrongly filed under the category of appeals where no debit had been effected, and found no infirmity in that conclusion. [Paras 6, 7, 10]Impugned order rejecting the refund claim on the stated ground is upheld.Re-credit to Electronic Cash Ledger - Whether the amount paid subsequently through DRC-03 and the question of re-credit to the Electronic Cash Ledger required separate consideration. - HELD THAT: - The Commissioner observed that the payment made by the appellant through DRC-03 dated 3-6-2020 and the matter of its re-credit to the Electronic Cash Ledger is a distinct issue governed by the Act and Rules. While the proper officer had indicated that the amount was eligible for re-credit, the Commissioner treated the legal and procedural consequences of the DRC-03 payment and the mechanics of re-credit as a separate matter to be addressed under the statutory scheme rather than as part of the refund adjudication which was rejected for the reason stated above. [Paras 8]The question of re-credit of the amount paid via DRC-03 is a separate issue to be dealt with under the provisions of the Act and Rules.Validity of departmental communication issued without DIN - Whether the show cause notice and the impugned order issued without a DIN are invalid and void ab initio. - HELD THAT: - The appellant contended that the show cause notice was invalid for failure to quote a DIN as mandated by the CBIC circular. The Commissioner did not accept this contention, noting that genuineness of records and references can be verified in the online GSTN system and that the impugned order properly addressed the contesting submissions. The Commissioner therefore found no merit in treating the communications as invalid solely on account of absence of a DIN in the online system context. [Paras 9]The plea of invalidity of the show cause notice and order for absence of DIN is rejected.Final Conclusion: The appeal is dismissed. The Commissioner (Appeals) upholds the rejection of the refund claim on the ground that the tax and penalty had not been discharged by debiting the Electronic Cash Ledger at the relevant time; the question of re-credit of amounts paid via DRC-03 remains a separate issue to be dealt with under the Act and Rules, and the contention of invalidity of communications for absence of DIN is rejected.

2021 (1) TMI 1168 - COMMISSIONER OF GST (APPEALS), JAIPUR GST

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Appellate authority affirms rejection of refund claim citing time-bar, GSTR-3B, Section 54(3); appeal dismissed. (1)
The appellate authority upheld the adjudicating authority's decision, confirming the rejection of the refund claim. The appellant's arguments regarding the time-barred application, the validity of GSTR-3B as a return, the applicability of Section 54(3) for unutilized ITC refunds, and the incorrect category of the refund claim were all dismissed. The appeal was disposed of, affirming that the refund application was untimely, the correct interpretation of the relevant date for the claim, the two-year time limit for refund applications under Section 54(1), and the misclassification of the refund claim.

Refund of unutilised input tax credit - time bar under Section 54(1) read with Explanation (2)(e) to Section 54 - relevant date for refund of ITC accumulated due to inverted tax structure - retrospective amendment of Rule 61(5) by Notification No. 49/2019 - calculation of refund under Rule 89(5) - classification of refund claim (inverted duty structure vs. IGST on import)Refund of unutilised input tax credit - time bar under Section 54(1) read with Explanation (2)(e) to Section 54 - Refund claim for the period October, 2017 to December, 2017 is time barred and liable to be rejected. - HELD THAT: - The adjudicating authority rejected the refund application in part on the ground that the claim for October-December 2017 was filed after the expiry of two years from the relevant date. Section 54(1) prescribes that refund applications must be made before expiry of two years from the relevant date, and the definition of relevant date (Explanation (2)(e)) governs refund of unutilised ITC arising from inverted duty structure. Applying these provisions, the authority found that the claim for October-December 2017, filed on 5 2 2020, was beyond the two year limitation and therefore time barred. The appellate authority concurred with this conclusion and found no merit in the appellant's contention that Section 54(3) dispenses with the two year limit. The two year limitation under Section 54(1), read with the relevant explanation, applies to refund of unutilised ITC; the specific provision relied on by the appellant does not oust the limitation. Accordingly, the claim for October-December 2017 was correctly rejected as time barred. [Paras 6]Claim for October, 2017 to December, 2017 is time barred and rejection is upheld.Relevant date for refund of ITC accumulated due to inverted tax structure - retrospective amendment of Rule 61(5) by Notification No. 49/2019 - Notification No. 49/2019 does not validate computing the two year period from 9 10 2019 for the purpose of the appellant's refund claim. - HELD THAT: - The appellant argued that GSTR 3B was declared a return under Section 39 only by Notification No. 49/2019 (dated 9 10 2019) and that therefore the two year limitation should be reckoned from that date. The appellate authority examined the notification and observed that it had retrospective effect from 1 7 2017 by substituting Rule 61(5), thereby declaring the circumstances in which GSTR 3B operates as the return specified under Section 39. The authority held that the appellant's interpretation-treating 9 10 2019 as the relevant date for computing limitation-was a misreading of the notification. The retrospective operation and the statutory scheme did not afford the appellant a fresh two year period from 9 10 2019, and the contention was accordingly rejected. [Paras 6]Appellant's contention that the two year period begins from 9 10 2019 is rejected; the notification does not validate the claim as timely.Calculation of refund under Rule 89(5) - No refund was available for the period January, 2018 to March, 2018 after recomputation under the Rule 89(5) formula. - HELD THAT: - The adjudicating authority re calculated the refundable amount for January-March 2018 using the formula in Rule 89(5) and recorded that there was no refund payable. The appellate authority reviewed the recalculation and agreed with the adjudicating authority's application of the statutory formula (Maximum Refund Amount = {(Turnover of inverted rated supply) x Net ITC / Adjusted Total Turnover} - tax payable on such supplies). On that basis, it held that no refund was due for January-March 2018. The appellate authority accepted the adjudicating authority's factual and mathematical conclusion and found no infirmity. [Paras 6]Claim for January, 2018 to March, 2018 yields no refund on recomputation under Rule 89(5); rejection is upheld.Classification of refund claim (inverted duty structure vs. IGST on import) - The appellant's refund claim was filed in an incorrect category; the claim related to IGST on import rather than to inverted duty structure as per Section 54(3). - HELD THAT: - The appellant asserted that IGST paid in cash on import was lying unutilised following business closure and that refund should be allowed. The appellate authority observed that the claim was presented as one for accumulation due to inverted duty structure under Section 54(3), but on the material on record the circumstances did not fit the scheme of inverted duty refund. The authority concluded that the refund claim was pleaded in the wrong category and that the filings did not establish entitlement under the inverted duty provisions. This classification error further supported the rejection of the claim. [Paras 6]Refund claim misclassified; it pertains to IGST on import rather than refund under inverted duty provisions, supporting rejection.Appellant's assent to show cause notice - Rejection of the refund claim is sustainable because the appellant agreed with the show cause notice and recorded no objection. - HELD THAT: - The impugned order recorded that the claimant agreed with the show cause notice and had no objection to rejection of the refund claim. The appellate authority found that this concurrence by the appellant rendered the adjudicating authority's rejection proper. Given the appellant's assent to the factual and legal bases in the show cause notice, there was no ground to interfere with the adjudicating authority's exercise of power in rejecting the claim. [Paras 6, 7]Appellant's agreement with the show cause notice renders the adjudicating authority's rejection proper; the appellate order upholds the rejection.Final Conclusion: The appellate authority upheld the Order in Original rejecting the refund application. The claim for October-December 2017 was held time barred; the claim for January-March 2018 yielded no refundable amount on recomputation under Rule 89(5); the appellant's contention that Notification No. 49/2019 created a fresh two year period was rejected; the claim was also found to be misclassified. The appeal is dismissed and the adjudicating authority's order is affirmed.

2021 (4) TMI 471 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Appellate authority remands case for fair hearing and justification of refund claim
The appellate authority remanded the case back to the adjudicating authority due to violations of natural justice principles. The adjudicating authority failed to provide the appellant with a fair opportunity for a hearing and did not consider the extended time limits due to COVID-19. Additionally, the rejection of the refund claim based on ITC mismatches was not adequately justified. The appellant was instructed to resubmit all relevant documents for a fresh decision ensuring a fair process and detailed reasoning by the adjudicating authority.

Opportunity of hearing under Section 75(4) of the CGST Act - proviso to Rule 92(3) of the CGST Rules - no refund to be rejected without giving opportunity of hearing - Notification No. 35/2020 - extension of time limits due to COVID-19 - mismatch between Form GSTR-3B and Form GSTR-2A in refund claims - Circular No. 139/09/2020 - treatment of ITC on imports, ISD and RCM supplies for refund - non speaking order vitiates proceedings / denial of audi alteram partem - remand for fresh adjudication and passing of a speaking orderOpportunity of hearing under Section 75(4) of the CGST Act - proviso to Rule 92(3) of the CGST Rules - no refund to be rejected without giving opportunity of hearing - Notification No. 35/2020 - extension of time limits due to COVID-19 - non speaking order vitiates proceedings / denial of audi alteram partem - Adjudicating authority rejected the refund claim without affording adequate opportunity of hearing and without a speaking order; whether the matter requires fresh adjudication. - HELD THAT: - The adjudicating authority issued a FORM RFD 08 and rejected the refund on account of mismatch in ITC but proceeded to pass the impugned RFD 06 without giving the appellant effective opportunity to file its reply or a personal hearing. The appellant had filed FORM RFD 09 seeking time to reply because of the COVID 19 lockdown. The Tribunal noted that Notification No. 35/2020 extended time limits for filing replies up to 31 8 2020 and found the appellant's explanation for non submission acceptable. Rule 92(3) and its proviso require that no refund application be rejected without giving the applicant an opportunity of being heard and that the officer's reasons be recorded. The order under challenge did not discuss the mismatch in detail and was non speaking; such procedure amounts to denial of natural justice. In these circumstances the Commissioner (Appeals) held that the adjudicating authority ought to reconsider the matter after granting opportunity and passing a speaking order setting out relevant facts and basis of decision. [Paras 9, 11, 12]Matter remanded to the adjudicating authority to decide afresh after affording the appellant opportunity of hearing in accordance with Section 75(4), Rule 92(3) and Notification No. 35/2020, and to pass a speaking order.Mismatch between Form GSTR-3B and Form GSTR-2A in refund claims - Circular No. 139/09/2020 - treatment of ITC on imports, ISD and RCM supplies for refund - remand for fresh adjudication and passing of a speaking order - Whether the adjudicating authority should have considered the appellant's submissions on causes of mismatch between GSTR 3B and GSTR 2A (including imports, ISD, RCM and timing differences) and Circular No.139/09/2020 before rejecting the refund claim. - HELD THAT: - The appellant explained that differences between net ITC in GSTR 3B and GSTR 2A may arise from ITC on imports, ISD invoices and reverse charge inward supplies, details of which may not appear in GSTR 2A, and cited Circular No.139/09/2020 which recognises that such ITC may be relevant for refund. The Commissioner (Appeals) observed that these contentions were not considered by the adjudicating authority and that the rejection order did not address the mismatch issue in a speaking manner. Because the adjudicating authority has not examined the appellant's factual and legal submissions on the mismatch and the Circular, the issue of admissibility of the claimed refund was not finally adjudicated and requires fresh consideration. [Paras 8, 12]Issue remanded for fresh consideration by the adjudicating authority, which shall examine the appellant's submissions (including applicability of Circular No.139/09/2020 and timing/import/ISD/RCM explanations) and record reasons in a speaking order.Final Conclusion: Appeal disposed by remanding the matter to the adjudicating authority for fresh adjudication: the adjudicating authority is directed to afford the appellant opportunity of hearing in terms of applicable law and Notification No.35/2020, consider the appellant's submissions (including those on mismatch between GSTR 3B and GSTR 2A and Circular No.139/09/2020), and pass a reasoned speaking order; the appellant to file relevant documents and submissions before the adjudicating authority.

2021 (6) TMI 20 - COMMISSIONER (APPEALS) CENTRAL GOODS AND SERVICE TAX, JAIPUR GST

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Appeal rejected as refund application deemed time-barred under amended CGST Act; procedural compliance required.
The appeal was rejected, and the order of the adjudicating authority was upheld. The appellant's refund application was deemed time-barred under the amended provisions of Section 54 of the CGST Act, 2017, as the fresh application was filed beyond the two-year limit from the relevant date. The substantive right to refund was acknowledged, but procedural compliance with the amended time limit was necessary.

Refund of unutilised input tax credit - relevant date for refund - time bar under Section 54(1) - prospective operation of statutory amendment - fresh refund application under Rule 90(3) - rectified application treated as fresh application - Circular No. 125/44/19 GST and its effect - deficiency memo and portal technical glitchesProspective operation of statutory amendment - relevant date for refund - The amendment to the explanation of "relevant date" made w.e.f. 1 2 2019 has prospective effect. - HELD THAT: - The CGST (Amendment) Act, 2018 brought the changed definition of "relevant date" into force from 1 2 2019 and contains no provision making the change retrospective. Rules of statutory interpretation indicate that a newly introduced provision is to be given prospective operation unless the amending statute expressly provides otherwise or is clarificatory of an existing provision. Applying these principles, the changed explanation to Section 54 was held to operate prospectively from 1 2 2019. [Paras 7]The amended explanation to Section 54 for computing the "relevant date" operates prospectively from 1 2 2019.Time bar under Section 54(1) - relevant date for refund - fresh refund application under Rule 90(3) - The fresh refund application filed on 25 1 2020 is beyond two years from the relevant date as defined by the amended provision and is therefore time barred. - HELD THAT: - Having held that the amended definition of "relevant date" applies prospectively, the due date for furnishing the return under Section 39 for the period in which the refund arises is to be used for reckoning the two year limitation for refund claims arising after 1 2 2019. The rectified (fresh) refund application in the present matter was filed on 25 1 2020; applying the amended reckoning, that filing falls outside the two year period from the relevant date and is accordingly time barred. [Paras 7, 8]The rectified/fresh refund application dated 25 1 2020 is time barred under the amended computation of the relevant date and cannot be entertained.Rectified application treated as fresh application - Circular No. 125/44/19 GST and its effect - A rectified refund application filed pursuant to a deficiency memo is to be treated as a fresh application and must satisfy the time limit requirement indicated in Circular No.125/44/19 GST where applicable. - HELD THAT: - Rule 90(3) requires that where deficiencies are noticed, the proper officer shall communicate them and require the applicant to file a fresh refund application after rectification. The CBIC Circular clarifies that a rectified application is given a new ARN and is to be treated as a fresh application; such rectified applications must also be submitted within two years of the relevant date as defined in the Explanation to Section 54. The adjudicating authority applied this framework to conclude that the rectified filing filed after issuance of the deficiency memo is a fresh filing subject to the two year limitation. [Paras 6, 8]The rectified application filed in response to the deficiency memo is a fresh application and must meet the limitation requirement; it was not filed within the period required under the amended reckoning.Deficiency memo and portal technical glitches - refund of unutilised input tax credit - Technical difficulties on the GST portal and the short interval between issuance of the deficiency memo and rectification do not excuse non compliance where the rectified filing, treated as a fresh application, falls outside the prescribed period under the amended reckoning. - HELD THAT: - The appellant submitted that portal glitches caused the omission of supporting documents in the original filing on 20 1 2020 and that the deficiency was rectified on 25 1 2020 within two days of the deficiency memo. While factual circumstances of portal malfunction were recorded, the legal consequence is that a rectified filing treated as a fresh application must meet the statutory/circular time limit. Because the rectified filing occurred after the applicable two year period under the amended definition of relevant date, the procedural difficulties did not alter the conclusion that the fresh filing was time barred. [Paras 6, 8]Portal technical glitches and the short interval for rectification do not validate a rectified filing that is time barred under the applicable limitation.Final Conclusion: The appeal is dismissed. The amended definition of "relevant date" (effective 1 2 2019) is to be applied prospectively, a rectified refund application filed on 25 1 2020 was treated as a fresh application and falls outside the two year limitation as computed under the amended provision, and therefore the original Order in Original rejecting the refund claim is upheld.

2021 (7) TMI 1115 - COMMISSIONER OF GST AND CENTRAL EXCISE (APPEALS-II), CHENNAI GST

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Issues involved:
1. Refund application rejection based on the timing of foreign exchange receipt.
2. Jurisdiction of the respondent to reject the refund application.
3. Interpretation of relevant provisions in determining refund eligibility.
4. Compliance with principles of natural justice in passing the impugned Order.

Detailed Analysis:
1. The appellant filed a refund application for May 2018 and received provisional refund. The respondent alleged that the refund was erroneous as the relevant payment was received in January 2019, not within the claimed period. The respondent denied the refund, stating the appellant was not eligible. The appellant argued that they received convertible foreign exchange in May 2018, supporting it with bank statements and CA certificate. The respondent's rejection was based on the date of invoice, not actual receipt, leading to the appeal against the impugned Order.

2. The appellant contended that the respondent lacked jurisdiction to reject the refund application. They argued that the rejection was against natural justice, equity, and fair play. The appellant emphasized that the respondent failed to consider their receipt of foreign exchange in May 2018, which was crucial for the refund claim. The grounds of appeal highlighted the procedural and legal flaws in the respondent's decision.

3. The dispute centered on the calculation of the turnover of zero-rated supply of services under Rule 89(4) of the CGST Act, 2017. The formula for refund amount determination includes turnover components. The appellant's eligibility hinged on the payments received during the relevant period for zero-rated services. The relevant period was crucial in assessing refund entitlement, and the appellant argued that the respondent misinterpreted this period, leading to the erroneous rejection.

4. The impugned Order was critiqued for lacking a robust judicial process and not considering the appellant's submissions adequately. Despite fulfilling the principles of natural justice on the surface, the Order did not reflect a comprehensive adjudication process. The appellant's right to reply to the Show Cause Notice and present their case was not fully acknowledged. The judgment emphasized the importance of a complete judicial process and directed the respondent to pass a fresh Order after allowing the appellant to respond and participate in the adjudication process fully.

In conclusion, the judgment highlighted the significance of adhering to legal provisions, principles of natural justice, and correct interpretation of relevant rules in determining refund eligibility. The appellant's claim for refund was upheld, emphasizing the need for a fair and thorough adjudication process in such matters.

Court overturns refund rejection, emphasizes legal compliance, natural justice, and correct interpretation
The appellant's refund application was initially rejected by the respondent based on the timing of foreign exchange receipt. The appellant argued that they received convertible foreign exchange within the claimed period, supporting it with evidence. The rejection was challenged on grounds of jurisdiction, natural justice, and misinterpretation of relevant provisions. The court found in favor of the appellant, emphasizing the importance of adhering to legal provisions, natural justice principles, and correct interpretation of rules in refund eligibility determinations. The respondent was directed to pass a fresh order after allowing the appellant full participation in the adjudication process.

Turnover of zero-rated supply of services - relevant period - payments received during the relevant period - Rule 89(4) of CGST Rules, 2017 - erroneous refund and recovery under Section 73 of CGST Act, 2017 - principles of natural justiceTurnover of zero-rated supply of services - relevant period - payments received during the relevant period - Rule 89(4) of CGST Rules, 2017 - Calculation of 'turnover of zero-rated supply of services' for refund under Rule 89(4) - whether payments for exports must be received within the same invoice period or only payments received during the claimed (relevant) period are to be considered. - HELD THAT: - The adjudicating authority confined 'payments received during the relevant period for zero-rated supply of services' to receipts only if those were against supplies made in the same period, treating invoice date as determinative. The appellate authority held that Rule 89(4) requires consideration of payments actually received during the relevant period, not a linkage that payments for exports made in that period must also be received within that period. Where an export invoice is dated 31-5-2018 it may be impossible for proceeds to be realized within that same day or month; the proper approach is to ascertain whether convertible foreign exchange was in fact received during the relevant period (May, 2018) and, if so, include those receipts when determining 'turnover of zero-rated supply of services' for the refund formula. The appellant's bank statement and chartered accountant certificate were materials that the respondent should verify in this exercise. The matter of entitlement therefore requires re-determination by the respondent after ascertaining actual receipt of foreign exchange in the relevant period. [Paras 7, 8]Payments actually received during the claimed period (May, 2018) are to be considered for computing 'turnover of zero-rated supply of services' under Rule 89(4); the respondent must re-determine entitlement after verifying actual foreign exchange receipts for that period.Erroneous refund and recovery under Section 73 of CGST Act, 2017 - principles of natural justice - Validity of the impugned order demanding recovery on the ground of erroneous sanction where the appellant was not heard on substantive submissions and evidence. - HELD THAT: - Although a Show Cause Notice with time and a hearing date was issued, the impugned order was rendered without considering the appellant's substantive contrary stand and documentary evidence that had not been placed before the respondent. An adverse order seeking recovery cannot be sustained unless the contra case has been considered in a complete and robust judicial process. Given that material submissions and supporting documents relating to receipt of foreign exchange in the relevant period had not been examined by the respondent, the appellate authority quashed the impugned order and directed a fresh, speaking adjudication in which the appellant shall be given an opportunity to reply to the SCN and to be heard. [Paras 9, 10]Impugned order quashed for failure to adjudicate after considering the appellant's contra submissions; respondent directed to pass a fresh, speaking order after affording opportunity and verifying receipts for the relevant period.Final Conclusion: The impugned order is quashed; the respondent is directed to re-determine the appellant's refund entitlement by verifying convertible foreign exchange receipts for May, 2018 and to pass a fresh speaking order on merits after affording the appellant an opportunity to reply to the SCN and be heard.

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