Refund claims allowed for IGST & CGST, rejection upheld for inadmissible credit under Section 17(5) The appeals were disposed of by allowing the refund claims related to IGST and CGST due to higher drawback claims. However, the rejection of refund for ...
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Refund claims allowed for IGST & CGST, rejection upheld for inadmissible credit under Section 17(5)
The appeals were disposed of by allowing the refund claims related to IGST and CGST due to higher drawback claims. However, the rejection of refund for inadmissible credit under Section 17(5) of the CGST Act, 2017 was upheld.
Issues: Appeals under Section 107 of the CGST Act, 2017 against Refund Sanction/Rejection orders.
Analysis: 1. The appeals were filed by a company engaged in manufacturing and trading of ceramic handicraft items, seeking refund under Section 54 of the CGST Act, 2017 for unutilized ITC on zero-rated supplies. The refund claims were rejected due to alleged higher drawback claims and inadmissible credit under Section 17(5) of the Act.
2. The appellant contended that the rejection based on claiming higher drawback was faulty as the rates of drawback were the same for customs component only. The appellant cited Circular No. 22/2017-Cus. and Notification No. 131/2016-Cus. to support their claim that the higher drawback was permissible during the transition period from July to September 2017.
3. The Additional Commissioner noted that the appellant correctly claimed only the customs component of the drawback for their exports, as per Circular No. 22/2017-Cus. and Notification No. 131/2016-Cus. The Circular also allowed claiming only the Customs portion of AIRs of duty drawback during the transition period.
4. Referring to Circular No. 37/11/2018-GST and Circular No. 125/44/2019-GST, the Commissioner clarified that a supplier availing drawback only on basic custom duty is eligible for refund of unutilized input tax credit. Based on these clarifications, the appeals were allowed to the extent of rejection of refund of IGST and CGST due to higher drawback claims.
5. However, the rejection of refund for inadmissible credit under Section 17(5) of the CGST Act, 2017 was upheld as no valid grounds were presented by the appellant against it.
6. Consequently, the appeals were disposed of by allowing the refund claims related to IGST and CGST due to higher drawback claims, while rejecting the appeals regarding inadmissible credit under Section 17(5) of the Act.
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