2021 (2) TMI 551 - Commissioner - GST

Appeal dismissed due to procedural non-compliance in procurement from DTA units

IN RE : MEGA JEWELS PVT. LTD.

IN RE : MEGA JEWELS PVT. LTD. - 2020 (42) G.S.T.L. 353 (Commr. Appl. - GST - Raj.) Issues Involved:1. Rejection of refund claim due to non-compliance with procedural requirements for procurement of goods from Domestic Tariff Area (DTA) units.2. Requirement of furnishing an undertaking for refund claims.3. Applicability of procedural compliance for deemed exports.Issue-wise Detailed Analysis:1. Rejection of Refund Claim Due to Non-Compliance with Procedural Requirements for Procurement of Goods from DTA Units:The appellant, a 100% Export Oriented Unit (EOU), filed a refund claim under Section 54 of the CGST Act, 2017, for the period of November 2017, amounting to Rs. 5,79,552. The adjudicating authority rejected the claim on the grounds that the appellant did not follow the prescribed procedure for procurement of goods from DTA units as outlined in Circular No. 14/14/2017-GST, dated 6-11-2017. Specifically, the appellant failed to provide prior intimation in Form A, pre-approved by the Development Commissioner, to the registered supplier and the jurisdictional officers.The appellant argued that the procedural requirements were newly introduced in November 2017 and that there was ambiguity and lack of clarity in the procedures. They contended that the procedural non-compliance was of a technical nature and should be condoned, citing legal precedents that support substantial compliance over strict procedural adherence.2. Requirement of Furnishing an Undertaking for Refund Claims:The appellant contested the requirement of furnishing an undertaking as specified in Para 4 of Circular No. 24/24/2017-GST, dated 21-12-2017. They argued that this requirement was applicable only when the supplier of deemed export intended to file a refund claim, not the recipient. The appellant submitted that they had obtained such undertakings from most suppliers to demonstrate compliance, even though it was not mandated for the recipient under the rules.The adjudicating authority held that the undertaking was mandatory in both scenarios—whether the refund claim was filed by the supplier or the recipient. This was further supported by Para 41 of Circular No. 125/44/2019-GST, dated 18-11-2019, which reiterated the need for compliance with the procedural requirements laid down in Circular No. 14/14/2017-GST.3. Applicability of Procedural Compliance for Deemed Exports:The appellant argued that the procedure prescribed by Circular No. 14/14/2017-GST was only applicable to suppliers of goods claiming deemed export benefits under Section 147 of the CGST Act. They contended that as recipients of deemed exports, they were not required to follow this procedure. The appellant also highlighted that there was no system in place for issuing pre-approved Form A by the Development Commissioner, which was confirmed through discussions and written communication with the Development Commissioner, Noida SEZ.The adjudicating authority, however, maintained that the appellant, as a recipient of deemed exports, was required to comply with the procedural safeguards outlined in Circular No. 14/14/2017-GST. The authority emphasized that the procedures were in addition to the terms and conditions of the Foreign Trade Policy (FTP) 2015-20 and the duty exemption notifications availed by such units.Conclusion:The adjudicating authority rejected the appeal, concluding that the appellant failed to comply with the procedural requirements for procurement of goods from DTA units and the mandatory furnishing of undertakings. The authority found the appellant's arguments and cited case laws inapplicable to the present case, upholding the initial rejection of the refund claim.