2021 (12) TMI 419 - HC - GST

Court remits refund claim for fresh decision on interpretation of 'subsequently held' circular

The court remitted the matter back to the appellate authority for a fresh decision on the petitioner's refund claim. The court directed a review based on ... Interpretation of the term 'subsequently held' in relation to refund under Section 77 of the CGST Act and Section 19 of the IGST Act - availability of refund where the supplier himself subsequently determines a supply to be intra State or inter State - remand for fresh consideration in light of a clarificatory circularInterpretation of the term 'subsequently held' in relation to refund under Section 77 of the CGST Act and Section 19 of the IGST Act - availability of refund where the supplier himself subsequently determines a supply to be intra State or inter State - remand for fresh consideration in light of a clarificatory circular - Order of the appellate authority rejecting the refund claim was set aside and the matter remitted for fresh adjudication in light of the clarificatory circular dated 25.09.2021 concerning the meaning of 'subsequently held' under Section 77 of the CGST Act and Section 19 of the IGST Act. - HELD THAT: - The Court noted that the departmental circular dated 25.09.2021 clarifies that the expression 'subsequently held' in Section 77 of the CGST Act and Section 19 of the IGST Act covers both situations where (a) a supply made by a taxpayer as inter State or intra State is subsequently found by the taxpayer himself to be intra State or inter State respectively, and (b) a supply is subsequently found/held as such by a tax officer in any proceeding; refund is available in either situation provided the taxpayer pays the required tax in the correct head. In view of this clarification, the Court held that the impugned appellate order - which applied a narrower understanding of 'subsequently held' and dismissed the taxpayer's refund claim for the tax period February, 2018 - could not stand without fresh consideration under the clarified position. The Court therefore set aside the impugned order and remitted the matter to the concerned appellate authority to decide the refund claim afresh under Rule 89(1) of the CGST Rules, 2017 and the relevant provisions of the CGST and IGST Acts in accordance with the circular and law. The Court expressly refrained from expressing any view on the merits of the refund claim.Impugned order set aside and matter remitted to the appellate authority to decide the refund claim afresh in light of the clarificatory circular dated 25.09.2021; no opinion expressed on merits.Final Conclusion: The challenge succeeds to the extent that the appellate order dated 25.06.2021 is set aside and the matter is remitted to the concerned appellate authority for fresh decision on the refund claim for February, 2018 in accordance with the clarificatory circular dated 25.09.2021 and applicable law; the Court has not adjudicated the merits of the claim. Issues:Challenge to order dismissing refund claim under Rule 89(1) of CGST Rules, 2017 based on failure to reply to show cause notice. Interpretation of 'subsequently held' in Section 77 of CGST Act, 2017 and Section 19 of IGST Act, 2017 for refund eligibility.Analysis:1. The petitioner's refund claim of Rs. 12,69,255 was rejected by the Deputy Commissioner due to non-submission of a reply to the show cause notice, leading to the appeal before the Additional Commissioner (Appeals).2. The Additional Commissioner, while considering Section 77 of CGST Act, 2017 and Section 19 of IGST Act, 2017, held that a refund would only arise when a supply is held differently by an authority, not suo motu, thus upholding the rejection of the refund claim.3. The petitioner cited a circular clarifying the term 'subsequently held,' stating that refund claims can be made if a taxpayer identifies the supply differently or if the tax officer does so in any proceeding. The petitioner requested a fresh consideration based on this interpretation.4. The court, after considering the circular, remitted the matter back to the appellate authority for a fresh decision, setting aside the previous order. The court emphasized that it did not express any opinion on the case's merits, leaving the decision to the appellate authority.5. The judgment concluded by disposing of the petition, directing the appellate authority to review the refund claim afresh in light of the circular issued on 25th September, 2021, and in accordance with the law, without expressing any view on the case's substance.