2022 (12) TMI 1037 - HC - GST

Dealer entitled to input tax credit allowed statutory choice of refund over carry forward; provisional order quantified Rs13,36,741

Easwaran Brothers India Private Limited Represented by its Director Mr. U. Sundaramaharajan Versus The Assistant Commissioner (ST) (FAC) Perur Circle Coimbatore

HC held that a dealer entitled to input tax credit had a statutory option to seek a refund or carry forward ITC to GST; the dealer chose refund. The Court ... Refund of ITC - option of either seeking refund or carrying forward the ITC to GST regime - provisional refund order has been issued after processing the refund application - HELD THAT:- Considering the facts and circumstances of the case, a counter from Revenue is really not necessary. This Court is of the view that the main writ petition can be disposed of by making a simple order after having heard both sides. It is clear from the narrative thus far that the dealer has two options i.e., refund or carrying forward the ITC to GST regime, the dealer in the case on hand, has opted for the former not the latter. The common portal giving dealer the option for choosing former or latter also is now active till 2024. In such circumstances, the dealer cannot be compelled to opt for one of the two i.e., refund or carrying forward the ITC to GST regime. It is after all an option given to the dealer. In the case on hand, the case of writ petitioner dealer stands buttressed by the provisional refund order made by the same sole respondent and issue of what is referred to as 'FORM-P' clearly quantified the entitlement of writ petitioner at Rs.13,36,741/-. This Court has no difficulty in coming to the conclusion that the impugned notice has been erroneously issued and the same deserves to be interfered with / set aside - Petition disposed off. Issues:1. Challenge to notice dated 25.11.2022 regarding refund under TNVAT Act.2. Dealer's option to seek refund or carry forward Input Tax Credit (ITC) to GST regime.3. Provisional refund order issued to the dealer.4. Impugned notice requesting the dealer to carry forward ITC to GST regime.5. Legal validity of impugned notice in light of dealer's choice for refund.Analysis:1. The main issue in this case is the challenge to a notice dated 25.11.2022 issued by the respondent regarding a refund under the Tamil Nadu Value Added Tax Act, 2006 (TNVAT Act). The petitioner, a registered dealer, had opted for a refund when the GST regime replaced the TNVAT Act.2. Upon the introduction of the GST regime, dealers with Input Tax Credit (ITC) had the choice of either seeking a refund or carrying forward the ITC. The petitioner opted for a refund due to a technical glitch. The matter reached the Supreme Court, which directed the Department to open a portal for transitional credit. The petitioner's refund request was processed, leading to a provisional refund order of Rs.13,36,741/- for the assessment year 2017-18.3. The provisional refund order was issued to the petitioner by the respondent, indicating the entitlement to a refund. However, the respondent subsequently issued an impugned notice requesting the petitioner to carry forward the ITC to the GST regime, despite the petitioner opting for a refund and the provisional refund order already being in place.4. The petitioner contended that since they had chosen the refund option and a provisional refund order had been issued, the impugned notice should not have been issued. The Government Advocate for the respondent acknowledged the provisional refund order and explained that the notice was prompted by the petitioner's alleged reversal of ITC in June 2017.5. The Court, after considering the facts, concluded that the dealer had the right to choose between a refund and carrying forward the ITC to the GST regime. Given that the dealer had opted for a refund, as evidenced by the provisional refund order, the impugned notice was deemed erroneous. The Court set aside the notice and directed the respondent to expedite the refund process, ensuring the petitioner receives the entitled amount promptly.In conclusion, the Court ruled in favor of the petitioner, emphasizing their right to choose the refund option and directing the respondent to fulfill the refund as per the provisional refund order.