Tax Refund Challenge Succeeds: Appellate Authority Ordered to Reconsider ITC Deduction and Expedite Refund Payment

HC allowed petitioner's writ challenging tax refund order. The court found the appellate authority's deduction of ITC for a specific invoice impermissible and set aside that portion of the order. The matter was remanded back to the appellate authority to reconsider the refund claim within eight weeks, directing expedited review and payment of the admitted refundable amount.

---

---

Issues involved:
The judgment involves a challenge against an order passed under Section 107 of the West Bengal Goods and Services Tax Act, 2017 regarding the refund of unutilized Input Tax Credit (ITC) on account of zero-rated supply without payment of tax under section 54(3) of the Act.

Refund Claim and Show Cause Notice:
The petitioner filed an application for refund of unutilized Input Tax Credit (ITC) on account of zero-rated supply without payment of tax under section 54(3) of the Act. A show cause notice was issued to the petitioner for not allowing the entire refund amount claimed, to which the petitioner duly replied.

Appellate Authority's Order:
The Adjudicating Authority rejected the entire claim for refund after being unsatisfied with the petitioner's reply. The petitioner filed a statutory appeal against this decision, which was disposed of by an order dated 23 May, 2023.

Grounds of Appeal:
The petitioner contended that the Appellate Authority erred in law by deducting credit for an amount in respect of output tax pertaining to a specific invoice, EXP/2021-22/005, which was impermissible under the law. It was argued that clubbing this particular invoice in the refund application was unreasonable and without legal authority.

Legal Submissions:
The petitioner argued that there was no provision under the Act allowing the authority to reject a claim and then recover the amount from the petitioner. Despite the deduction for the specific invoice, the Appellate Authorities modified the order to allow the petitioner to obtain a refund for the remaining balance amount.

Judgment and Remand:
The Court found that clubbing the refund claim with the specific invoice EXP/2021-22/005 and simultaneously recovering the amount was contrary to law. The portion of the order denying and recovering the amount for this invoice was set aside. The matter was remanded back to the Appellate Authority to reconsider the claim in respect of the specific amount within eight weeks.

Conclusion:
The Court allowed the writ petition with specific directions for the Appellate Authority to review the claim in accordance with the law and expedite the payment of the admitted refundable amount. The decision emphasized that the Appellate Authority should not be influenced by any previous observations on the case's merits while reconsidering the issue.

---