2025 (4) TMI 499 - HC - GST

Manufacturing unit wins refund of wrongfully rejected budgetary support claims worth Rs. 2,195 for January-March 2022 quarter

J&K Cement Corporation Versus Union of India through Secretary, Ministry of Commerce (Department of Industrial Policy and Promotion) New Delhi, Commissioner Central Taxes Jammu, Deputy Commissioner-Central Goods and Services Taxes Jammu, Commissioner State Taxes, Excise and Taxation Jammu. State Taxes Officer, Kathua.

The HC allowed the petition challenging rejection of budgetary support refund claims. The court found that under the Budgetary Support Scheme, eligible ... Rejection of the refund claims - mode and manner of determination of the amount of budgetary support - rejection of part of the claim by adopting certain calculations, which have not been made known to the petitioner - HELD THAT:- From a careful reading of Para 5 of the Budgetary Support Scheme, it becomes abundantly clear that an eligible unit manufacturing specified goods is entitled to budgetary support to be calculated at the rate of 58% of the central tax paid through debit in the cash ledger maintained under Section 49 (1) of CGST Act, 2017 and 29% of IGST paid, after utilization of the input tax credit of the central tax and integrated tax. This is so provided in Clauses 5.1(i) and %.1(ii). In the instant case, the CGST on value addition would be 75% (Chapter 25 of Table of Excise Notification No. 1/2010-C.E. dated 06.02.2010) of the total amount of CGST paid for the quarter January, 2022 to March, 2022, which, in any case, would be exceeding the refund claim. In view of the aforesaid, we see no error or mistake committed by the petitioner claiming a refund of Rs. 4,44,114/-. There is no good reason emerging from the impugned order passed by respondent No. 3 to justify the rejection of claim of the petitioner for an amount of Rs. 2195/-, which the respondent No. 3 has held to be an amount inadmissible on account of budgetary support. Conclusion - The rejection of claim of Rs. 2195/- in respect of quarter January, 2022 to March, 2022 by respondent No. 3 is held bad and contrary to the notification dated 05.10.2017. Respondent No. 3 shall take steps for release of the amount held inadmissible by it in the sanction/rejection orders impugned in this petition passed in respect of CGST paid by the petitioner for quarter January, 2022 to March, 2022. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in the judgment were:1. Whether the rejection of part of the refund claim by the Deputy Commissioner, CGST Division, Samba, was in violation of the notification dated 05.10.2017 issued by the Government of India, Ministry of Commerce & Industry.2. Whether the petitioner was entitled to the full refund amount claimed under the budgetary support scheme for the period January 2022 to March 2022.3. Whether the calculation method used by the respondent to determine the refund amount was consistent with the provisions of the notification dated 05.10.2017.ISSUE-WISE DETAILED ANALYSIS1. Violation of Notification Dated 05.10.2017- Relevant legal framework and precedents: The notification dated 05.10.2017 issued by the Government of India provided a scheme for budgetary support to eligible manufacturing units in certain regions, including Jammu & Kashmir. The scheme was intended to replace the excise duty exemption/refund previously available under rescinded notifications.- Court's interpretation and reasoning: The court noted that the notification clearly outlined the method for determining the amount of budgetary support, which involved calculating 58% of the CGST and 29% of the IGST paid through the cash ledger after utilizing input tax credits.- Key evidence and findings: The petitioner was recognized as an eligible unit under the scheme, and the majority of its refund claim had been accepted. The court found that the rejection of a portion of the claim lacked a clear explanation or basis under the notification.- Application of law to facts: The court applied the provisions of the notification to the facts of the case, concluding that the rejection of part of the refund claim was inconsistent with the notification's terms.- Treatment of competing arguments: The respondents argued that the refund was calculated according to the scheme, but they failed to provide a clear explanation of the calculation method used, leading the court to side with the petitioner.- Conclusions: The court concluded that the rejection of the refund claim was in violation of the notification dated 05.10.2017.2. Entitlement to Full Refund Amount Claimed- Relevant legal framework and precedents: The budgetary support scheme under the notification dated 05.10.2017 outlined the eligibility criteria and calculation method for determining the refund amount.- Court's interpretation and reasoning: The court found that the petitioner was entitled to the full refund amount claimed, as the calculation method used by the respondent was not justified under the notification.- Key evidence and findings: The court noted that the petitioner had complied with the scheme's requirements, and the rejection of Rs. 2,195/- was not supported by any clear rationale from the respondent.- Application of law to facts: The court applied the scheme's provisions to the petitioner's refund claim and determined that the full amount was admissible.- Treatment of competing arguments: The respondents' objections were not substantiated with a clear explanation of the calculation method, leading the court to favor the petitioner's claim.- Conclusions: The petitioner was entitled to the full refund amount claimed for the period January 2022 to March 2022.3. Calculation Method Consistency with Notification- Relevant legal framework and precedents: The notification specified the calculation method for determining the budgetary support amount, including the percentages of CGST and IGST to be refunded.- Court's interpretation and reasoning: The court found that the respondent's calculation method was not consistent with the notification, as it did not provide a clear basis for the rejection of part of the refund claim.- Key evidence and findings: The court highlighted the lack of explanation from the respondent regarding the calculation method used, which was contrary to the notification's clear provisions.- Application of law to facts: The court applied the notification's provisions to the facts, determining that the respondent's calculation method was flawed.- Treatment of competing arguments: The respondents failed to provide a satisfactory explanation for their calculation method, leading the court to reject their arguments.- Conclusions: The calculation method used by the respondent was inconsistent with the notification dated 05.10.2017.SIGNIFICANT HOLDINGS- Preserve verbatim quotes of crucial legal reasoning: 'The rejection of part of refund claim of the petitioner by respondent No. 3 flies in the face of clear and unambiguous language of Notification dated 05.10.2017.'- Core principles established: The court reaffirmed that the calculation of budgetary support must strictly adhere to the provisions outlined in the notification, and any deviation without clear justification is impermissible.- Final determinations on each issue: The court held that the petitioner was entitled to the full refund amount claimed, and the rejection of Rs. 2,195/- was contrary to the notification. The respondent was directed to release the inadmissible amount to the petitioner.