TaxTMI 
TaxTMI 
2019 (7) TMI 1229
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....und of ITC availed on input services (and remaining unutilized) in whole or part thereof. • Where the answer to above is negative, the Applicant wishes to understand how does the Notification 21 and 26 apply in a scenario where factually following financials may exist: A. Revenue streams Works contract services liable to 12% GST INR 1,000 Output GST@ 12% INR 120 Total Revenues incl. GST INR 1,120 B. Input Tax Credit Data Particulars Amount (INR) ITC on inputs 65 ITC on input services 90 Sub-total 155 Less: Total tax on outward supplies 120 Net balance remaining unutilized 35 The questions/ issues placed for determination before the Hon'ble Bench has to be appreciated in light of the following position of law and its applicability to the facts of the Applicant's business and activity as discussed above and detailed hereunder, as may be necessary. At the outset, we would like to make it clear that the provisions Of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to t....
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....pan erection, plant and equipment installation Input services 18% 10 Formworks Input services 28% 11 Plant and equipment hire cost Input services 18% 12 Spares and consumables, lubricants, etc Inputs services 18% 13 Design, insurance and finance charges Input services 18% 14 Indirect cost such as site office, labour camp, IT infrastructure, land lease, vehicle rental, furniture, site running expenses, etc Input services 18% *The rate mentioned is total of CGST and State GST rates, as may be applicable, 10 supply of attendant goods and services. (vi) (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than i) zero rated supplies made without payment of lax; ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Governme....
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.... (xii) The amendments made by the (2) notifications, essentially aimed at following changes in scheme of refund for inverted duty structure under GST regime: (a) Extension of benefit to outward supplies of 'services' - Prior to amendment, formula for computing maximum refund amount only considered the turnover of supply of 'goods'. Acknowledging this error, the formula was rectified by retrospective amendment whereby turnover of supply of service was also included. This amendment underlined the intent of Government to extend benefit in all cases, whether supply of goods or services. (b) Exclusion of 'input service from definition of 'Net ITC' - Prior to amendment, definition of 'Net ITC' was borrowed from sub-rule (4) of Rule 89 which included within its ambit 'inputs' as well as 'input services'. However, as per the amended definition, the definition of Net ITC only covers ITC availed on 'inputs'. Thus, the amendment has restricted the benefit of refund only to procurement of inputs which are used for inverted rated supply of goods or services. (xiii) Given the above, the Notification 21 & 26 lea....
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.... than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies ..... .... .... (10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may -- (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which rem....
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.... of Nahar Spinning Mills Ltd vs Commissioner of Central Excise, Bhopal (2000 (121) ELT 60] = 2000 (7) TMI 362 - CEGAT, NEW DELHI where in the context of determining due date for filing refund application, it was observed by the Hon'ble Tribunal that rules framed under subordinate legislation cannot over-ride statutory provisions contained in the section. Similar view has also been upheld in Ashok Granites Ltd vs CCE & ST, Salem (2016 (46) STR 875 (Tri - Chennai)], = 2016 (7) TMI 1078 - CESTAT CHENNAI Applying the said principle in the instant case, benefit available to Applicant by Section 54(3) of CGST Act should not be curtailed by Rule 89(5) of CGST Rules. (xi). Additionally, Applicant would also like to submit that in the event CGST Act intended certain condition or restriction to be placed on quantum of refund to be granted, the CGST Act itself would expressly provide for same. Alternatively, CGST Act would provide specific stipulation to the effect that condition prescribed in CGST Rules should apply for determining the amount of refund. However, Section 54 in no manner, provides or stipulates that amount of refund would be granted subject to restriction specif....
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.... 120 Less: ITC on input services 90 Balance liability to be paid 30 (b) The balance liability if any is set off against the ITC of inputs Total ITC on inputs 5 Balance to be utilized (see (i) above 30 Balance remaining unutilized 35 (c) And the refund formula is populated only with such utilization as it noted at (ii) above. Formulas as stipulated vide the amendment Notifications 21 and 26 case financial interposed in the formula Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC + Adjusted Total Turnover) - tax payable on such inverted rated supply of goods and services Max Refund = (1000 X 65] - 30 1000 = 35 (xviii) The correct applicability of the Notifications may kindly be determined by the Hon'ble Bench. PRAYER I. The Hon'ble Bench may be pleased to take the aforesaid application on record and pronounce a ruling in light of attendant facts as well as legal/ judicial position. II. The ruling sought from the Hon'ble Bench is as follows: "The refund of ITC on input services could also be claimed in case of an inverted duty structure scena....
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....ents (goods and services both) required for execution of MTHL Project viz. cement, Concrete additives as micro silica, GGBFS, Admixture, etc, Reinforcement steel and structural steel, Bridge accessories as bearings, expansion joint and PT strands, etc, Other material as bridge furniture such as crash barrier, view barrier, sound barrier, fence, fenders, etc, labour, geo technical investigation work, pile testing works, Other works such as deck water-proofing, road works, steel span erection, plant and equipment installation, formworks, Plant and equipment hire cost, Spares and consumables, lubricants, etc, Design, insurance and finance charges, and Indirect cost such as site office, labour camp, IT infrastructure, land lease, vehicle rental, furniture, site running expense, etc, are procured by them on paying GST ranging from 18% to 28%. (v) The legal provisions are as follows • Section 54(3) of GST Act reads as follows. * Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period: Provided that no refund of unutilized input tax credit shall be allowed in....
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....During the hearing, applicant was asked to clarify whether the questions raised in the ARA was covered under the Section 97(2) of CGST ACT. Jurisdictional Officer was not present. Applicant was called for hearing on 26.03.2019. Sh. Gopal Mundra appeared, made oral & written submissions. Jurisdictional Officer Sh. Jadhav, Dy. Commr., State Tax, MUM-VATE-638, LTU-4, Mumbai, also appeared & made written submissions. We heard both the sides. 05. OBSERVATIONS 5.1 We have gone through the facts of the case, documents on record and written submission made by both, the applicant as well as the jurisdictional office. The issue raised before us is in respect of the applicant's eligibility for refund of unutilized input tax credit. 5.2 We find that M/S Daewoo-TPL J V, a joint venture between M/s Daewoo Engineering and Construction Company Limited and M/s. Tata Projects Limited is registered under the GST Act and have been awarded the contract from MTHL in the form of works contract. The contract in the nature of services. Execution of construction of large projects such as MTHL Project entails procurement of various inputs, input services and capital goods such as cement, conc....
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....h inverted rated supply of goods and services The said formula considers "input tax credit". As per Section 2(63) of the COST Act, 'input tax credit' means the credit of input tax. And as per Section 2(62) of the CGST Act, "input tax' means ..........., the Central Tax, State Tax, Integrated Tax or Union Territory tax charged on any supply of goods or services or both ..... & includes ......." Section 2(59) defines as "input means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business" Thus input would mean goods and tax on inputs would mean tax on goods. Section 54 (3) (ii) talks of 'where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies.' It is clear that the said clause (ii) speaks only in respect of credit availed on inputs being higher i.e. credit availed on tax paid on goods being higher. A reading of the provisions of Section 54 (3) (ii) and Notification No 21 of 2018 implies that the formula prescribed (for determination of eligible refund amount) under Rule 89(5) of CGST Rules i.e. for "Net ITC" only considers ....
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....Rule 89 of CGST Rules, 2017. Therefore whenever the Section 54 is to be applied, it has to be applied only in accordance with the Rule 89 of CGST Rules, 2017 as amended from time to time. The significance and the necessity of subordinate legislation and how it has become a component of legislation has been summed up by the Hon'ble Supreme Court, quoting John Salmond, in the Gwalior Rayon Mills Mfg. (Wing.) Co. Ltd. V. Asstt. Commissioner Of sales Tax and Others [All India Reporter 1974 SC 1660 (1667)] = 1973 (12) TMI 38 - SUPREME COURT thus: "Most of the modern socio-economic legislations passed by the legislature lay down the guiding principles and the legislative policy. The legislatures because of limitation imposed upon by the time factor hardly go into matters of detail. Provision is, therefore, made for delegated legislation to obtain flexibility, elasticity, expedition and opportunity for experimentation. The practice of empowering the executive to make subordinate legislation within a prescribed sphere has evolved out of practical necessity and pragmatic needs of a modern welfare State. In modern times, it is not always possible for the legislatures to make....
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....eemed to have been paid, (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term." 5.9 We find from the above subsection 2 of Section 97, that the method of calculation of refund is not covered therein. The provisions of Section 95 state that the applicant shall ask the question in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by them on matters or questions specified in, and to that extent only, the authority shall answer/give a ruling to those category of issues. 5.10 From the perusal of the question it is seen that the query no. 2 above is with respect to the formula involved in calculation of refund. Such queries do not fall under Section 97 of the CGST Act. 5.11 We find that in the present case, applicant has posed the question no 2 that is not covered under the category mentioned from (a) to (g) of subsection (2) of secti....