TaxTMI 
TaxTMI 
2020 (2) TMI 169
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....sian countries etc. The export activity of the petitioner is categorised as zero-rated supplies as defined under Section 16(1)(a) of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as "the IGST Act"). 4. The present petition inter-alia impugns Circular No.37/11/2018-GST dated 15.03. 2018 and Circular No. 125/44/19-GST dated 18.11.2019. Mr. Puneet Agrawal, learned counsel for the petitioner submits that owing to the restrictions imposed in the afore noted circulars, Petitioner has been deprived of the benefit of availing refund claim of the unutilised input tax credit for the period from April, 2018 to June, 2018. This is causing serious financial hardship as more than Rs. 30 crores of accrued and unutilised input tax credit, that is eligible for refund is now lying stuck. The implementation of the aforesaid circulars on the GSTN portal has occasioned the disablement of the option for filing the refund of tax. He submits that the problem stems from paragraph 8 of impugned circular no. 125/44/2013/GST dated 18th November, 2019, which inhibits refund claims for a period of two separate (not successive) financial years. He argues that this is in contraventio....
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....g options, namely:-- (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made there under.]" (Emphasis Supplied) 7. He argues that the petitioner as exporter of goods, has a substantive right to claim refund of "unutilised input tax credit". He submits that sub clause (a) of Sub Section (3) of Section 16 provides that a registered person making zero rated supplies shall be eligible to claim refund by making supply of goods and services under bond or letter of undertaking subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit in accordance....
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....hat a registered person claiming refund of any "unutilised input tax credit" at the end of any tax period, may make an application before the expiry of two years from the relevant date as enabled by Section 54(1). Further, Rule 89(4)(F) of CGST rules define the term "relevant period" as the period for which the claim has been filed. He submits that on a harmonious reading of the aforesaid provisions, it emerges that a person making zero rated supplies can claim refund of unutilised input tax credit at the end of any tax period by making refund application before the expiry of two years from the relevant date in such form and manner as may be prescribed. He further submits that Circular No. 17/17/2017 earlier provided that the refund period could not spread across different months. However, on receiving representations from traders and the stakeholders, the Government became cognizant of the difficulties faced by the exporters while claiming refund, and the CBIC issued the impugned Circular No. 37/11/2018, recognising the difficulties faced by exporters, which is evident from the following clauses of the said circular: "11.1 In many scenarios, exports may not have been made....
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....ndertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula - Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero rated supply of services) x Net ITC /Adjusted Total Turnover Where, - (A) "Refund amount" means the maximum refund that is admissible; (B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; (C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both; (D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the ....
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....r the refund of accumulated unutilised ITC of Rs. 2.80 crores on account of export of goods. The current position is that by virtue of the circulars, the petitioner is not able to claim the refund as the option of selecting the tax period which lies with the petitioner in terms of the aforesaid provisions, has been denied. Petitioner has been trying to file the refund application for the unutilised input tax credit claimed in the respective months of production; however the impugned circulars have denied the petitioner the statutory rights. Rule 89(4) of the CGST Rules which provides the formula for calculating input tax for refund is in contravention of Section 16 of the IGST Act r/w Section 54 of CGST Act as the said Rule restricts the computation of the refund taking the basis of ITC "availed during the relevant period". The "relevant period" has been defined in Rule 89(4)(F) as the period for which the claim has been filed and said provision is also impugned in the petition. Mr. Agarwal argues that the impugned circulars, in so far as they restrict the refund claims only on monthly basis, are contrary to the rights conferred by the Act. 11. Ms. Bhatnagar, learned senior stan....
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....petitioner made exports in the month of June, 2018, we do not see any justification to deny the refund of the ITC which have accumulated in the previous financial years. The entire concept of refund of ITC relating to zero rated supply would be obliterated in case the respondents are permitted to put any limitation and condition that takes away petitioner's right to claim refund of all the taxes paid on the domestic purchases used for the purpose of zero rated supplies. The incentive given to the exporters would lose its meaning and this would cause grave hardship to the exporters who are earning valuable foreign exchange for the country. The Respondents cannot, artificially by acting contrary to the fundamental spirit and object of the law, contrive ways to deny the benefit, which the substantive provisions of the law confer on the tax payers. Thus, in our considered opinion, the petitioner has a strong prima facie case, and we cannot deny the petitioner of its right to claim refund which is visible from the mechanism provided under the Act. The impugned circulars take away the vested right of the taxpayer that has accrued in the relevant period. It would be profitable to refer to....