AI Drafter 
TaxTMI 
TaxTMI 
2020 (10) TMI 890
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....c Yarn falling under Chapter Heading No.5509 of the GST Tariff appeared to have wrongly claimed GST refund of Rs. 47,28,635/-(Rs. 23,66,567/-(CGST) + Rs. 23,62,068/-(SGST) which was further sanctioned erroneously by the adjudicating authority as per the facts enumerated below: 2.2 The appellant has filed application for refund claim of GST amounting to Rs. 64,11,146/- (Rs. 32,05,573/- CGST +Rs. 32,05,573/- SGST) in respect of Inverted Duty Tax Structure for the Tax period of May-2018 on 10.08.2018 and after preliminary scrutiny of the claim,, 90% refund claim amounting to Rs. 57,65,530/- (Rs. 28,85,015/- CGST + Rs. 28,80,515/- SGST) had been sanctioned on provisional basis vide RFD-04 No. Refund GST/BEH-E/18/P-059 dated 31.08.2018. 2.3 Further, during the course of detailed scrutiny of documents submitted by the appellant, the adjudicating authority had noticed that the appellant had wrongly taken Net ITC in RFD-01 which included ineligible ITC of Capital Goods (Rs. 51,97,848/- and ineligible ITC of Input Services Rs. 1,76,403/-). 2.4 Thus the appellant had shown Net ITC of Rs. 1,20,82,033/- in the RFD-01A for the month of May-2018 which included of ITC availed or Capital ....
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....059 dated 31.08.2018. In view of the above, the appellant appeared to have wrongly filed the refund claim of Rs. 47,28,635/-[Rs. 23,66,567/- CGST Rs. 23,62,068/- SGST] by mis-declaring/ suppressing correct value of Net ITC with intent to claim inadmissible refund and the same appeared recoverable along with interest under Section 74 (1) & Section 50 respectively of the CGST/RGST Act, 2017. The appellant had wrongly mentioned the excess ITC of Rs. 53,74,251/- in the RFD-01A with intent to claiming the excess refund by suppressing/mis-declaring the value of Net ITC in respect of the inverted duty structure and appeared to have contravened the provisions of Rule 89 (5) of CGST Rules, 2018 for which the appellant is liable to penalty under Section 122 of the CGST Act, 2017/ Section 122 (1) bf the RGST Act, 2017. Further, the adjudicating authority found that the appellant has suppressed/mis-declared the value of Net ITC in the refund application resulting in taking excess refund and this act attracts penalty under Section 122 (2) (b) of the CGST/RGST Act, 2017. Further, the adjudicating authority has passed the order as under:- i) Confirmed the demand of Rs. 47,28,635/- [Rs....
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....xplained that GST is a new law with complicated provisions and thus the allegation of suppression is not correct. The request for dropping penalty along with interest was also made. The said reply is already part and parcel of the OIO and hence is not reproduced for the sake of brevity. -that however, in a cursory manner, by flouting the principles of natural Justice completely and without understanding the facts of the case, with an intention to garner the revenue without authority of law, a non-speaking, illegal OIO was passed bad in law and has failed to appreciate the facts of the case wherein demand of tax for erroneous refund has been confirmed along with interest and penalty under Section 122 (2) of the CGST Act 2017 which is beyond the scope of SCN. The observation that refund claim is not in accordance with the provisions of Rule 89 (5) of the CGST Rules 2017 is inconsistent with the principles of Section 54 of the CGST Act 2017 and hence is ultra-virus. -that appellant also purchased capital goods under Export Promotion Scheme Capital Goods Scheme and thus was entitled for claim of refund under "receipt of Deemed Export" provisions of the CGST Act 2017 f....
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....s made without payment of tax; (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 hnth as may be notified by the Government on the recommendations of the Council: -that on reading of aforesaid bare provisions it is evident that refund under Section 54 (3) (ii) is allowed when rate of tax on inputs is higher than rate of tax on output supplies. In reality, since refund under given clause of the sub-section is allowed when rate of tax on inputs is higher than rate of tax on output supplies, hence the meaning of words inputs and outputs needs to be interpreted. The term "input" should not be interpreted in isolation without analysing the term output. -that the term "output supply" has not been defined under the law. --that the term outward supply has been defined under Section 2 (83) of the CGST Act 2017. However, since the term "output" has been used instead of "outward" by the law in its own wisdom, hence same has to be treated differently from the term "outward". -that the dictionary ....
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.... services and capital goods under Section 54 (3 (ii) of the Act. However, under the Rule 89 (5), the learned adjudicating authority has wrongly interpreted the word inputs in given case. Hence same needs to be correctly interpreted by way of a circular in this regard. The Rule is in line with Section 54 (3) (ii) but the interpretation of same through circular is contrary to the provisions of the law. -that without prejudice to above also, the word defined under Section 2 (59) is input whereas the word used under Rule 89 (5) (a) is "inputs". The plural version of the word input cannot be read as being defined under Rule 2 since it has a different context. -that in fact on close perusal of definition of Net ITC", it excludes the ITC taken in context of Rule 89(4.A) and (4B) from the ITC taken on inputs. In such case, on perusal of Rule 89 (4A) and 89 (4B), the ITC of inputs and input services both has been mentioned. Thus, the interpretation of the learned adjudicating authority shall fail in the given case that Net ITC shall not include the ITC on input services and capital goods since by a specific exclusion the ITC claim on certain input services have been reduce....
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....ed to them. -that during the course of proceedings the appellant has explained that it received the capital goods under EPCG Scheme on which it was entitled to claim the refund under the provisions of "receipt under deemed exports". The provisions for same are contained under Notification No. 48/2017-CT. -that however, since it is well known that GST is a new Act all together which has changed the complete dynamics of indirect taxes in India. In such a case, more than 500 notifications, circulars and orders were issued till the time the refund was filed. The appellant did not have a full time GST consultant to advise them on the procedures. Thus on the basis of the limited understanding of the provisions of the procedure, a common refund claim can be treated.to have been filed under Rule 89(5) instead following the two separate applications. -that the claim of refund of the appellant under the deemed export is not incorrect and nor it has been discussed to be void. The only problem which has surfaced is that the appellant should not have filed the refund claim for same under the procedure of inverted duty structure. However, all other legal substantive co....
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.... of CCE & ST, Belgum vs Swarnagriri Wire Insulation Pvt Ltd reported in 2014 (301) ELT 46 (Kar) = 2014 (5) TMI 640 - KARNATAKA HIGH COURT it was held that Penalty - Imposition of - Permissibility, when no proposal made in the show cause notice - HELD : Adjudication order to be confined to the proposal made in the show cause notice and without mentioning the amount proposed to be recovered as penalty, no order could be passed - Any order passed by the adjudicating authority beyond the scope of the show cause notice is wholly without jurisdiction - In the instant case, the adjudicating authority demanded duty for loss of 2.04% copper in the process of enamelling the copper wire, which was not at all proposed in the show cause notice - Same not being justified, order of CESTAT setting aside the order of the adjudicating authority, proper - Section 35G of Central Excise Act, 1944. [para 8] -that in case of Diary Tech Enterprises vs C CEx, Ludhiana reported in 2017 (47) STR 347 (Tri-Chandi.) = 2017 (4) TMI 435 - CESTAT CHANDIGARH it was held by Hon'ble CESTAT, Chandigarh that Order - Revision order beyond scope of shoe cause notice - Imposition of pen....
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.... has rejected the refund claim on the ground that the appellant has wrongly taken Net ITC of Rs. 1,20,82,033/- in column 4 of table instead of ITC of Rs. 67,07,782/- ((Rs. 1,20,82,033/- Rs. 67,07,782/-) resulting excess claim of refund as mentioned in the table below in RFD-01A for the month of May-2018, which is inclusive of ITC availed on Capital Goods (Rs. 51,97,848/- and Input Services(Rs. 1,76,403/-) Total Rs. 53,74,251/-. Table:-1 Turnover of inverted rated supply of goods Tax payable on such inverted supply of goods Adjusted total turnover Net Input tax credit Maximum refund amount to be claimed [{1*4/3}-2] 1 2 3 4 5 Integrate Tax 52819610 5670887 52819610 12082033 6411146 {3205573+3205573} Central Tax State/UT Tax Cess 0 Total 0 0 641116 Table:-2 Turnover of inverted rated supply of goods Tax payable on such inverted supply of goods Adjusted total turnover Net Input tax credit Maximum....
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....order to align the CGST Rules with the CGST Act, notification No.26/2018-Central Tax, dated 13.06.2018 was issued wherein it was stated that the term Net ITC, as used in the formula for calculating the maximum refund amount under rule 89 (5) of the CGST Rules, shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both. 6. In view of the above, it is clear that both the law and the related rules clearly prevent the refund of tax paid on Input Services and Capital Goods as part of refund or Input Tax Credit accumulated on account of Inverted Duty Structure. Therefore, appellant's contention that credit of Capital Goods along with Input Services also be included for the purpose of determination of Net ITC is not correct and rightly rejected by the adjudicating authority. 7. As far as the appellant's contention that he was entitled to claim the refund under the provisions of "receipt under deemed export" is concerned, the appellant was at his liberty to claim the refund under relevant provision of the law and he should have filed the claim under relevant provi....