TaxTMI 
TaxTMI 
2021 (6) TMI 41
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....ers sanctioning/ rejecting refund amount (Rs.) 1 APPL/JPR/CGST/ JP/32/VIII/2019 19/2019-20, dated 21-5-2010 Nov.-2017 25,83,420/- 2 APPL/JPR/CGST/ JP/33/VIII/2019 20/2019-20, dated 21-5-2019 Dec.-2017 33,68,451/- 3 APPL/JPR/CGST/ JP/34/VIII/2019 18/2019-20, dated 21-5-2019 Sept.-2017 27,07,429/- 4 APPL/JPR/CGST/ JP/35/VIII/2019 21/2019-20, dated 21-5-2019 Jan.-2018 52,72,443/- 5 APPL/JPR/CGST/ JP/36/VIII/2019 17/2019-20, dated 21-5-2019 Aug.-2017 49,57,127/- 6 APPL/JPR/CGST/ JP/43/XI/2019 78/2019-20, dated 9-8-2019 Feb.-2018 27,86,712/- 7 APPL/JPR/CGST/ JP/44/XI/2019 77/2019-20, dated 9-8-2019 Mar.-2018 1,13,17,338/- 8 APPL/JPR/CGST/ JP/36/VII/2020 ZZ0804200286871, dated 15-4-2020 May-June-2018 93,01,029/- 9 APPL/JPR/CGST/ JP/37/VII/2020 ZP0804200286859,dated 15-4-2020 July-Sep., 2018 1,17,11,871/- 2. Brief facts of the case are that the appellant having GST No. 08AAACU8461G1Z5 is engaged in activity of mining who extracts soap stone from earth and thereafter sells the soap stone as such or soap stone powder (after grinding of crude soap stone) which attracts GST @ 5% as per tariff classification of their product i.e. soap stone un....
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....rule (4A) or (4B) or both; Whereas the amount of ITC on input service and capital goods have been included in net ITC for the purpose of refund. The claimant, as per sub Rule (5) of Rule 89 of the CCST Rules, 2017 as amended vide Board's Notification No. 26/2018-C.T., dated 13-6-2018 appears not entitled to claim refund of ITC as per the formula and the expression of "Net ITC" given-under the said Rule. Hence liable to be rejected under Section 92(3) of CGST Rules, 2017." 3. Thereafter, the adjudicating authority has passed the Os-I-O (GST-RFD-06) as mentioned in above table wherein he find that the appellant have not produced any documents relating to their input rather they have submitted copies of documents which pertain to Input Services and Capital Goods, i.e. other than input as defined under Section 2(59) of the Central Goods and Services Tax Act, 2017 and the assessee have not disputed this fact except the Capital Goods. Further, the adjudicating authority found that since the ITC amount on Input Service and Capital Goods is not included in the Net ITC for the purpose of refund amount as per Rule 89(5) of the CGST Rules, 2017 as amended vide CBIC Notification No. 26....
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.... inverted duty structure. (F) It is to be noted from this structure that the credit is accumulated on account of rates of inputs and input services both (12%, 18% and 28%) being higher that the rate of tax on output supplies (5%). There is no other reason for accumulation of Input Tax Credit. Thus, in this case the appellant is allowed for refund of ITC as per the provisions of Sec. 54 of the CGST Act, 2017, which is rightly accepted in order by not challenging the preposition of Sec. 54. There is no question put up by the Learned Adjudication Authority on the eligibility of the appellant as per proviso to Section 54(3). (G) However, the refund is not allowed by authorities merely by virtue of Notification No. 26/2018, dated 13-6-2018 since it has made a retrospective amendment w.e.f. 1-7-2017 in the refund of Input tax credit on input services accumulated on account of inverted duty structure. (H) From the perusal of Rule 89(5), it is clearly seen surpassing the mandate given by the law in Sec. 54(3), in no case it can surpass the legislation. There is no provision under Sec. 54 which provides that any further limitation ....
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....pra) under the CGST Bill, 2017. There is no restriction even related to ITC accruing on account of Capital Goods. (O) One should also refer to definition of refunds under explanation 1 of Sec. 54 to understand the concept of refund. (P) This definition makes it amply clear that in relation to cases covered by Sec. 54(3) the refund of Unutilised Input Tax Credit is available. There is no distinction made by the legislature that refund of accumulated Unutilised Input Tax Credit on account of Inputs or Input services to be treated separately. (Q) Further, the appellant has referred the case of M/s. VKC Footprints Global Pvt. Ltd. v. State of Gujarat pronounced on 26 February, 2020. 5. Personal hearing in virtual mode through video conference was held on 8-1-2021. Shri Ranjan Mehta, CA appeared on behalf of the appellant and explained the case. Shri Mehta reiterated grounds of appeal during oral submission and also laid emphasis upon the additional submission. 6. I have gone through the facts of the case as inscribed in the appeal memo, the oral iteration along with the additional submissions offered by the appella....
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....h 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." Also, the Rule 89(5) of the CGST Rules, 2017 provides that - "CHAPTER X REFUND 89. Application for refund of tax, interest, penalty, fees or any other amount. ... [(5) in the case of refund on account of inverted duty structure, refund of input tux credit shall be granted as per the following 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. Explanation :- For the purposes of this sub-rule, the expressions - (a) "Net ITC" shal....
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....is also empowered to give retrospective effect to the rules or any of them from a date not earlier than the date on which the provisions of this Act come Into force by virtue of Section 164(3) of the Act :- 164. Power of Government Io make rules. - ... (3) The power to make rules conferred by this section shall include the power to give retrospective effect to the rules or any of them from a date not earlier than tie date on which the provisions of this Act come into force. 13. Therefore, I find that the Central Government, in contemplation of the powers conferred by Section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), has amended the Central Goods and Services Tax Rules, 2017 by issuing the Notification No. 26/2013-Central Tax, dated 13-6-2018. 14. I find that the subject matter has also been under consideration at various judicial & quasi judicial authorities and the recent progression in the matter is prominent to deliberate cautiously hereunder, which isn't only a obiter dicta but also laid the foundation for formulation of the principles of law for the purpose of deciding the present problem before us on this issue. 15. The Hon....
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....18, I find that it unambiguously verbalizes that Net ITC 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-rule (4A) or (4B) or both. Further, the definition of the input and input services under Section 2(59) and 2(60) of the Act, stipulates that unless the context otherwise requires the same shall mean as under :- "2. Definitions. - ... (59) "input" means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business; (60) "input service" means any service used or intended to be used by a supplier in the course or furtherance of business;" 18. Further, the refund provision should be treated on a par with an exemption provision. For this principle, in W.P. No. 8596 of 2019 Batch etc. to the judgment in AC v. Dharmendna Trading Co. (1988) 3 SCC 760 the Supreme Court held that though styled as a refund of sales tax, the benefit is in the nature of an exemption or reduction of tax. Correspondingly, by relying upon the judgment of the Five Judge Bench of the Hon'ble Supreme Court in Commissioner of Cust....