TaxTMI 
TaxTMI 
2023 (4) TMI 864
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to issue direction to opposite party no.1 to pay interest on the refundable amount. 2. The factual matrix of the case, in brief, is that the petitioner, a holder of Goods and Services Tax Registration Number 21AACCO7477Q1ZU under the CGST/OGST Act, is engaged in the business of manufacture of e-vehicles in various processes including chassis punching, colouring, wiring etc., and subsequent supply thereof. The petitioner procures domestically and imports various items with different HSN, which are integral part and parcel of manufacturing of e- vehicles. The petitioner procures inputs (goods) for manufacturing of e-vehicles at various rates, such as, 5%, 12%, 18% and 28% with separate HSN, whereas the outward supply is of the new product, namely, "e-vehicles" with different HSN on which GST is leviable @ 5%. As a result of such reduced rate of the GST on outward supply of goods, i.e., evehicles, the Input Tax Credit (hereinafter referred to as "ITC") gets accumulated in the hands of the petitioner, which is legally and statutorily termed as "Inverted Duty Structure". Further, the petitioner also procures and supplies spare parts chargeable to GST @18% and 28% to its channel partne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h all the requisite/supporting documents with a show cause reply praying therein for necessary order granting of refund on account of ITC accumulated due to Inverted Tax Structure. Though the petitioner submitted all the documents in physical mode before issuance of show cause notice in RFD-08, which were uploaded along with Form-GST-RFD-09, it was caused appearance along with its books of account before opposite party no.1 on 13.07.2022. The books of account were examined in detail and the petitioner's authorized person explained the books of account in terms of column no.5 of the CBIC Circular bearing No. 125/44/2019-GST in connection with Section- 54 (3) read with Rule-89 (5) appertaining to refund on account of inverted duty structure. On 28.07.2022, the authorised person of the petitioner's company received a call from opposite party no.2 for submission of soft copies of data, which were uploaded and submitted as per column no.5 of the CBIC circular and accordingly, on the very same day, the petitioner submitted all the soft copies of the data for verification of opposite party no.2. 2.3. Then, opposite party no.2 called upon the petitioner on 29.07.2022 through e-mail, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eye of law and, consequentially, seeks for quashing of the orders impugned under Annexures-10 & 11 and issuance of direction for refund of the dues, as claimed by the petitioner. 4. Mr. Sunil Mishra, learned Additional Standing Counsel appearing for CT & GST Department vehemently contended that there is availability of alternative remedy under Section-107 of the OGST & CGST Act. Without availing the same, the petitioner has directly approached this Court by filing this writ petition, which is not maintainable before this Court. To substantiate his contention, he has relied upon Commissioner of Income Tax v. Chhabil Das Agarwal, (2013) 357 ITR 357 (SC) : (2014) 1 SCC 603. It is further contended that the petitioner has failed to render necessary assistance to the proper officer in verification of accounts, when the NET ITC amount reflected in RFD-01 did not match with the NET ITC amount shown in the statement submitted by the petitioner on 01.08.2022 for the tax period December, 2021 to January, 2022 and when the NET ITC amount reflected in RFD-01 reflected input services not admissible for computation of refundable amount on account of inverted duty structure. It is further conten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 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‖ 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 subrules (4A) or (4B) or both; and [―Adjusted Total turnover‖ and ―relevant period‖ shall have the same meaning as assigned to them in sub-rule (4)." 7. To give effect to the provisions of the Act and Rules, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs GST Policy Wing issued circular No.125/44/2019-GST on 18.11.2019. Clause-3 thereof reads as follows: "3. With effect from 26.09.2019, the applications for the following types of refunds shall be filed in FORM GST RFD 01 on the common portal and the same shall be processed electronically: a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax; b. Refund of tax paid on ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... input tax credit. It is clarified 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 of input tax credit accumulated on account of inverted tax structure. 54. There have been instances where while processing the refund of unutilized ITC on account of inverted tax structure, some of the tax authorities denied the refund of ITC of GST paid on those inputs which are procured at equal or lower rate of GST than the rate of GST on outward supply, by not including the amount of such ITC while calculating the maximum refund amount as specified in rule 89(5) of the CGST Rules. The matter has been examined and the following issues are clarified: a) Refund of unutilized ITC in case of inverted tax structure, as provided in section 54(3) of the CGST Act, is available where ITC remains unutilized even after setting off of available ITC for the payment of output tax liability. Where there are multiple inputs attracting different rates of tax, in the formula provided in rule 89(5) of the CGST Rules, the term "Net ITC" covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isional refund. Undertaking in relation to sections16(2)(c) and section 42(2) Self-declaration under rule 89(2) (l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2) (m) otherwise. 5. Refund of ITC unutilized on account of accumulati on due to inverted tax structure Declaration under second and third proviso to section 54(3) Declaration under section 54(3)(ii) Copy of GSTR-2A of the relevant period Statement of invoices (Annexure-B) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-certified copies of invoice entered in Annexure-B whose details are not found in GSTR-2A of the relevant period. Statement 1A under rule 89(5) Statement 1A under rule 89(2)(h) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certified under rule 89(2)(m) otherwise Annexure-B to the aforesaid circular, which deals with statement of invoices to be submitted with application for refund of unutilized ITC, is given below in a tabular form: Sr. no GSTIN of the Supplier ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in response to RFD-08, the petitioner failed to submit the same and, as such, the amount of refund to be sanctioned could not be determined without proper verification of books of account. Therefore, the refund application of the petitioner was rejected. 10. On perusal of the statutory provisions and the circular governing the field, it is made clear that in order to get refund as per formula given under Rule- 89(5), the petitioner has to adhere to the said provisions. The prayer for refund has not been taken into consideration in proper perspective while passing the order impugned on the plea that the petitioner had not produced the relevant documents. What the petitioner had to submit that has already been mentioned in the provisions of the Act and Rules and CBIC guidelines, as mentioned above. Had the petitioner adhered to the same, no new plea would have been taken at this stage contending that since the petitioner had not produced books of accounts, it is not entitled to get refund of the amount. 11. Much reliance has been placed by the learned Additional Standing Counsel for CT & GST Department on paragraph-9 of the counter affidavit, wherein it has been specifically plead....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... per the monthly model wise vehicle manufactured and input used thereon. But the net ITC has been calculated as per Rule 89(5) of the OGST Rules and reflected in RFD-01 at Rs.2,22,97,228/-. Thus, there lied a mismatch of Rs.5,18,230/- in the net ITC amount disclosed. On account of such mismatch, the invoices of suppliers of the petitioner are required to be verified. But the petitioner failed to comply on this score. In absence of such compliance and in the interest of Govt. revenue the refund application of the petitioner has been rejected by the proper officer and the refund rejection order has been issued in RFD-06 on dated 02.08.2022." 13. It is admitted on the part of the opposite parties that the dispute is with regard to refund of Rs.5,18,230/-, which requires proper adjudication by the authority on production of documents, as claimed by the opposite parties. Therefore, excluding Rs.5,18,230/-, out of Rs.2,22,97,228/-, the balance amount has to be refunded to the petitioner. If any further amount is found to be refundable, the same can be paid after final adjudication. 14. In Canadian Eagle Oil Co. Ltd. v. R., (1945) 2 All ER 499, quoting with approval a passage from ROWLA....