TaxTMI 
TaxTMI 
2023 (12) TMI 237
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.... account of interest liability. The interest liability comprised of an amount of Rs.2,26,71,171/-, on account of interest on delayed payment of tax on input supplies on Reverse Charge Method (hereafter 'RCM') and Rs.2,81,32,596/- as interest on delayed payment of IGST on zero rated supplies. The Adjudicating Authority had passed the impugned Order-in-Original dated 08.08.2019 pursuant to a remand by the learned Appellate Authority holding that the adjustment on account of interest was permissible under Section 75 (12) of the Central Goods & Services Tax Act, 2017 (hereafter 'the CGST Act') and Section 79(1)(a) of the CGST Act. 2. In addition, the petitioner impugns the Review Order dated 16.10.2019 passed by respondent no. 1 [Principal Commissioner, Central Goods & Service Tax, Delhi, South Commissionerate] directing that an appeal be filed for setting aside the impugned Orders-in-Original dated 24.10.2018 and 08.08.2019 to the extent that the said orders accepted the petitioner's claim for a refund of IGST in the sum of Rs.24,33,20,306/-. 3. The petitioner also impugns an Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority [Commissioner of Central Tax, Appeals....
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....ate of the impugned Order-in-Original dated 08.08.2019. Since, the said order dealt with the question of refund, the Revenue's right to review the same was wide enough to cover all aspects of refund, including the petitioner's claim for the refund of Rs.24,33,20,306/- which was accepted by the Adjudicating Authority. 7. It is the Revenue's case - which was accepted by the Appellate Authority in its impugned Order-in-Appeal dated 14.10.2020 - that the petitioner having chosen to export the goods under a Letter of Undertaking (LOU) without payment of Central Goods and Service Tax (hereafter 'CGST') was precluded from changing its option to pay IGST and claim refund on export of services (zero rated supply). It is submitted that the only recourse available to the petitioner was to seek refund of ITC on account of tax paid on RCM in respect of import of input supplies. Since the petitioner had not filed any application seeking refund of the said ITC and had confined its application to the refund of IGST, its claim for refund was unsustainable. 8. The controversy in the present case arises in the following factual context. 8.1 The petitioner is engaged in the business of provid....
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....mending its invoices to reflect the same as invoices bearing IGST under the IGST Act. In the month of August, 2018, the petitioner deposited IGST for its input supplies (on RCM). It also deposited IGST on export of services by utilizing the ITC that was accumulated on account of payment of IGST on input supplies. Thereafter, on 28.08.2018, the petitioner filed an application claiming Rs.24,33,20,306/- as refund of IGST paid against zero rated supplies. 8.5 The refund application was duly acknowledged by respondent no. 2. The said application was disposed of by the Adjudicating Authority by the Order-in-Original dated 24.10.2018. The Adjudicating Authority accepted the petitioner's claim for refund of IGST amounting to Rs.24,33,20,306/-, however, it held that the interest due on delayed payment of IGST on RCM, on inputs as well as on the interest liability on delayed payment of IGST, was required to be adjusted under Section 73 of the CGST Act read with Rule 50 of the Central Goods & Services Tax Rules, 2017 (hereafter 'the CGST Rules'). The aggregate of the interest was computed as Rs.5,08,03,767/-. Accordingly, the net amount of Rs.19,25,16,539/- was sanctioned. Tabular stateme....
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....In addition, the petitioner contended that the transactions were tax neutral and that the petitioner had no real liability to pay any tax. Although, it was liable to pay IGST on import of services, it was entitled to refund of the same on export of services. It was also entitled to a refund of any IGST paid on output supplies, therefore, the delay in payment of IGST, input or on output supplies did not prejudice the Revenue in any manner. It is also contended that the levy of interest is compensatory in nature, thus, if the petitioner is entitled to refund on payment, the Revenue cannot claim any interest on account of any delay as in any event it could not retain any amount of IGST so paid. 8.7 The Appellate Authority rejected the aforesaid contentions. It held that the petitioner was required to pay IGST and interest on its own in terms of Section 50(1) of the CGST Act without waiting for any show cause notice under Section 73 of the CGST Act. The learned Appellate Authority held that it was not permissible for the petitioner to withhold payment of IGST for periods ranging over four months to a year. Therefore, the Appellate Authority rejected the contention that the transacti....
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....nd of IGST. According to respondent no. 1, it was not open for the petitioner to amend its returns and change its option of exporting the services on payment of IGST after the services in question are exported. The said Authority accordingly directed filing of an appeal against both the impugned Orders-in-Original (Order-in-Original dated 24.10.2018 and the Order-in-Original dated 08.08.2019). In terms of the said Review Order dated 16.10.2019, the Revenue filed appeals before the Appellate Authority. Both the appeals (appeal preferred by the Revenue as well as the appeal preferred by the petitioner) were disposed of by a common order dated 14.10.2020. The Appellate Authority allowed the appeal filed by the Revenue and rejected the petitioner's appeal. The Appellate Authority accepted the contention that it was not permissible for the petitioner to amend its return and therefore, the refund of IGST was neither just nor proper. The Appellate Authority did not accept that the appeal filed by the Revenue against the Order-in-Original dated 24.10.2018 was barred by limitation. It also did not accept the contention that the transaction was revenue neutral as claimed by the petitioner. ....
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....s shall apply to such application." 10. It is apparent from the plain reading of Sub-section (2) of Section 107 of the CGST Act that any application to the Appellate Authority at the instance of the Commissioner can be made only within six months of the communication of the decision or order passed by the Adjudicating Authority. 11. In the present case, the Review Order was passed by the Commissioner on 16.10.2019, that is, almost one year after the impugned Order-in-Original dated 24.10.2018. Subsequent thereto, the Revenue, filed an appeal on 17.10.2019. Notwithstanding the same, it was contended on behalf of the Revenue that its appeal against the Order-in-Original dated 24.10.2018 was within time as that order was received by the Revenue Branch (Commissioner) on 24.09.2019. The petitioner disputes that the information regarding the Order-in-Original was received on 24.09.2019 as claimed by the Revenue. The petitioner also contends that in any event the Revenue cannot draw any advantage on account of any delay in intra-departmental communications, as accepting the same would negate the legislative intent of ensuring that the appeals are filed within the specified time peri....
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....e of the Order-in-Original dated 08.08.2019. 15. The Revenue claims that on becoming aware of the Order-in-Original dated 08.08.2019 (although the Revenue has not explained as to how the Review Branch became aware of the same), the Review Branch sent a letter dated 19.09.2019 informing, respondent no. 2 that it had not received the Order-in-Original dated 08.08.2019. On receipt of this letter, respondent no. 2 once again forwarded the Order-in-Original dated 08.08.2019 to the Review Branch under cover of its letter dated 20.09.2019. 16. It is stated that on receipt of the Order-in-Original dated 08.08.2019, the Review Branch became aware of the existence of the Order-in-Original dated 24.10.2018. The Review Branch then sent a letter dated 24.09.2019 to respondent no. 2 requesting for a certified copy of the Order-in-Original dated 24.10.2018, which was supplied by respondent no. 2 under cover of the letter issued on the same date, that is, on 24.09.2019. 17. The question that arises for consideration is whether, in the given facts, the stipulated time for filing the appeal is required to be reckoned from 24.09.2019. 18. In our view, the said question is required to be a....
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....in which the appeals can be preferred to the Appellate Authority. In terms of Sub-section (1) of Section 107 of the CGST Act, any person aggrieved by the said decision of the Adjudicating Authority can file an appeal to the Appellate Authority within a period of three months from the date on which the order is communicated to such person. In terms of Subsection (2) of Section 107 of the CGST Act, the Revenue can apply to the Appellate Authority within a period of six months of communication of the order passed by the Adjudicating Authority. In terms of Sub-section (4) of Section 107 of the CGST Act, the Appellate Authority can condone the delay for filing an appeal beyond the period of six months, subject to maximum of one year. Further, Sub-section (13) of Section 107 of the CGST Act enjoins the Appellate Authority to, where it is possible to do so, hear and decide the appeal within a period of one year from the date on which it is filed. 24. It is also important to note that there is no provision which requires the Adjudicating Authority to communicate its orders intra-departmentally. In terms of Section 54(7) of the CGST Act the Proper Officer is required to issue the order o....
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....pute with regard to the admissibility of refund claim. The lis has arisen out of adjustment of Rs.5,08,03,767/- out of the sanctioned refund claim". It is material to note that the Revenue was a party to the proceedings before the Appellate Authority. The Appellate Authority had also noted certain admitted facts as is apparent from the following extract from the Orders-in-Appeal dated 30.04.2019: "4(ii) First of all, I note that the appellant have disputed neither interest liability nor the quantum thereof. For such conclusion, I refer to para 5 & 6 of statement of facts and para no. 6.2 to 6.4 of grounds of appeal. Admitted facts are:- a. The IGST of more than Rs. 24.68 Crores on account of import of service was payable for the period from September 2017 to March 2018 but the same has been paid with delay ranging from 124 days to 309 days. b. The IGST of more than 24.33 Crores on account of payment of tax on zero rated supply of service was payable for July 2017 to March 2018 but the same has been paid with the delay ranging from 127 days to 365 days. c. That the appellant are liable to pay the interest of Rs. 5,08,03,767/- for such offence. ....
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....at the Appellate Authority had upheld the admissibility of the petitioner's claim for refund of IGST as well as the order adjusting the interest on delayed payment of IGST on inputs and IGST on exports. The matter ought to have concluded at that. However, the matter was remanded to the Adjudicating Authority. The Appellate Authority has found no fault with the admissibility of the petitioner's claim for refund, the matter was remanded to the Adjudicating Authority for a limited purpose and the proceedings before the Adjudicating Authority on remand were confined to the examination of the provisions of law under which any adjustment on account of any unadjudicated interest liability was permissible. 29. In view of the above, there is no doubt that the Order-in-Original dated 24.10.2018 stood merged with the Order-in-Appeal dated 30.04.2019. The Revenue's contention that the matter was set at large in view of the remand order is unmerited. Consequently, the Revenue appeal in respect of matter determined in the Order-in-Appeal dated 30.04.2019 was not maintainable. WHETHER ADJUSTMENT OF INTEREST LIABILITY IS PERMISSIBLE. 30. The next question to be considered is whether the A....
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.... by an assessee in his return, the same is required to be paid and if not paid can be recovered under Section 79 of the CGST Act. 36. In Union of India v. L.C. Infra Projects Pvt. Ltd. 2020 SCC OnLine Kar 5093, the Karnataka High court considered the question whether a notice under Section 73(1) of the CGST Act was applicable in respect of interest payable under Section 50 of the CGST Act. In the aforesaid context, the Karnataka High Court observed as under: "11. On plain reading of sub-section (1) of section 73 of the GST Act it is applicable when any tax has not been paid or short-paid. It contemplates that a show-cause notice is to be issued to the assessee calling upon him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 of the GST Act. 12. Assuming that sub-section (1) of section 73 is not applicable, in our view, before penalizing the assessee by making him pay interest the principles of natural justice ought to be complied with before making a demand for interest under sub-section (1) of section 50 of the GST Act Consequence of demanding interest and non-payment thereof is v....
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....e on which it is paid, the amount of interest would be a matter of calculation. 41. Having stated the above, in case there are contentious issues, which require to be adjudicated, a proper notice is required to be issued to the taxpayer and the quantum of interest payable is required to be adjudicated. In the present case, the adjudicating officer has adjudicated the interest payable and there is no dispute as to the material facts on the basis of which said interest is calculated. In these circumstances, the principles of natural justice are satisfied and there was no requirement for the Adjudicating Authority to issue any further notice. The petitioner has also availed of remedy of an appeal under Section 107 of the CGST Act. 42. In view of the above, we find no infirmity with the process of adjusting interest as payable on the admitted tax against the amount refundable to a tax payer. WHETHER THE PETITIONER IS LIABLE TO PAY INTEREST AS DETERMINED BY THE ADJUDICATING AUTHORITY. 43. As noted hereinbefore, the Adjudicating Authority had recovered an amount of Rs.5,08,03,767/- on account of interest payable on delayed payment of tax. The said amount comprised of two comp....
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....evy cannot be avoided on the ground that the petitioner at a subsequent stage is entitled to a refund of the ITC. The assumption that since the transaction of imports and exports is revenue neutral, the same would absolve the petitioner from payment of GST or any interest thereon is contrary to law. It is not open for the assessee to plead that since the supply imported was required to be exported, the petitioner was absolved from the statutory levy under the IGST Act. Refund of unutilized ITC or GST is available only in terms of the relevant statutory provisions. A claim for refund of tax collected in accordance with law is a statutory right and is circumscribed by the statutory provisions. There is little scope for imputing principles of equity in matters of tax, which are covered by the statutory provisions. As observed by Subba Rao J in Commissioner Income Tax, Madras & Anr v. V. MR P. Firm Mua & Ors. (1965) 1 SCR 815, "equity is out of place in tax law". In Cape Brandy Syndicate v. Inland Revenue Commissioner 1921 (1) KB 64, Rowlatt J had observed: "....in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equ....
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....deemed exports and benefit from tax was available in the circumstances. It is in these circumstances that the Court had come to the conclusion that the decision of the Settlement Commission to impose tax was not warranted. 50. The substratal principle followed by the Tribunal in Jet Airways (I) Ltd. v. Commissioner of Service Tax, Mumbai and the Bombay High Court in Apar Industries Ltd. v. B.S Ganu is that if the assessee does not prevail in its contention regarding the taxability and is held to be liable to pay tax, the assessee need not be deprived of the benefit of other provisions that may as a consequence be available to the assessee. It is necessary to bear in mind that levy of tax is not a punitive measure. Thus, if an assessee has filed its return on the belief that it is not liable to pay taxes and the said assumption is found to be erroneous, the assessee may be fastened with the liability to pay tax but ought not be deprived of the benefit of other provisions that are available in such eventuality. 51. The petitioner's contention that it is not liable to pay interest on delayed payment of GST on inputs on RCM as it may eventually be entitled to refund of the same c....
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....under a bond or LOU or refund of IGST paid on the goods and service tax in respect of zero rated supplies made on payment of IGST. Since, the petitioner had exported supplies without payment of IGST at the material time, it was entitled to claim refund of unutilized ITC in respect of input supplies. However, the assessee could not claim such refund at the material time because it had not deposited IGST on RCM on inputs. Apart from a small amount of Rs.26,71,165/- paid as IGST for part of services imported in the month of September 2017, which was paid on 20.02.2018, the payment of IGST on imports for the period September, 2017 to March 2108, were paid on 24.08.2018. Therefore, unutilized ITC in respect of the outwards supplies was not available to the petitioner for discharging its liability to pay IGST on exports on due dates when the said lability fell due. 56. The petitioner's grievance essentially arises because it, at a subsequent stage, had sought to amend the invoices in its return. The petitioner now reflected that the supplies were exported with payment of IGST. The petitioner's application for refund of IGST was also premised on the basis that it had discharged its lia....
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.... alter its option to reflect exports as IGST paid after having effected the exports under a LOU without payment of IGST. This is because the petitioner's claim for refund had been accepted by the Adjudicating Authority by Order-in-Original dated 24.10.2018. The said order was premised on the basis that the petitioner is entitled to refund of GST paid on zero rated supplies. The said finding was affirmed by the Appellate Authority in terms of an Order-in-Appeal dated 30.04.2019. The petitioner had accepted the said finding. The Revenue has sought to review the Orders-in-Original dated 24.10.2018 and 08.08.2019 after the aforesaid findings have been affirmed by the Appellate Authority. 62. As noted above, the appeal filed by the Revenue impugning the decision to admit the quantum of refund was liable to be rejected as having been preferred beyond the prescribed period. However, it is also material to note that the Revenue's appeal was premised on the basis that the petitioner could not amend or alter its return/invoices to reflect export of services on payment of IGST instead of export under LOU. According to the Revenue, it was not permissible for the petitioner to pay IGST in re....