TaxTMI 
TaxTMI 
2023 (12) TMI 237
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....rised 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-II, Delhi] rejecting the petitioner's appeal against the impug....
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.... 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 providing services of digital media management, online advertisement, management of....
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....t. 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 statements indicating the interest liability on delayed payment of IGST on inputs was comput....
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....ut 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 transaction was tax neutral and entitled the petitioner to resist payment of interest on delayed payment of tax. 8.8 It is relevant to note that the Appellate Authority also noted that there was no dispute as to the quantum of interest liability. However, Appellate Authority found that the Adjudicating Authority had incorrectly referred to Section 73 of the CGST Act and Rule 50 of....
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.... 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. 8.12 As stated above, the petitioner has filed the present petition assailing the impugned Order-in-Appeal dated 14.10.2020 passed by the Appellate Authority as it cannot avail the statutory right of appeal before the Goods and Services Tribunal because the same has not been constituted. WHETHER THE REVENUE'S APPEAL AGAINST THE ORDER DATED 24.10.2018 WAS BARRED BY LIMITATION. 9.....
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....er 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 period and not thereafter. 12. In view of the aforesaid, this Court had by an order dated 13.02.2023 directed the Revenue to file, inter alia, an affidavit disclosing the procedure adopted by it for communication of the Orders-in-Original. And, if such a procedure was established, the reasons for not following the same in the present case. In compliance with the said order, the Revenue filed an affidavit st....
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....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 answered in the negative. We are unable to accept that the appeal filed by the Revenue against the Order-in-Original dated 24.10.2018 was within the period of limitation for several reasons. First, we find it difficult to accept the Revenue's explanation regarding delayed communication of the Order-in-Original dated 24.10.2018. As noted above, there is no explanation as to how the concerned officer became aware of the ....
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....pellate 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 of refund under Sub-section (4) of Section 54 of the CGST Act within sixty days from the date of receipt of the application, complete in all respect. In contradistinction, any order passed by the Appellate Authority under Section 107 of the CGST Act is required to be sent to the Jurisdictional Commissioner or any authority designated by him in this behalf. In the given statutory framework, where there is no statutory provision req....
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....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. Also, the appellant have themselves quantified the interest liability in Annexure-II and III of appeal memo which is reproduced hereunder:- *** *** *** Thus, the interest liability as quantified by the Adjudicating Authority is also admitted by the appellant and that being the position, I need not discuss as to whether the interest is to be paid by the appellant or not. Thus, the lis involved is to be decided taking into account the fact that at the time of ge....
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....fore 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 Adjudicating Authority was entitled to adjust the interest due from the petitioner from the refund of the amount that is found admissible. 31. It is the petitioner's case that the Adjudicating Authority had accepted its claim for refund in full - that is, for an amount of Rs.24,33,20,306 - but had recovered an amount of Rs.5,08,03,767/- on account of liability, which was not the subject matter of any determination under Section 73 of the CGST Act. It is contended that no liability on account of interest could be d....
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....ST 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 very drastic. 13. Therefore, the learned single judge (LC Infra Projects Pvt. Ltd. v. Union of India (2020) 73 GSTR 248 (Karn))) rightly held in paragraph 6 of the impugned judgment that issuance of show-cause notice is sine qua non to proceed with the recovery of interest payable in accordance with sub-section (1) of section 50 of the GST Act." 37. There is no dispute that a taxpayer from whom interest is proposed to be recovered is required to be put to notice of the same. The principles of natural justice demand that he be given full ....
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....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 components namely, interest on delayed payment of GST on RCM on input supplies and interest on the delayed payment of IGST on exports. 44. The tabular statement set out in the Order-in-Original dated 24.10.2018 indicates that the petitioner had delayed depositing IGST of Rs.24,68,39,430/- on input services on RCM. Interest on such delayed payment of IGST on inputs was computed at Rs.2,26,71,171/-. 45. According to the petitioner, its profit margins are relatively low and the petitioner could not afford to block any amount in payment of GST. It is contended that at....
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....laim 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 equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." 47. The aforesaid passage was referred by the Supreme Court in Commisioner of Income Tax, Madras v. Ajax Products Limited (1965) 1 SCR 700. and in a number of decisions delivered thereafter. 48. The reliance placed by the petitioner on the decision of the Central Excise and Service Tax Appellate Tribunal in Jet Airways (I) Ltd. v. Commissioner of Service Tax, Mumbai 2016 SCC OnLine CESTAT 7389 and the decision of the Bomb....
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....sions 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 completely disregards the statutory scheme, which we cannot accept. In view of the above, we find no merit in the contention that the petitioner is not liable to pay interest on the delayed deposit of GST on input supplies on RCM method. 52. In addition to the interest liability on delayed payments of tax on RCM, the petitioner is also mulcted with interest liability for delayed payment of IGST on exports quantified at Rs.2,81,32,596/-. 53. The petitioner had exported supplies during the period July, 2017 to March, 2018 without payment of IGST under a LOU. It also filed its returns a....
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....eriod 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 liability by payment of IGST on export of services. 57. The interest liability on delayed payment of IGST is the statutory consequence of the assessee's claim that the exports made by it were on payment of IGST. There is no dispute that the IGST on the exports during the months of July, 2017 to March, 2018 was liable to be paid on various dates in August, 2017 to April, 2018 as mentioned in the tabular statement as set out by the Adjudicating Authority in the Order-in-Original dated 24.10.2018. 58. Clearly, if the petitioner's claim that it had exported goods on payment of IGST - on which its claim for refund....
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....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 respect of such services by amending the returns/invoices. There is no dispute that the petitioner had paid IGST on export of services albeit belatedly, by utilizing the accumulated ITC. Plainly, if the said payment of IGST was impermissible, there could be no impediment in the petitioner claiming the refund of the same. It is not open for the Revenue to contend that IGST was not payable and yet resist the refund of IGST paid by the petitioner. 63. As noted above, Ms Godiyal's contention that the apposite course for the petitioner was to seek refund of ITC for petitioner may be merited. This Court had pointedly asked if th....