TaxTMI 
TaxTMI 
2025 (5) TMI 538
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.... petitioner - M/s Indian Oil Corporation Ltd., is a Public Sector Undertaking engaged in storage and supply of various petroleum products like petrol, diesel, LPG-Domestic and LPG (Non-Domestic), Furnace Oil, Lubes, Superior Kerosene Oil (SKO) - PDS and petrochemicals. Petitioner maintains terminals/depots for SKO, Bunker fuel and bottling plants for LPG products from where it is stored and then supplied to respective customers. It is stated that LPG consists of various hydrocarbons such as Butane and Propane, which are imported. LPG is transported in bulk through road and pipelines to the petitioner's bottling plant. It is unloaded and bottled in cylinders. The cylinders are thereafter sealed and safety valves are fixed. The said cylinders are then distributed to customers. 2.1 It is contended that the goods supplied by the petitioner attract multiple rates of GST. It supplies LPG-Domestic, Bunker Fuel (Furnace Oil), Superior Kerosene Oil (SKO)-PDS which attract GST @ 5% and LPG Non-Domestic, Auto LPG, Lubricants, Petrochemicals etc. which are chargeable to GST @ 18%. In supplying the products that attract GST @ 5%, certain inputs are used which attract GST @ 5% or more, as....
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....3.04.2022 was allowed only to an extent of Rs. 72,06,385/-. Aggrieved by the impugned order passed by the respondent- appellate authority, petitioner is before this Court by way of the present petitions. 3. Heard learned Senior counsel for the petitioner and learned counsel for the respondent-revenue and perused the material on record. 4. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioner would elaborate his submissions as under; • Section 54(3)(ii) of the CGST Act does not proscribe/forbid the grant of refund where the input and the output are the same. It is submitted that clause (ii) of proviso to sub-section (3) of Section 54 of the CGST Act does not contemplate comparing rate of tax on the principal input with the rate of tax chargeable on the principal output supply. There is neither any reason nor any scope to further confine the refund of unutilised ITC only to the cases where the rate on main input is higher than the rate of tax on the principal output as held by the Delhi High Court in the petitioner's own case in Indian Oil Corporation Ltd., vs. Com....
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....he impugned orders deserve to quashed and the respondent be directed to grant refund in favour of the petitioner on this ground also. • It is submitted that the petitioner would be entitled to consequential interest on refund in terms of Section 56 of CGST Act, 2017 in that payment of interest under Section 56 of the CGST Act being statutory in nature is automatically payable in favour of the petitioner in case refund is not made within 60 days from the date of receipt of application. 4.1 In support of his submissions, learned Senior counsel placed reliance upon the following decisions: i) Indian Oil Corporation Ltd vs Commissioner of CGST - 2023(13) Centax 228 (Del); ii) Suchitra Components Ltd vs CCE, Guntur 2006(12) SCC 452; iii) K.P. Varghese Vs Income Tax Officers (1981) 131 ITR 597 (SC); iv) Baker Hughes Asia Pacific Ltd vs UOI 2022 (140) Taxmann.com 326 (Raj); v) Shivaco Associates vs Joint Commissioner of State Tax, Directorate of Commercial Taxes 2022 (59) GSTL 389 (Cal)(Para 16,17,26); vi) BMG Informatics (P) Ltd vs UOI 2021 (130) Taxmann.com 182 (Gau); vii) Malabar Fuel Corporation vs ACCT & C....
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....e 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. (4) The application shall be accompanied by- (a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and (b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declarati....
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....contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8). (10) Where any refund is due to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may- (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. Explanation.--For the purposes of this sub-section, the expression "specified date" shall mean the last date for filing an appeal under this Act. (11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings ....
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....eemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished; [(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies;] (c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of-- (i) receipt of payment in convertible foreign exchange "or in Indian rupees wherever permitted by the Reserve Bank of India", where the supply of services had been completed prior to the receipt of such payment; or (ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice; (d) in case where the tax becomes refundable as a consequence of judgment....
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....supplies are made under a concessional notification due to which the rate of tax on output supplies is less than the rate of tax on inputs. In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same point of time due to supply of goods by the supplier under such concessional notification, the credit accumulated on account of the same is admissible for refund under the provisions of clause(ii) of the first proviso to sub-section (3) of section 54 of the CGST Act, other than the cases where output supply is either Nil rated or fully exempted, and also provided that supply of such goods or services are not notified by the Government for their exclusion from refund of accumulated ITC under the said clause." 9. As rightly contended by the learned Senior counsel for petitioner, the Circular No.135/05/2020-GST dated 31.03.2020 was issued with two restrictions viz., the input and output being the same in such cases, though attracting different tax rates at different points in time, would not be covered under 54(3)(ii) of CGST Act, 2017 and accumulated ITC under Section 54(3)(ii) of the CGST Act would not be applicable in cases where the input a....
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....) has filed the present petition being aggrieved by denial of claims for the refund of accumulated Input Tax Credit (hereafter 'ITC'). The same was denied to the petitioner on the ground that the rate of tax on input supply and output supply are the same. According to the Revenue, the refund is not permissible in view of Clause (ii) of the proviso to Section 54(3) of the Central Goods & Service Tax Act, 2017 (hereafter 'the CGST Act'). 2. The petitioner states that it accumulates unutilized ITC on account of rate of tax on certain inputs being higher than the rate of tax, chargeable on bottled Liquid Petroleum Gas (hereafter 'LPG') - the petitioner's output supply. Thus, according to the petitioner, refund of unutilized ITC is not proscribed in terms of the proviso to Section 54(3) of the CGST Act. QUESTION TO BE ADDRESSED 3. The principal question that arises for consideration is whether in the given facts refund of accumulated ITC is proscribed by virtue of Clause (ii) of the proviso to Section 54(3) of the CGST Act. BRIEF FACTS 4. The petitioner, is a public sector undertaking and is, inter alia, engaged in....
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....the period for which the said applications were filed are set out below: Sl. No. Date of Order-in- Original Tax Period Refund Amount ( in. Rs. ) 1. 11-8-2022 October, 2018 to December, 2019 8,63,48,590.00 2. 11-8-2022 January, 2020 2,03,31,308.00 3. 11-8-2022 February, 2020 2,21,91,912.00 4. 24-8-2022 July, 2020 58,46,517.00 5. 24-8-2022 August, 2020 1,22,98,882.00 10. The said applications were acknowledged but the same were not processed. The concerned officer issued show cause notices (in Form GST RFD-08) pursuant to the respective refund applications filed by the petitioner. The petitioner responded to the said show causes notices. However, the petitioner's claims were not accepted. The Adjudicating Authority rejected the applications filed by the petitioner for various tax periods by respective Orders-in- Original. A tabular statement indicating the details of the Orders-in-Original (five in number) denying refund for the respective tax-periods is set out below: Sl. No. Date of Order-in- Original Tax Period Refund Amount ( in. Rs. ) 1. 11-8-2022 October, 2018 to December, ....
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....f total input utilized / availed by them. In this context, the adjudicating authority has mentioned para 3.2. of Circular No.135/05/2020-GST dated 31.03.2020 in the impugned order, which is reproduced hereunder: "3.2 It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rate at different points in time, do not get covered under the provisions of clause (ii) of sub- section (3) of section 54 of the CGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be applicable in cases where the input and the output supplies are the same." 6.1 In this context, the appellant submitted that the above clarification is not applicable in their case as it is applicable only in the cases where there is accumulation of ITC due to reduction in tax rate by the Government i.e. same goods were procured a....
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....h officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions." 17. It is apparent from the plain reading of Sub-section (1) of Section 168 of the GST Act that CBIC can issue such orders, instructions, or directions only if it considers it necessary and expedient to do for the purpose of uniformity in implementation of the CGST Act. Plainly, CBIC has no power to issue circulars in derogation of the provisions of the CGST Act. CBIC can neither add to the provisions of the CGST Act nor curtail the import of any part of the enactment. Section 168(1) of the CGST Act confines the powers of CBIC to issue circulars for uniformly implementing the provisions of the CGST Act. It can do nothing further. Plainly, if the IOCL is entitled to refund in terms of Section 54(1) of the CGST Act, the same cannot be denied by virtue of any circular issued under Section 168(1) of the CGST Act. 18. The question whether IOCL's claim for refund for accumulated unutilised ITC is admissible, has to be determined with reference to the express provisions of Section 54 of the CGST Act. In terms of Section 54(1) ....
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....VKC Footsteps India Pvt. Ltd.2 and had authoritatively held that the refund of unutilised ITC was confined to two categories as spelt out in Clauses (i) and (ii) of the proviso to Sub-section (3) of Section 54 of the CGST Act. The relevant extract of the said decision is set out below: "98. Sub-Section (3) of Section 54 begins, in its main part, with the stipulation that a registered person may claim refund of any 'unutilised ITC at the end of any tax period'. Whether we construe the first proviso as an exception or in the nature of a fresh enactment, the clear intent of Parliament was to confine the grant of refund to the two categories spelt out in clauses (i) and (ii) of the first proviso. That clauses (i) and (ii) are the only two situations in which a refund can be granted is evident from the opening words of the first proviso which stipulates that "no refund of unutilised input tax credit shall be allowed in cases other than". What follows is clauses (i) and (ii). The (2022) 2 SCC 603 intent of Parliament is evident by the use of a double - negative format by employing the expression "no refund" as well as the expression "in cases other than." In other words,....
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....n the output or for any other reason. In case where the accumulation of ITC is attributable solely to the rate of tax on inputs exceeding the rate of tax on output supplies, the taxpayer's claim for refund on accumulated unutilised ITC will squarely fall under Clause (ii) of proviso to sub- section (3) of Section 54 of the CGST Act. 23. It is important to note that Clause (ii) of Section 54(3) of the CGST Act does not proscribe the grant of refund where the input and the output are the same. Clause (ii) of proviso to sub-section (3) of Section 54 of the CGST Act merely restricts the refund of unutilised ITC to cases where there is accumulation of unutilised ITC on account of rate of tax on inputs being higher than the rate of tax on the output supplies. 24. Clause (ii) of proviso to sub-section (3) of Section 54 of the CGST Act does not contemplate comparing rate of tax on the principal input with the rate of tax chargeable on the principal output supply. There is neither any reason nor any scope to further confine the refund of unutilised ITC only to cases where the rate on main input is higher than the rate of tax on the principal output. 25. It is ....
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.... ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act. 3.2 It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be applicable in cases where the input and the output supplies are the same." 27. It is clear from a plain reading of paragraph 3.2 of the Circular 135/5/2020 that it seeks to clarify that in cases where input and output is the same but the tax has accumulated on account of the different tax rates at different points of time, refund under Section 54 of the CGST Act is not admissible. It is not necessary for this Court to examine whether such clarification falls foul of S....
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.... the output supply was the same. The Calcutta High Court accepted the petitioner's claim and rejected the Revenue's contention that refund was not admissible by virtue of the Circular 135/05/2020. The Court held that any circular issued under Section 168(1) of the CGST Act "cannot supplant or implant any provision which is not available in the Act". The Circular could not restrict release of benefits as provided under the CGST Act. The Court held as under: "26. In the present case, the Act does not mention about non-granting of the benefit of accumulated input tax credit where the input and output supplies are the same. The circular is trying to restrict the refund to a particular set of supplies. The circular is trying to create a class inside the class, which is impermissible. According to the Act, refund is permissible in respect of all classes where the input tax is higher than the output tax. By way of the circular, the Board is curtailing the said benefit and making refund permissible only if the input and output supplies are different. The same amounts to overreaching the provisions as laid down in the Act. 27. It cannot be said that the legislature....
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....d on the basis that though the input supply and output supply is the same, the rate chargeable on input and output are different. In any view, we find no merit in the Revenue's contention. 37. In view of the above, the present petition is allowed. 38. The concerned authority is directed to process the petitioner's applications for refund along with applicable interest in accordance with law as expeditiously as possible and in any event, within a period of six weeks from date. 39. The pending application is also disposed of." 14. A similar view has been taken by other High Courts in the following judgments:- (i) Baker Hughes Asia Pacific Ltd vs UOI 2022 (140) taxmann.com 326 (Raj)(Para 14); (ii) Hon'ble Calcutta High Court Shivaco Associates vs Joint Commissioner of State Tax, Directorate of Commercial Taxes 2022 (59) GSTL 389 (Cal)(Para 16, 17, 26); (iii) BMG Informatics (P) Ltd vs UOI 2021 (130) taxmann.com 182 (Gau)(Para 28); (iv) Malabar Fuel Corporation vs ACCT & CE 2024 (15) Centax 153 (Ker)(Para 10-11); (v) MO Industries vs UOI 2024-TIOL 1245 HC RAJ GST (Para 7); (vi) Eveready Spinning....