TaxTMI 
TaxTMI 
2025 (9) TMI 470
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....s, we deem it appropriate to issue Rule which is made returnable forthwith. 2. The Petitioner, a private limited Company, is a manufacturer of Kraft Paper and is registered under the regime of the Goods and Services Tax Act, 2017. In the manufacturing process, the Petitioner uses raw material which include coal, which is used in boiler for generation of steam, on which the compensation cess is paid to the supplier in terms of the provisions of the Goods and Services Tax (Compensation to States) Act, 2017 while selling the product under export. The Petitioner is making export on payment of IGST @ 12% while utilizing the Input Tax Credit corresponding to compensation cess payment of CGST, IGST, SGST on the raw material. It is the specific submission of the learned Counsel for the Petitioner that the raw material coal is subjected to two type of levies, one is the CGST and IGST, and the other is the compensation cess. As far as the claim for refund in respect of the IGST and CGST is concerned, the Petitioner faced no difficulty as the same was allowed and the Petitioner availed the option contemplated in Clause (b) of Section 16(3) of the Integrated Goods and Services Tax Act, 2017....
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....Tax Act, but does not include the tax paid under the composition levy." 4. In contrast, when we look at the provisions contained in the Goods and Services Tax (Compensation to States) Act, 2017, an Act to provide for compensation to the States for loss of revenue arising on account of implementation of Goods and Services Tax in pursuance to the amendment introduced in the Constitution, for levying the Goods and Services Tax, we find the definition of Input Tax Credit in Section 2(g) to mean: "(i) cess charged on any supply of goods or services or both made to him; (ii) cess charged on import of goods and includes the cess payable on reverse charge basis. The term 'Cess' is defined in Section 2(c) to mean the goods and services tax compensation cess levied under Section 8." 5. Section 8 clearly stipulate that there shall be levied a cess on such intra-State supplies of goods or services or both, as provided for in Section 9 of the Central Goods and Services Tax Act, and such inter-State supplies of goods or services or both as provided for in Section 5 of the Integrated Goods and Services Tax Act, and collected in such manner as may be prescribed, for the pur....
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....te supply of goods and services, as the case may be. 7. It can thus be seen that as far as the procedural aspect of claiming input tax credit as well as the other matters like interest, appeals, offences and penalties, by incorporation, the statute has incorporated the provision of CGST Act while dealing with the levy and collection of cess on the intra-State supply of goods and services, and also the provisions of IGST Act in so dealing with inter-State supply of goods and services. It is a clear-cut situation of statute by incorporation, and therefore, when an application is made for refund of compensation cess by the applicant, it is an application under Section 11 (2) read with Section 16(3) of the IGST Act, 2017. What the Department is attempting to suggest, or rather has suggested is, if the Petitioner has adopted the mechanism prescribed in Clause (b) of Section 16(3) for the purpose of CGST/IGST, then the same mechanism must be followed while it claims refund in respect of compensation cess. 8. In our considered opinion, the said logic appear to be flawed and this is clear from their own Circular issued by the Government of India, Ministry of Finance dated 30.05.20....
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....y prescribed in Clause (a) of Section 16(3) while he claimed refund of the unutilized compensation cess as an input tax credit. Learned Counsel for the Petitioner would also rely upon the decision of the High Court of Gujarat at Ahmedabad in the case of Patson Papers Pvt. Ltd. v/s. Union of India (2025) 29 Centax 457 (Guj.), where a similar issue has been dealt with and a similar conclusion has been arrived at, and we find the conclusion recorded in the said decision in the following words: "21. On a conjoint reading of above provisions of the GST Act, IGST ACT and the GST (Compensation to State) Act, 2017 (for short 'the Cess Act') as well as para-5 of the Circular No.45/19/2018 and para-42 of Circular No. 125/44/2019, the respondent authority appears to have misinterpreted the circulars while rejecting the refund claim applications filed by the petitioner for refund of input tax credit of cess paid by the petitioner for purchase of coal utilized for manufacture of the goods which are exported. As per the provision of Section 54(3) of the GST Act read with Section 16(3) of the IGST Act and Section 11(2) of the Cess Act, the petitioner can claim the refund....