TaxTMI 
TaxTMI 
2025 (9) TMI 537
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...., the CGST Act) by the Division Bench. The interpretation of the provisions arises as the respondent - SICPA India Private Ltd. (for short, SICPA) insists that the unutilised Input Tax Credit (for short, ITC) is required to be refunded by the appellant under section 49(6) of the CGST Act. SICPA succeeded before the writ Court and therefore, the Union of India has preferred this appeal. Submissions 2. The learned Deputy Solicitor General of India submits that the CGST Act and the relevant provisions for refund of ITC has already been examined and decided by the Hon'ble Supreme Court in Union of India vs. VKC Footsteps (India) (P) Ltd. (2022) 2 SCC 603 and the present writ appeal may be disposed of as the interpretation rendered therein is binding. She also relied upon the judgment of the Division Bench of Tripura High Court in M/s Sterlite Power Transmission Limited vs. Additional Commissioner, CGST and CX and others (2024) SCC Online Tri 879, in which it was held that in case of accumulated ITC remaining in the credit ledger of the tax payer, refund is not made out under section 54(3) of the CGST Act as none of the enumerated conditions are made out. 3. The learned Counsel....
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....ikkim. It was also claimed that during the period April 2019 - March 2020, SICPA sold all the machineries and manufacturing facilities and at the time of sale of assets SICPA had reversed the ITC, as per applicable provisions under GST law. It was contended that due to closure of business operation, SICPA had accumulated balance of ITC amounting to Rs. 4,37,61,402/- for which refund was claimed in terms of section 49(6) of the CGST Act to be refunded in accordance with the provisions of section 54 of the Act. The refund claim for unutilised ITC was made by filing FORM GST RFD-01 under the category 'any other'- "under sub-section (6) of section 49 of the CGST Act for unutilised ITC balance lying in the electronic ledger upon discontinuance of business". The Form, it is noticed, did not contain the self declaration by SICPA under section 54(4) on its claim that it was not applicable. This means that the application was not 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 ....
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....ST Act deals only with two circumstances where refunds can be made, however the statute also does not provide for retention of tax without the authority of law. Consequently, I am of the considered view that the Petitioners are entitled to the refund of unutilised ITC claimed by them and it is ordered so." 8(i). We notice that the parties did not refer to the judgment of the Hon'ble Supreme Court in VKC Footsteps (supra) before the learned Single Judge. Slovak India 9. In Slovak India (supra) referred to by the learned Single Judge, the High Court of Karnataka had examined a refund claim which was allowed by the Tribunal when there was no provision in rule 5 of the Cenvat Credit Rules, 2002, to refund the unutilised credit. The Tribunal allowed the claim application on the ground that refund cannot be rejected when the assessee goes out of Modvat Scheme or when the company is closed. The assessee was engaged in the manufacture of shoes. It surrendered its registration and thereafter made a refund application. During internal audit, it was noticed that the assessee had availed Cenvat Credit of the materials received by them during the past on the strength of the photocopies....
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....f the Karnataka High Court and it was confirmed on its own merits; It was reasoned that question arising for consideration on facts almost identical to previous case, the Revenue cannot be allowed to take a different view. However, the Hon'ble Supreme Court dismissed SLP No. CC 10805/2011 against the judgment of the High Court of Bombay in Jain Vanguard Polybutlene (supra) vide order dated 12.07.2011 but left the question of law open. 9(iii). Although the learned Single Judge relied upon Slovak India (supra), it is also noticed that a three Judges Bench of High Court of Bombay in Gauri Plasticulture P. Ltd. vs. Commissioner of Central Excise (2019) SCC OnLine Bom 996 examined as to whether a refund of unutilised amount of Cenvat Credit on account of closure of manufacturing activities can be granted. It also examined as to whether what is observed in the order dated January 25, 2007 passed by the Hon'ble Supreme Court in a petition for Special Leave to Appeal (Civil) No. CC467 of 2007 (Union of India vs. Slovak India Trading Co. Pvt. Ltd.) can be read as a declaration of law under Article 141 of the Constitution of India. The Bombay High Court opined after a detailed analysis an....
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....ax and the amount remaining, if any, may be utilised towards the payment of integrated tax; (c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of integrated tax: Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax; (d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining, if any, may be utilised towards payment of integrated tax: Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax; (e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and (f) the State tax or Union territory tax shall not be utilised towards payment of central tax. (6) The balance in the electronic cash ledger....
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....such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of Section 49, may claim such refund in such form and manner as may be prescribed. (2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under Section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of two years from the last day of the quarter in which such supply was received. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refu....
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....visional basis, ninety per cent. of the total amount so claimed, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant. (7) The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects. (8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) refund of tax paid on export of goods or services or both or on inputs or input services used in making such exports; (b) refund of unutilised input tax credit under sub-section (3); (c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued; (d) refund of tax in pursuance of Section 77; (e) the tax and interest, if any, or any other amount paid by the appli....
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....ntrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of Section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under Section 39. (14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees. Explanation.-For the purposes of this section,- (1) "refund" includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3). (2) "relevant date" means- (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,- (i) i....
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.... as to supply any assumed deficiency (see Union of India & Others vs. Ind-Swift Laboratories Limited (2011) 4 SCC 635). (ii). It is also equally well settled that in interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed: it cannot imply anything which is not expressed; it cannot import provisions in the statutes so as to supply and assume deficiency (see Commissioner of Sales Tax vs. Modi Sugar Mills Ltd. (1961) 12 STC 182(SC)). 12. We shall now examine whether the judgment rendered by the Hon'ble Supreme Court in VKC Footsteps (supra) is distinguishable from the facts of the present case. VKC FOOTSTEPS 12(i). In VKC Footsteps (supra), the Hon'ble Supreme Court was called upon to examine two conflicting views of the High Court of Gujarat and the High Court of Judicature of Madras passed in writ petitions under Article 226 of the Constitution of India. The Gujarat High Court directed the Union of India to allow ....
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....o conditions and within such time as is prescribed. Similarly, sub-section (4) of Section 49 stipulates that the amount available in the electronic credit ledger can be used for making payment towards output tax under the CGST Act or under the IGST Act in such manner and subject to the conditions and within such time as is prescribed. Sub-section (5) of Section 49 spells out the priorities according to which the amount of ITC available in the electronic credit ledger can be utilised. Sub-section (6) of Section 49 is significant and provides as follows: "49. (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of Section 54." 73. The provisions of Section 16 and Section 49 indicate the following position: 73.1. The ITC in the electronic credit ledger may be availed of for making any payment towards output tax under the CGST Act or under the IGST Act. 73.2. The amount available in the electronic cash ledger may be used for making any payment towards tax, interest,....
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....be recast, without altering its meaning to read that a refund of unutilised ITC shall be allowed only in the cases governed by clauses (i) and (ii). Clause (i) deals with zero-rated supplies without payment of tax. Explanation 1 to Section 54 clarifies that the expression "refund" includes refund of tax paid on zero-rated supplies on goods or services or both, or on inputs or input services used in making such zero-rated supplies. On the other hand, in the case of deemed exports, Explanation 1 refers to a refund of tax on the supply of goods. Likewise in regard to domestic supplies, governed by clause (ii) of the first proviso, the expression "refund" means refund of unutilised ITC as provided under sub-section (3). With the clear language which has been adopted by Parliament while enacting the provisions of Section 54(3), the acceptance of the submission which has been urged on behalf of the assessee would involve a judicial re-writing of the provision which is impermissible in law. Clause (ii) of the proviso, when it refers to "on account of" clearly intends the meaning which can ordinarily be said to imply "because of or due to". When proviso (ii) refers to "rate of tax", it ind....
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....v). Sub-section 6 of section 49, contemplates a refund of the balance which remains in the electronic cash ledger or electronic credit ledger in the manner stipulated by the provisions of section 54. (v). Clauses (i) and (ii) of the first proviso to sub-section (3) of section 54 are the only two situations in which a refund can be granted. (vi). The first proviso to section 54(3) is not a condition of eligibility but a restriction which must govern a grant of refund under section 54(3). (vii). To interpret section 54(3) in any other manner would involve a judicial re-writing of the provision which is impermissible in law. 14. In view of the interpretation and clarification of sections 49 and 54 of the CGST Act by the Hon'ble Supreme Court in VKC Footsteps (supra), we have no hesitation in rejecting the contention of the learned Counsel for SICPA that they were eligible to be granted refund under section 49(6) alone. Section 49(6) permits the refund of the balance of electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under the CGST Act or the Rules made thereunder in accordance wit....
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....s), except supplies of goods or services or both as may be notified by the Government on the recommendation of the Council. Therefore, we reject this submission of the learned Counsel for SICPA. 16. With great respect, we cannot agree with the opinion rendered in the impugned judgment as it is contrary to the opinion of the Hon'ble Supreme Court in VKC Footsteps (supra). Admittedly, VKC Footsteps (supra) was not brought to the notice of the learned Single Judge. With the clear language which has been adopted by Parliament while enacting the provisions of section 54(3), the opinion would involve a judicial re-writing of the provision which is impermissible in law. It would require us to add an additional clause in section 54(3) to enable the refund on closure of business beyond clauses (i) and (ii) thereof. This would lead to recognising an entitlement to refund beyond what was contemplated by the Parliament. We are of the view that the opinion that there is no express prohibition in section 49(6) read with section 54 and 54(3) of the CGST Act for claiming a refund on closure of unit is not correct. We are of the view that section 54(3), in fact, is a restriction to the refund on....
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....proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,- (a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or (b) there is any change in the constitution of the business; or (c) the taxable person is no longer liable to be registered under Section 22 or Section 24 or intends to optout of the registration voluntarily made under sub-section (3) of Section 25: Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed. (2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,- (a) a registered person has contravened such provisions of the Act or the rule....
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....ion 15, whichever is higher. (6) The amount payable under sub-section (5) shall be calculated in such manner as may be prescribed." [emphasis supplied] 18(ii). It is noticed that section 29 deals with cancellation of registration in view of discontinuance of business as well. Sub-section 5 of section 29 provides that when such cancellation takes place the registered person, i.e., SICPA herein, shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceeding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed: provided that in case of capital goods or plant and machinery, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery under....