TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1326
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....group of petitions involve similar issue of denial of refund of tax in view of Circular No. 172/04/2022-GST dated 06.07.2022 issued under section 168 of the Central Goods and Service Tax Act, 2017 (For short "the GST Act"). 4. For the sake of convenience, Special Civil Application No. 18892 of 2023 is treated as a lead matter. Facts: 5. Brief facts of Special Civil Application No. 18892 of 2023 are that the petitioners are engaged in the business of manufacture and export of Tissue Paper, Wrapping Paper, Disposable Plastic Products. etc. being 100% Export Oriented Undertaking(EOU). 6. The petitioners purchased raw materials from the registered suppliers under the GST Act which was utilised for manufacture of the finished products for the purpose of export. 7. Section 54(3) of the GST Act provides for grant of refund of unutilised input tax credit in case of zero-rated supplies made without payment of tax. The petitioners are accordingly entitled to claim refund of unutilised input tax credit in respect of exports made without payment of tax. Supplies made by the registered person to a 100% EOU also qualified as deemed exports under the provisions of the GST Act. In c....
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....ed 06.07.2022, refund granted to the petitioners would be withdrawn. 13. The petitioners therefore preferred Special Civil Application No. 17246 of 2022 challenging the Circular No. 172/04/2022-GST dated 06.07.2022 as well as notice for withdrawing refund for the month of April, 2022. During the pendency of the petition, the respondent authority passed the impugned order dated 18.08.2022 withdrawing the refund for the month of April, 2022 amounting to Rs. 28,40,959/-. 14. The petitioners therefore, amended Special Civil Application No. 17246 of 2022 to challenge the said order. By order dated 07.09.2022, notice was issued by the Court and ad-interim relief against coercive recovery was granted. 15. In the meantime, the refund granted for the period from December, 2021 to March, 2022 was sought to be reviewed by the authority on the basis of circular dated 06.07.2022. By order dated 29.12.2022 passed under section 107(2) of the GST Act, relying upon the circular dated 06.07.2022, order dated 07.07.2022 passed by the Deputy Commissioner sanctioning the refund was reviewed by the Principal Commissioner, Central GST & Central Excise, Vadodara-1 and it was found that appeal be ....
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....llate authority for recovering refund granted to the Petitioners for the period from December 2021 to March 2022 as being wholly without jurisdiction, arbitrary and illegal; E. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to stay the operation, execution and implementation of impugned order dated 6.9.2023 (annexed at Annexure B); F. Ex parte ad interim relief in terms of prayer E may kindly be granted; G. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray." 19. Special Civil Application No. 17246 of 2022 is filed for the period prior to the impugned order passed by the appellate authority whereas Special Civil Application No. 17080 of 2023 is filed against the appeal order for the period of refund claimed for the month of May, 2022. Special Civil Application No.96 of 2025 is filed against the appellate order of withdrawal of the refund for the period from June, 2018 to May, 2019 whereas Special Civil Application No.8319 of 2025 is filed by Kumar World Trade Pvt. Lt....
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....eemed export Notification No. 48/2017 dated 18.10.2017 whereas in the facts of the present case, neither the supplier nor the recipient has taken the benefit of the deemed export notification and therefore, Rule 89(4A) of the GST Rules has no applicability. 24. It was submitted that merely because the suppliers have sold the goods to the petitioners upon payment of GST instead of taking benefit of the deemed export notification, the petitioners cannot be barred from claiming the refund on the exports made by the petitioners under section 54(3) of the GST Act. 25. Learned advocate Mr. Sheth in the alternative submitted that the show cause notice under section 73 of the GST Act could have been issued by the respondent in case of non-payment of tax or erroneous automatic refund of tax but in cases where there exists a quasi-judicial order adjudicating and sanctioning the refund application of the petitioner, section 73 would not be applicable and only remedy which would have been available to the respondents was to file an appeal against the refund sanctioning order. It was also pointed out that in cases where order granting refund is not challenged by the Assessing Authority, t....
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....s the assessees' the counsel submitted) but a restriction which must govern the grant of refund under Section 54(3). We, therefore, accept the submission which has been urged by Mr N. Venkataraman, learned ASG." Submissions of the respondents: 28. On the other hand learned advocate Ms. Hetvi Sancheti for the respondents submitted that the jurisdiction under sections 73 and 74 of the GST Act can be validly invoked to recover an erroneous refund granted under section 54 of the GST Act even in the absence of an appeal preferred against the refund order. It was submitted that sections 73 and 74 of the GST Act empowers the proper officer to issue a show cause notice to determine the amount of tax not paid, short paid or erroneously refunded due to reasons such as non-levy, short-levy or erroneous refund whether by reason of fraud, collusion, willful misstatement, suppression of facts or otherwise. 29. It was submitted that section 54 of the GST Act provides for grant of refunds subject to scrutiny and verification by the proper officer, however, an erroneous refund granted under the provisions of the GST Act does not attain finality which precludes the recovery proceedings unde....
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.... cannot be modified or changed without filing appeal and further tax collected cannot be refunded on the ground of being wrongly collected on refund application being made by the assessee without challenging the self-assessment order itself. It was submitted that in the facts of the said case, it was held that assessees are not vested with any such powers for opening the self-assessment orders whereas the provisions of section 73 and section 74 of the GST Act vests specific powers with the department to recover erroneous refund sanction. 35. It was submitted that in the facts of the case, no contentious issue has been adjudicated upon between the department and the assessee by the appellate authority and passing of an order under Form RFD-01 by the adjudicating authority cannot mean that issue of refund has been adjudicated upon. 36. It was submitted that it is a settled legal position that "if law prescribes certain thing to be done in a certain manner, it has to be done in that manner" and such principle is applicable in the facts of the case because as per the law, refund application ought to have been made under Rule 89(4A) of the GST Rules and therefore, the petitioners ....
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....ificatory in nature and therefore, the question of giving retrospective effect does not arise. 44. Reliance was placed on the decision of Hon'ble Supreme Court in case of WPIL Ltd Ghaziabad v. Commissioner of Central Excise, Meerut in Civil Appeal No. 4228-4229 of 1999. 45. In support of her submissions reliance was also placed on the following decisions: 1) M/s. Premier Cotton Textiles (supra). 2) Grasim Industries Limited (supra) 3) Vkc Footsteps India Private Limited (supra) Analysis: 46. The questions that arises for the consideration in this group of matters can be framed as under: 1) Whether the refund claim filed by the petitioner was rightly disallowed by the respondents on the ground that the petitioners did not file the refund claim under Rule 89(4A) of the GST Rules? 2) Whether the refund claim filed by the petitioners could have been rejected applying para 2.2 of the Circular No. 172/04/2022-GST dated 06.07.2022 issued by the respondents with the retrospective effect? 3) Whether the respondents were justified in exercising suo motu powers for reviewing the orders sanctioning the refund claim of the petiti....
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.... (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: 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. Appeals to Appellate Authority. 107(2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communicati....
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.... supply of goods means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less; (D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) "Adjusted Total Turnover" means the sum total of the value of- (a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; ....
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.... 1. Supply of goods by a registered person against Advance Authorisation 2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation 3. Supply of goods by a registered person to Export Oriented Unit 4. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation Explanation - For the purposes of this notification, 1. "Advance Authorisation" means an authorisation issued by the Director General of Foreign Trade under Chapter 4 of the Foreign Trade Policy 2015-20 for import or domestic procurement of inputs on pre-import basis for physical exports 2. Export Promotion Capital Goods Authorisation means an authorisation issued by the Director General of Foreign Trade under Chapter 5 of the Foreign Trade Policy 2015. 20 for import of capital goods for physical exports. 3. "Export Oriented Unit" means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provision....
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....ional GST officer. (ii) The registered supplier thereafter will supply goods under tax invoice to the recipient EOU/EHTP/STP/BTP unit. (iii) On receipt of such supplies, the EOU/EHTP/STP/BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to - (a) the registered supplier; (b) the jurisdictional GST officer in charge of such registered supplier, and (c) its jurisdictional GST officer. (iv) The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU/EHTP/STP/BTP unit. (v) The recipient EOU/EHTP/STP/BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in "Form-B" (appended herewith). The software for maintenance of digital records shall incorporate the feature of audit trail. While the data elements contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or re....
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....ed export 2 Whether the ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is to be included in the "Net ITC" for computation of refund of unutilised ITC under rule 89(4) & rule 89 (5) of the CGST Rules, 2017. The ITC of tax paid on deemed export supplies, allowed to the recipients for claiming refund of such tax paid, is not ITC in terms of the provisions of Chapter V of the CGST Act, 2017. Therefore, such ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is not to be included in the "Net ITC" for computation of refund of unutilised ITC on account of zero-rated supplies under rule 89(4) or on account of inverted rated structure under rule 89(5) of the CGST Rules, 2017. 48. The undisputed facts are that the petitioners are 100% Export Oriented Unit. The petitioners filed refund claim in view of Notification No. 48/2017 under section 54 of the GST Act read with Rule 89(4) of the GST Rules. The supplier of the goods to the petitioners did not avail the input tax credit and refund was sanctioned by the authorised office....
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.... 52. So far as para. 2.2 of the Circular No. 172/04/2022-GST dated 06.07.2022 is concerned, it only clarifies that input tax credit of the tax paid on deemed export supplies allowed to the recipients for claiming refund of such tax paid, is not input tax credit in terms of provisions of Chapter-V of the GST Act and therefore, such input tax credit availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is not to be included in the Net ITC for computation of refund of unutilised ITC on account of zero-rated supplies under Rule 89(4) or on account of inverted rated structure under Rule 89(5) of the GST Rules. Such clarification was made in view of the issue as to whether the input tax credit availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is to be included in the Net ITC for computation of refund of unutilised ITC under Rule 89(4) and Rule 89(5) of the GST Rules or not. 53. Rule 89(4) and Rule 89(5) of the GST Rules refers to the formula for computation of eligible refund in case of zero-rated supplies of goods or services or both without payme....
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....nswered in favour of the petitioners to the effect that respondents were not justified in disallowing the refund claim of the petitioners on the ground that the petitioners did not file such claim under Rule 89(4A) of the GST Rules. 57. As the petitioners are exporters of the goods and has never claimed the input tax credit under Notification No. 48/2017 as deemed exporter, para no. 2.2 of clarificatory Circular No. 172/04/2022-GST dated 06.07.2022 would not be applicable in the facts of the case and therefore, challenge to such circular is without any basis. We are therefore not deciding the question no. 2 as to whether such circular would be applicable with retrospective effect or not in facts of the case. 58. When we have already answered the issues on merits in favour of the petitioners to the effect that petitioners are entitled to refund claim of the ITC and the goods are exported without payment of tax under Rule 89(1)/89(4) of the GST Rules, whether the respondents were justified in review of the refund sanction order under section 107(2) of the Act or issue notice under section 73/74 of the GST Act for recovery of the refund paid to the petitioners would become acade....