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IN THE HIGH COURT OF JUDICATURE AT PATNA
K. VINOD CHANDRAN, CJ., HARISH KUMAR, J.
M/s Induvarna LPG Bottling Private Limited, through its Managing Director, Jnanendra Jha (Male), S/o Dr. (Prof) Binodanand Jha – Petitioner
Versus
The Union of India through the Secretary Department of Revenue, Ministry of Finance and Ors. - Respondents
Civil Writ Jurisdiction Case No.18609 of 2023
Decided On : 29-02-2024
Central Goods and Services Tax Act, 2017 (CGST Act) – Section 54(3)(ii) read with Central Goods and Services Tax Rules, 2017 (CGST Rules) – Rule 89(5) – Refund of tax paid on the 'Inverted Duty Structure' – Section 54 of the CGST Act has the nominal heading of 'Refund of Tax' under which the refund of higher tax paid on purchase, than that levied on subsequent sale; is provided by sub-section (1) – It is also a mandate that such refund application shall be filed before the expiry of two years from the relevant date, in such form and manner as may be prescribed – Petitioner had paid tax in accordance with the statute and had filed all its return in time – Application for refund of the tax credited back to the ledger to be perfectly in order – Refund of the amounts set off from the credit ledger of the petitioner is directed to be made as tax due on the enhanced demand made for the Assessment years 2018-19 and 2019-20, which now stands refunded as per the appellate order – Writ application allowed – Refund to be effected within two months. (Paras 2, 13 & 14)
JUDGMENT :
(K. Vinod Chandran, CJ.)
The petitioner is before this Court claiming a refund of the tax paid by the petitioner on the ‘Inverted Duty Structure’ applicable to the business carried on by the petitioner; being bottling of LPG.
2. The petitioner purchases LPG in bulk after paying the applicable tax. The bulk LPG purchased is bottled in cylinders and sale is made to customers, collecting tax from commercial users; at the same rate of purchase of LPG and to the domestic users, at a lesser rate. As per Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 (for brevity ‘CGST Act’) read with Rule 89(5) of the Central Goods and Services Tax Rules, 2017 (for brevity ‘CGST Rules’) a refund of such differential tax is provided which is defined by the term ‘Inverted Duty Structure’.
3. Section 54 has the nominal heading of ‘Refund of tax’ under which the refund of higher tax paid on purchase, than that levied on subsequent sale; is provided by sub-section (1). It is also a mandate that such refund application shall be filed before the expiry of two years from the relevant date, in such form and manner as may be prescribed. The petitioner had paid tax in accordance with the statute and had filed all its returns in time.
4. The period in the present case relates to the Financial Year 2018-19, specifically to the period between October 2018 to March 2019. The petitioner filed an application for refund in the format RFD-01 on 12.04.2023 in terms of Rule 89(1) read with Section 54 of the GST Act much later to the limitation period and claimed a refund of Rs 6,12,487/-paid under IGST.
5. The 6th respondent who is the Assessing Officer of the petitioner issued Annexure-P/4 pointing out that the application is filed beyond the limitation period, to which the petitioner replied by Annexure-P/5. It was the contention of the petitioner, in the reply filed, that since the petitioner did not succumb to the Assessing Officer’s claim for bribe, he had wrongly raised demands, far in excess of that due for the years 2018-2019 and 2019-2020. The amounts so assessed and demanded were also set off from the credit ledger of the petitioner’s input credit. The copy of the demand orders and the recovery made are produced as Annexure-P/6 series. An appeal was filed in which the Appellate Authority by Annexure-P/7 series allowed the appeal and the recovered amounts were credited back to the credit ledger on 24.08.2022.
6. It is claimed by the petitioner that the order in appeal passed on 20.02.2022 was received after six months on 15.08.2022 and the limitation had to commence from the said date. It is also contended that the due date for filing of refund, for the Financial Year 2018-2019 has been extended till 31.03.2023 by the Central Board of Indirect Taxes and Customs vide its Notification No. 13/2020-Central Tax dated 05.07.2022.
7. The relevant date from which the limitation of two years commence, as noticed in Section 54, in so far as unutilized input tax credit under sub-section (3), is the end of the financial year in which such claim for refund arises; as per Explanation (2)(a). Hence, for the Assessment Year 2018-19, the relevant date would be 31.03.2019 and in that context the expiry of limitation for filing a refund application falls on 31.03.2021. In the present case, the application for refund was made by the petitioner on 12.04.2023. Even as per the notification of the Central Board of Indirect Taxes, the refund claim for the Financial Year 2018-19 stood extended only till 31.03.2023.
8. However, it has to be noticed that even without reckoning the allegation of demand of bribe, there was an assessment carried out for the Financial Years 2018-19 and 2019-20 against which a demand order was raised on 29.01.2021. Copy of the ledger produced along with Annexure-P/6 series also shows a recovery having been effected from the credit ledger of the petitioner on 20.03.2021. The amount set off were the amounts under the ‘Inverted Duty St
The relevant date for filing refund applications under the CGST Act is the date of communication of the appellate order, not the original assessment date.
The court affirmed that the right to claim Input Tax Credit refunds is unambiguous and cannot be restricted arbitrarily by circulars or notifications that infringe upon statutory rights.
Input tax credits accrued before the effective date of a notification can be claimed despite subsequent restrictions, as clarified by the court.
The restrictions on refund of accumulated input tax credit under Notification No. 9/2022 apply prospectively only, allowing claims for periods prior to the notification while filed within the statuto....
The main legal point established is that the statutory scheme of refund under Section 54(3) of the CGST Act, 2017 applies to cases of accumulation of unutilised input tax credit due to an inverted du....
The court established that the limitation period for refund applications under the CGST Act is determined by the original filing date, not subsequent deficiencies.
The court determined that the appellant's refund application was timely despite prior conflicting findings and ruled on unjust enrichment based on lack of evidence.
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