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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
M/s Balaji Exim – Appellant
Versus
Commissioner, CGST & Ors. – Respondents
W.P.(C) 10407 of 2022, W.P.(C) 10423/2022
Decided On : 10-03-2023
Refund Applications - Goods and Services Tax - Section 16(2) of the Central Goods & Services Tax, 2017 - ITC - Fake Invoices
Fact of the Case:
The petitioner sought refund of unutilized Input Tax Credit (ITC) for goods exported, but the applications were rejected due to suspicion that the supplier had issued fake invoices. The petitioner appealed the rejection, arguing that it had paid for the goods and there was no conclusive evidence of fake invoices.
Finding of the Court:
The Court found that the rejection of refund applications was based on mere suspicion without conclusive evidence of fake invoices. It held that the petitioner was entitled to the refund of ITC on exported goods and directed the respondents to process the applications.
Issues: Rejection of refund applications based on suspicion of fake invoices, possession of tax invoices without conclusive evidence of receiving goods, and the entitlement of the petitioner to the refund of ITC on exported goods.
Ratio Decidendi: The rejection of refund applications cannot be solely based on suspicion without conclusive evidence. The petitioner is entitled to the refund of ITC on goods exported by it.
Final Decision: The petitions are allowed, and the respondents are directed to process the petitioner's applications for refund of the ITC including Cess. The respondents may initiate action if they find material to establish the allegations regarding non-supply of goods by the supplier.
JUDGMENT
Vibhu Bakhru, J. The petitioner has filed the present petitions impugning the common Order-In-Appeal dated 31.03.2022 (Order-In-Appeal No.347-348/2021-22 - hereafter `the impugned order'), whereby two separate appeals preferred by the petitioner against the Order-In-Original Nos. ZU0707210034420 dated 03.07.2021 and ZT0707210034442 dated 02.07.2021, respectively were dismissed.
2. Although the petitioner has a statutory right to appeal the impugned order, it is not possible for the petitioner to avail the said remedy as the Tribunal has not been constituted.
3. The petitioner had filed its refund application dated 11.09.2020 (in Form - GST-RFD-01) seeking refund of the unutilized Input Tax Credit (hereafter `ITC') amounting to Rs.72,03,961/-, which comprised of Integrated Goods and Service Tax (hereafter `IGST') amounting to Rs.19,53,062/- and Cess of Rs.52,50,899/-. The petitioner also filed another refund application dated 12.09.2020 (in Form GST-RFD-01) claiming refund of ITC of Rs.12,40,270/- comprising of IGST of Rs.3,37,174/- and Cess amounting to Rs.9,03,096/-. The refund sought was in respect of goods exported by the petitioner.
4. Respondent no.2 issued an acknowledgment (in Form GST- RFD-02) dated 27.09.2020, in respect of the petitioner's refund application for the amount of Rs.12,40,270/-. In respect of the first application dated 11.09.2020, respondent no.2 issued a deficiency memo dated 21.09.2020, inter alia, stating that the supporting documents were not uploaded on the GST portal. Accordingly, the petitioner filed another application dated 23.09.2020 along with all documents in support of its refund application. The same was acknowledged by the respondent on 01.10.2020.
5. The petitioner's applications were not processed as the supplier from whom the petitioner had purchased the goods had allegedly received fake invoices from its suppliers.
6. A search was conducted by the officers of Central GST, Anti Evasion Branch, Delhi West Commissionerate in the premises of the petitioner on 21.10.2020. Thereafter, the petitioner (its proprietor) was summoned to the office of respondent no.1 on 23.10.2020 to tender certain documents.
7. Admittedly, the petitioner (proprietor) appeared before the Superintendent, Anti Evasion Branch on 23.10.2020 and furnished documents as sought for. Notwithstanding the same, the petitioner was issued another summons dated 28.12.2020 for furnishing the documents, which, according to the petitioner, had already been submitted.
8. The petitioner wrote several letters to respondent no.2 requesting for an early disposal of his refund applications. However, his requests were not acceded to.
9. In the meantime, the petitioner became aware of the allegations that its supplier, M/s Shruti Exports, had issued fake invoices and its ITC was blocked. The said supplier had moved the High Court of Calcutta by filing a writ petition seeking unblocking of its Electronic Credit Ledger (hereafter `ECL').
10. Show cause notice dated 04.06.2021 was issued by respondent no.2 to the petitioner proposing to reject the petitioner's refund applications. This show cause notice indicated that respondent no.2 had sought a report regarding legitimacy and genuineness of the export of goods from the Customs Station, Kolkata, which were purchased by the petitioner from M/s Shruti Exports (proprietor Sh. Vijander Kumar Goel). In response to the said query, respondent no.2 had received information that the said supplier - M/s Shruti Exports was being investigated by DGGI in connection with fake invoices allegedly issued by it. It was further alleged that M/s Shruti Exports had availed CGST and SGST amounting to Rs.1,35,21,489/- and Cess of Rs.21,76,132/- on the strength of fake invoices issued by certain persons.
11. The petitioner responded to the said show cause notice on 12.06.2021. The petitioner was also afforded a personal hearing by respondent no.2 on 01.07.2021. During the course of the said proc
AI
The rejection of refund applications cannot be solely based on suspicion without conclusive evidence. The petitioner is entitled to the refund of ITC on goods exported by it.
The central legal point established in the judgment is that the denial of refund in respect of Input Tax Credit should be based on valid reasons and evidence, and should not be generalized to all sup....
The eligibility of a merged entity for ITC refund is recognized under GST, allowing inclusion of export proceeds from previous tax regimes.
A registered person is not entitled to input tax credit if the claimed supplies are from non-existent firms, regardless of the validity of the supplier's GST registration at the time of transaction.
Necessity of producing all necessary documents, including statutory returns, for processing refund claims.
A taxpayer is not required to make repeated applications for seeking a refund after succeeding in appellate proceedings, and the refund claim is required to be processed in accordance with the law.
A petitioner invoking writ jurisdiction must approach the court with clean hands, and failure to challenge adverse findings may lead to dismissal of the petition.
The exclusion period provided in the notification issued by the Central Board of Indirect Taxes and Customs allowed for the period affected by the COVID-19 pandemic to be excluded for the purposes of....
The court established that transitional CENVAT credit can be carried forward into the GST regime and utilized for claiming refunds under the CGST Act, rejecting hyper-technical interpretations by aut....
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