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 duty structure, irrespective of the number of inputs and output supplies, and the refund computation must be based on the statutory formula provided in Rule 89(5) of the CGST Rules, 2017.

ORDER :

Manindra Mohan Shrivastava, J.

1. As the common issue of law arises for consideration in these petitions, this common order shall govern disposal of these writ petitions filed by one and the same petitioner with reference to different tax periods ventilating its grievance on account of rejection of its claim for refund of unutilised input tax credit. For brevity and convenience, the facts stated in D. B. Civil Writ Petition No. 8476/2021 are being referred to.

2. The petitioner, a public limited company, seeks to assail orders dated 06.10.2020 and 11.05.2021 passed by Respondent No. 3, Additional Commissioner (Appeals), Central Goods and Services Tax, Jaipur, whereby, petitioner’s appeals, against the orders rejecting its claim for refund, have been disposed off.

3. Facts of the case:

Quint essential facts necessary for adjudication of controversy involved in these writ petitions are in narrow encompass and stated infra:

3.1 The petitioner-company is engaged in manufacturing of textiles and its operation thereof ranging from spinning, weaving and processing. It is registered under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act, 2017’). In the process of manufacturing, the petitioner uses various raw materials. Rate of goods and services tax (hereinafter referred to as ‘GST’) on inputs varies from 5% to 28%. The raw materials used are cotton, manmade fibre and other inputs. The output/manufactured products are cotton yarn, cotton blended yarn, polyester/viscose yarn, polyester/viscose blended yarn. The rate of GST on outputs ranges from 0.1% to 12%. According to the petitioner, as the rates of GST on inputs was higher than the rates of GST on outputs, it is entitled to claim refund of unutilised credit at the end of relevant tax period, it being a case of inverted duty structure, under the statutory scheme of Section 54, sub-section (3) of the CGST Act, 2017.

3.2 For the relevant year in question, i.e. January, 2020 to March, 2020, the petitioner filed refund application under Section 54(3) of the CGST Act, 2017, to the tune of Rs. 1,31,39,059/- in respect of the unutilised input tax credit accumulated on account of inverted tax structure. According to the petitioner, application was filed on the GSTN portal of the petitioner in the form and manner prescribed under Rule 89 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules, 2017’).

3.3 A show cause notice was issued proposing rejection of claim for refund on the statement that the petitioner’s case does not fall under the category of “inverted duty structure”. Vide order dated 24.08.2020, the adjudication proceedings eventually culminated in rejection of petitioner’s claim for refund on the ground that the petitioner’s case does not fall in the category of inverted duty structure.

3.4 Feeling aggrieved, the petitioner preferred separate appeals against rejection of claim for refund for different tax periods before the Commissioner (Appeals), Central Excise and CGST, Jaipur (hereinafter referred to as ‘the Appellate Authority’). Those appeals came to be disposed off by the learned Appellate Authority vide two common orders dated 06.10.2020 and 11.05.2021, affirming the findings recorded by the Adjudicating Authority that the petitioner’s case does not fall in the category of inverted duty structure and it is not entitled to refund of unutilised ITC through invocation of the provisions contained in Section 54(3) of the CGST Act, 2017.

3.5 Though Section 112 of the CGST Act, 2017 provides for further appeal before Goods and Service Tax Appellate Tribunal (GSTAT), there being no Appellate Tribunal in existence, rejection of petitioner’s claim by the Adjudicating Authority and its affirmation by the Appellate Authority is under challenge in these writ petitions.

4. Submissions on be