Whether can alternate mechanism for manual refund of GST tax in absence of electronic credit be adopted?

Whether can alternate mechanism for manual refund of GST tax in absence of electronic credit be adopted?

The Gujarat High Court, Ahmedabad bench of Ms Justice Harsha Devani and Mr Justice Bhargav D. Karia has held that?alternate mechanism for manual refund of GST tax in absence of electronic credit can be allowed.

FACTS OF THE CASE

The Input Tax Credit (ITC) refund on purchase of the inputs used in supply of zero-rated goods, tax credit on account of inverted duty structure, supply to SEZ and export of goods out of India of the Petitioner was denied for the period between July 2017 to October 2017. Petitioner is a registered person under CGST Act and is engaged in production and supply of goods for home consumption and/or to SEZ. As per the procedures of CGST Rules, 2017 read with relevant notifications and circulars explaining process to file refund claims manually in Form GST RFD-01A, petitioner submitted the claim in prescribed form along with the necessary supporting documents and obtained ARN?(acknowledgement) since?the online refund procedure was having problems.

Under CGST rules if any deficiencies are noticed, proper officer communicates the same to petitioner through common portal electronically. Accordingly on 16th?January,2018 proper officer raised deficiencies in the petitioners six (6) refund applications and on 18th?January 2018 petitioner duly rectified all the deficiencies in refund claims and submitted. However acknowledgements were not provided by the respondent for such submissions. Thereafter also replies, information and documents were provided by the petitioner to respondents and acknowledgments were repeatedly requested continuously for all such submissions.

As per section 54(6) of the CGST Act read with rule 91 of CGST Rules, refund of 90% input tax paid for zero-rated supplies is to be granted on provisional basis within a week. As per section 54(5) proper officer must issue order within 60 days from the date of filling in case of applications completed in all respects. Petitioner awaited refund order and on 01st?March 2018 enquired with Respondent no 3 about the status of refund claim. On 07th?March 2018, Respondent no 3 rejected refund claims on ground that?the petitioner has failed to submit compliance/file a fresh refund application in prescribed time limit, that is thirty (30) days in terms of circular no 17/17/2017-GST dated 15th November,2017 in respect of deficiency memos issued on 16th?January 2018. Thereafter on 13.03.2018 requested respondent no 3 to follow procedure as per act and rules and again on 15.03.2018 petitioner sent a reminder letter reminding the same and requesting finalisation of refund of claims. But respondent no 3 do not responded to any of the letter and hence petitioner filed the petition with the court seeking relief on refund of ITC.

Counsel of Petitioner citing rule 93 of GCST rules requested for re-credit of ITC to electronic credit ledger by an order made in Form GST PMT 03. Rule 93 provides that

1. If deficiency is pointed out by the proper officer then amount debited under 89(3) shall be recredit
2. Amount of refund denied is to be credited back into electronic credit ledger of the assessee.

Explanation to rule 93:- i) If the assessee goes into an appeal, recredit after the appeal is rejected.

1. ii) Else the assessee gives an undertaking in writing to proper officer to not to file an appeal.

Petitioner brought to the notice of court that?respondent no 3 has already issued order made in Form GST PMT 03 but the mechanism to re-credit the rejected amount is not available on common portal and hence petitioner was forced to move the petition to avail credit manually.

COURT HELD

Considering the facts as recorded, court held that as per the provisions of the explanation to rule 93 of the CGST Rules, there is no non-compliance on the part of petitioner except for submitting the undertaking. But court observed that there is no mechanism to recredit the amount back to electronic credit ledger of the assessee on common portal.

The court directed Respondent no 3 to recredit the amount of Rs 17,55,13,818.00 to the electronic credit ledger of petitioner on the basis of Form GST PMT 03. Alternatively if it is not possible to recredit the amount, then the prayer of petitioner to avail credit of denied ITC refund claim manually was allowed. The entire exercise to be carried out on or before 19th?April 2019.

ANALYSIS OF THE JUDGEMENT

Considering the facts as recorded, court held that as per the provisions of the explanation to rule 93 of the CGST Rules, there is no non-compliance on the part of petitioner except for submitting the undertaking. But court observed that there is no mechanism to recredit the amount back to electronic credit ledger of the assessee on common portal.

The court directed Respondent no 3 to recredit the amount of Rs 17,55,13,818.00 to the electronic credit ledger of petitioner on the basis of Form GST PMT 03. Alternatively if it is not possible to recredit the amount, then the prayer of petitioner to avail credit of denied ITC refund claim manually was allowed. The entire exercise to be carried out on or before 19th?April 2019.

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