Madras HC directs Department to Process ITC Claim Rejected Solely on the Basis of Inadvertent Error

[CA Bimal Jain]

The Hon’ble Madras High Court in the case of ABI EGG TRADERS, REPRESENTED BY ITS PROPRIETRIX PANNEERSELVAM THATSAYINI VERSUS ASSISTANT COMMISSIONER, SALEM II DIVISION, O/O. THE ASSISTANT COMMISSIONER OF GOODS AND SERVICES TAX CENTRAL EXCISE, SALEM - 2022 (11) TMI 484 - MADRAS HIGH COURT ruled in favor of the assessee by directing the department to process the Input Tax Credit (“ITC”) claim that were previously rejected solely on the ground of inadvertent error.

Facts:

Abi Egg Traders (“the Petitioner”) is a sole proprietor engaged in the business of export of eggs. Since eggs are a "nil" rated commodity, there is no tax burden associated with their export. Hence, the Petitioner was entitled to the Input Tax Credit that had accumulated on the exports. The period in question is August 1, 2017 to March 31, 2018, for which return in form GSTR-3B was filed in May 2018.

The Petitioner made a mistake while exporting as it opted for column ‘with payment of tax ' instead of ‘without payment of tax'.

Issue:

Whether department can reject ITC claim solely on the basis of inadvertent error?

Held:

The court observed and directed the following:

• Department nowhere mentioned dispute the Petitioner’s right to refund and in fact conceded that the mistake was made bonafide and reaffirmed that the petitioner was entitled to the ITC return because the export was exempt from tax.
• Therefore, in such circumstances, rejecting the refund solely on the inadvertent error was set side.
• The Court granted 8 weeks from the date of Order to the officer to issue refund within stipulated time period.

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