TMI Blog2021 (6) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proviso to Section 54 of the Act and also submitted that the formula given under Rule 89(5) of the CGST Rules, 2017 is inconsistent with Section 54 of the Act and hence is ultra vires. It is also found that refund of input services is not includible in the Net ITC as explained in the clause under Rule 89(5) of the CGST Rules, as amended. Further, as the appellant has not submitted any segregated documents relating to input to the proper officer in spite of providing sufficient opportunities to come forthwith for evidencing stake of inputs for impugned refund claim - there are no infirmity in rejection of the refund - appeal dismissed. - 34 (MAA)CGST/JPR/2021 - - - Dated:- 29-1-2021 - Shri Manzoor Ali Ansari, Additional Commissioner (Appeals) ORDER This appeal has been filed under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter also referred to as the Act ) by M/s. Rajasthan Patrika Private Limited, Kesargargh, Jawahar Lal Nehru Marg, Jaipur (hereinafter referred to as the appellant ) against Order-in-Original No. ZW0806200177951, dated 15-6-2020 (hereinafter called as the impugned order ) passed by the Assistant Commissioner, CG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Refund in FORM GST RFD-08, dated 24-5-2020 was issued upon the appellant by the adjudicating authority wherein the appellant was asked to show cause as to why the total refund claim should not be rejected for the above reasons. that as narrated in the facts, appellant filed an application for refund of unutilized input tax credit on account of inverted duty structure dated 15-5-2020 and was served a notice for rejection of application of refund vide SCN dated 24-5-2020. The appellant was directed to furnish a reply to the notice within 15 days from the date of service of SCN which was falling on 8-6-2020 whereas it was directed to appear before the authority on 6-6-2020 for personal hearing which was before the due date of submission of reply to the notice and the same was on Saturday which is a holiday in Central Government Tax Department. that since the date for personal hearing was on a Government holiday, the appellant tried to communicate to the authority and it was informed on communication that the date has been wrongly punched as 6-6-2020 instead of 8-6-2020. That on being so informed by the department, the appellant filed an adjournment to the Show Cause Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the refund application since the ITC of capital goods has not been included by the appellant in Net ITC for the purpose of refund calculation. that the invoice wise details of inward supplies in Annexure-B submitted with the refund application have been specifically classified under Inputs and Input services and the invoices of capital goods have already been excluded in such Statement and the ITC excluding such invoices has been considered in Net ITC for purpose of refund calculation. that the impugned order is bad in law since the given refund claim as filed by the appellant was in accordance with the provisions of the Section 54. The observation that refund claim is not in accordance with the provisions of Rule 89(5) of the CGST Rules, 2017 is inconsistent with the provisions of Section 54 of the CGST Act, 2017 and hence is ultra vires. that reference has been made to Rule 89(5) of the CGST Rules, 2017 by the proper officer wherein the term Net ITC has been defined in an Explanation for the purpose of Rule as (a) Net ITC shall mean input tax credit availed o inputs during the relevant period other than the input tax credit availed for which refund is claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed for deciding the appeal. 6. On Going through the case records, I find that the Issues involved in the present case for consideration are as under : (a) whether principle of natural justice has been followed in the instant case or not? (b) whether application filed by the appellant for the tax period of June, 2019 as refund of unutilized input tax credit on account of inverted duty structure, is inadmissible or not? 7.(a) In respect of issue at S. No. 6.(a) I find that : The appellant emphasized that the impugned order passed by the adjudicating authority is in violation of principle of natural justice, I find that the adjudicating authority had issued Show Cause Notice in Form of RFD-08 to the appellant, also provided opportunity for personal hearing with a direction to file reply. However, I find that the appellant has not endeavoured to attend the personal hearing though the appellant noticeably contacted to the Department to defer the personal hearing. I find that the sufficient time was available with the appellant to file reply in the matter if he intended to do so. Therefore, I am in opinion that the adjudicating authority has passed the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2017 provides that - CHAPTER X REFUND 89. Application for refund of tax, interest, penalty, fees or any other amount. [(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula :- Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services. Explanation :- For the purposes of this sub-rule, the expressions - (a) -Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rule (4A) or (4B) or both; and (b) -Adjusted Total turnover shall have the same meaning as assigned to it in sub-rule (4).]* *Amendment made effective with effect from 1-7-2017 vide Notification No. 26/2018-C.T., dated 13-6-2017. Substituted vide notification No. 21/2018-C.T., dated 18-4-2018 for (5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula - Maximum Refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, dated 13-6-2018. I find that the subject matter has also been under consideration at various judicial quasi judicial authorities and the recent progression in the matter is prominent to deliberate cautiously hereunder, which isn t only a obiter dicta but also laid the foundation for formulation of the principles of law for the purpose of deciding the present problem before us on this issue. The Hon ble Madras High Court in the matter of M/s. Tvl. Transtonnelstroy Afcons v. Union of India (in W.P. No. 8596 of 2019 Batch etc.) [2020 (43) G.S.T.L. 433 (Mad.)], pronounces its inference in the batch of petitions on inverted duty structure and arrived at the following conclusion - (1) Section 54(3)(ii) does not infringe Article 14. (2) Refund is a statutory right and the extension of the benefit of refund only to the unutilised credit that accumulates on account of the rate of tax on input goods being higher than the rate of tax on output supplies by excluding unutilised input tax credit that accumulated on account of input services is a valid classification and a valid exercise of legislative power. (3) Therefore, there is no necessity to adopt the interpretive device o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s principle, in W.P. No. 8596 of 2019 Batch etc. to the judgment in AC v. Dharmendra Trading Co. - (1988) 3 SCC 760 the Supreme Court held that though styled as a refund of sales tax, the benefit is in the nature of an exemption or reduction of tax. Correspondingly, by relying upon the judgment of the Five Judge Bench of the Hon ble Supreme Court in Commissioner of Customs v. Dilip Kumar - (2018) 9 SCC 1 = 2018 (361) E.L.T. 577 (S.C.) (Dilip Kumar), it is concluded by the Supreme Court that an exemption provision in a tax statute should be construed strictly and any ambiguity should be resolved in favour of the revenue. In particular, in the recent judgment of the Hon ble Supreme Court in Ramnath v. CTO - (2020) 108 CCH 0020 ISCC (Ramnath), wherein the Hon ble Supreme Court, uprightly held that all provisions for incentive, rebate or any form of concession should be interpreted in the same manner as an exemption provision. Also, the Act restrains a refund claim to the unutilised credit that accumulates only on account of the rate of tax on input goods being higher than the rate of tax on output supplies. In other words, it qualifies and curtails not only the class of registered ..... 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