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2024 (10) TMI 1658 - HC - GSTRefund application filed under Section 142(3) - Unutilised CENVAT credit of cess - HELD THAT - We find ourselves in complete agreement with the findings of the learned Single Judge that in the light of the judgment of the Supreme Court in Union of India and Others v. VKC Footsteps India Private Limited 2021 (9) TMI 626 - SUPREME COURT and the fact that the refund that was sought was of amounts that could not be refunded as per the statutory provisions that were in force the prayers in the writ petition could not be granted. We are also not impressed with the submission of the learned counsel for the appellant that the Assessing Authority ought to have considered and passed orders on the refund application preferred by it under Section 55 of the CGST Act. As rightly noticed by the learned Single Judge the refund application could not be maintained in the first place and hence a direction to the respondents to consider the refund claim would be nothing but an exercise in futility. In the result we see no reason to interfere with the impugned judgment of the learned Single Judge. The Writ Appeal fails and is accordingly dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this appeal were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability and Limitation of Refund Application under Section 142(3) of the CGST Act Relevant legal framework and precedents: Section 142(3) of the CGST Act governs the procedure for claiming refunds. The limitation period for filing refund claims is prescribed under the Act and allied rules. The Supreme Court's ruling in Union of India and Others v. VKC Footsteps India Private Limited [(2022) 2 SCC 603] was pivotal in interpreting the scope and limitation applicable to refund claims under the GST regime. Court's interpretation and reasoning: The Court noted that the refund application was filed belatedly and was barred by limitation. The learned Single Judge's finding that the refund claim was time-barred was affirmed. The Court emphasized that the statutory provisions in force at the relevant time did not provide for refund of unutilised credit of the specified cesses. Key evidence and findings: The appellant had availed CENVAT credit of Education cess, Secondary and Higher Education cess, and Krishi Kalyan cess on inputs but could not utilize these credits due to abolition of these cesses in 2015 and 2017. The appellant did not seek refund immediately after abolition, presumably because no statutory provision for refund existed at that time. Application of law to facts: Since the refund claim was filed much after the abolition and outside the limitation period, and given the absence of any statutory provision permitting refund of unutilised cesses, the Court held the refund claim to be untenable. Treatment of competing arguments: The appellant argued for maintainability of the refund claim and sought to transition the unutilised credit into the GST regime. The Court rejected this, holding that such transition was impermissible and the claim was barred by limitation. Conclusions: The refund application under Section 142(3) was not maintainable as it was barred by limitation and statutory provisions did not permit refund of unutilised credit of the abolished cesses. Issue 2: Transition of Unutilised CENVAT Credit of Abolished Cesses into the GST Regime Relevant legal framework and precedents: The transition provisions under the CGST Act and related rules govern the carry forward or transition of input tax credits from the pre-GST regime. The Supreme Court's decision in VKC Footsteps India Private Limited clarified the scope of transition and refund claims. Court's interpretation and reasoning: The Court found that the unutilised credit of the Education cess, Secondary and Higher Education cess, and Krishi Kalyan cess could not be transitioned into the GST regime as per the statutory scheme. The abolition of these cesses in 2015 and 2017 meant that the credit could not be carried forward or refunded under GST. Key evidence and findings: The appellant's attempt to transition the unutilised credit was refused by the authorities. The Court noted that the erstwhile rules allowed utilisation of such credit only against similar cesses on output goods and services, which ceased to exist post-abolition. Application of law to facts: Since the statutory framework did not permit transition or refund of such credits, the appellant's claim was legally untenable. Treatment of competing arguments: The appellant contended that the credit should be allowed to transition and be refunded. The Court, however, relied on the statutory provisions and precedent to reject this argument. Conclusions: Unutilised CENVAT credit of the abolished cesses could not be transitioned into the GST regime nor refunded under the CGST Act. Issue 3: Maintainability and Consideration of Refund Application under Section 55 of the CGST Act Relevant legal framework and precedents: Section 55 of the CGST Act provides for refund claims under certain circumstances. The statutory requirements for maintainability and consideration of such claims are governed by the Act and allied rules. Court's interpretation and reasoning: The Court agreed with the learned Single Judge that the refund application under Section 55 was not maintainable. Consequently, directing the authorities to consider the application would be futile. Key evidence and findings: The appellant's refund claim under Section 55 was alternate relief. However, since the claim itself was not maintainable, no adjudication on merits was warranted. Application of law to facts: The Court held that since the refund claim under Section 55 was barred and not maintainable, no direction to consider the claim was necessary. Treatment of competing arguments: The appellant argued for a direction to consider the refund claim under Section 55. The Court found this submission unpersuasive and dismissed it as an exercise in futility. Conclusions: The refund claim under Section 55 was not maintainable, and no direction to consider it was warranted. 3. SIGNIFICANT HOLDINGS The Court held that:
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