Refund claims cannot be considered as dubious on the basis of erroneous findings

[CA Bimal Jain]

The Hon’ble Delhi High Court in M/S. MAHAJAN FABRICS PVT. LTD. VERSUS COMMISSIONER, CGST AND ORS. - 2023 (2) TMI 430 - DELHI HIGH COURT has set aside the order passed by the Appellate Authority, disallowing the refund claimed by the assessee. Held that, the foundation of the Revenue’s appeal was flawed and based on erroneous finding that the vehicles mentioned in invoices used for transport of goods were not registered on the e-vahan portal. Hence, there was no tangible reason to doubt that the particulars as stated in the invoice by the assessee were untrue. Directed the Respondent to disburse the refund amount previously sanctioned to the assessee.

Facts:

M/s. Mahajan Fabrics Pvt. Ltd. (“the Petitioner”) had filed for an application of refund claim for INR 22,32,502 under Section 54 of the Central Goods and Services Act, 2017 (“the CGST Act”) read with Rule 89 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) and the same was granted vide Order-in-Original dated September 12, 2019 (“the O.I.O”). However, a review order dated March 15, 2020 (“the Review Order”) issued by the Revenue Department (“the Respondent”) stated that the vehicle numbers mentioned in two out of 126 invoices issued by M/s. Artex Overseas Pvt. Ltd. were not reflected on the e-vahan portal and the claim for refund of tax was dubious and therefore inadmissible.

Subsequently, an appeal was filed by the Respondent and the Appellate Authority found that the vehicles mentioned in those invoices were, in fact, registered on the e-vahan portal. However, the appeal was allowed vide order dated December 30, 2021 (“the Impugned Order”), on the ground that the Petitioner had not provided details of other vehicles pertaining to the remaining invoices.

Being aggrieved, this petition has been filed.

The Respondent contended that it is not sufficient for the Petitioner to confine itself to establishing the registration of only two vehicles on the e-vahan portal that were used to transport the goods under the two invoices in question. Further, once a doubt is raised, it is mandatory on the part of the Petitioner to file all the necessary details.

Issue:

Whether the Impugned Order passed by the Appellate Authority was sustainable?

Held:

The Hon’ble Delhi High Court in M/S. MAHAJAN FABRICS PVT. LTD. VERSUS COMMISSIONER, CGST AND ORS. - 2023 (2) TMI 430 - DELHI HIGH COURT held as under:

• Analysed Section 16(2)(a) of the CGST Act and noted that if the conditions mentioned in the provision are satisfied, it would be considered that the person has received the goods.
• Noted that, the Petitioner had filed its return furnishing all necessary details for claiming the refund and the same was accordingly sanctioned.
• Observed that, only a few invoices were picked up for scrutiny wherein it was found that the vehicles mentioned in two invoices were not registered on the e-vahan portal and accordingly the Review Order was passed.
• Stated that, the Review Order was based on an erroneous finding and hence, was incorrect
• Held that, the foundation of the Respondent’s appeal was flawed and no flaw was found in the details furnished by the Petitioner and hence, there was no tangible reason to doubt that the particulars as stated in the invoice were untrue.
• Set aside the Impugned Order.
• Directed the Respondent to disburse the amount of refund as sanctioned in the O.I.O.

Relevant Provisions:

Section 16(2)(a) of the CGST Act:

“Eligibility and conditions for taking input tax credit.– 

……………………

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;”

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