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TMI Blog2022 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... the Impugned Refund rejection Order in FORM RFD 06 dated 05.01.2021 (Annexure-2) as being arbitrary, illegal and constitutionally invalid; b. issue an appropriate writ, order, or direction in nature of Certiorari or any other writ, order or direction of like nature, to call for, examine the record in relation to the Impugned Circular bearing No. 135/05/2020-GST F.No.CBEC-20/01/06/2019-GST dated 31.03.2020 (Annexure-2) and quash Para 3 of it to the extent it seeks to deny refund in cases where input and output supplies are same as being arbitrary, violative of Article 14, and Article 300A of the Constitution of India and ultra vires Section 54 of the Central Goods and Services Tax Act, 2017; c. Writ of Mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the Respondent No.2 and 3 [Deputy Commissioner, State Tax] to grant refund of accumulated Input Tax Credit amounting to Rs. 27,02,26,876 as claimed by the Petitioner under FORM-GST-RFD-01 dated 29.09.2020;" 2. Brief facts relevant and essential for disposal of the writ petition are noted herein below: The petitioner operating in the State of Rajasthan through its project Office at Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umulated in favour of the petitioner on account of difference in rate of tax (GST) which was much higher than the rate of output tax. The petitioner has thus claimed that it is entitled to refund under the inverted duty structure as provided by the CGST and RGST Acts. For this purpose, the petitioner has relied upon Section 54 of the CGST Act which reads as below: "(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed. ........... (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period: Provided that no refund of unutilized input tax credit shall be allowed in cases other than- (i) ....... (ii) where the credit has accumulated on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019-GST - CBEC-20/16/04/18-GST wherein, it has been clarified that refund under Section 54(3)(ii) of the CGST Act i.e. inverted duty structure, is to be allowed when the inputs are being procured at the normal GST rate and the output supplies are being made at a lower GST rate because of the lower rate notification in place. The said para of the circular is reproduced herein below for the sake of ready reference: "59. Notification No. 40/2017 - Central Tax (Rate) and notification No. 41/2017 - Integrated Tax (Rate) both dated 23.10.2017 provide for supplies for exports at a concessional rate of 0.05% and 0.1% respectively, subject to certain conditions specified in the said notifications. It is clarified that the benefit of supplies at concessional rate is subject to certain conditions and the said benefit is optional. The option may or may not be availed by the supplier and/or the recipient and the goods may be procured at the normal applicable tax rate. It is also clarified that the exporter will be eligible to take credit of the tax @ 0.05%/0.1% paid by him. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt points of time but the refund of accumulated unutilised tax credit will not be available under Section 54(3)(ii) of the CGST Act where the input and output supplies are same. It has been directed by the Guwahati High Court that this Circular would have to be ignored in situations akin to the case at hand. While accepting the writ petition in the case of M/s. Shivaco Associates (supra), Hon'ble Calcutta High Court went on to hold that the respondent authority, ought not to have rejected the claim of the petitioners by relying on the circular dated 31.03.2020 as the same was contrary to the provisions of the Act. Shri Jarwal further urged that subordinate legislation in form of a statutory circular cannot supersede or override the parent statute and as such, the impugned circular, to the extent it disallows Input Tax Credit under the Inverted Duty Structure where input and output supplies are same, and so also the impugned order dated 05.01.2021, are per se illegal and hence deserve to be struck down while accepting the writ petition. 8. Per contra, Shri Mukesh Rajpurohit, learned ASG representing the Union of India and CBIT, learned Senior Counsel Shri Sandeep Shah, AAG repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t mention that the credit could be claimed only if the supplier has made any value addition/ enhancement to the goods supplied. The very purpose of fixing the rate of GST at 2.5% each towards CGST/RGST on goods supplied for execution of petroleum projects was introduced with the object of promoting the oil and gas exploration activities. The Central Government Notification dated 28.06.2017, in unambiguous terms stipulates that upon being satisfied that it is necessary in the public interest to do so, on the recommendations of the council, intra State supply of goods, was being exempted/taxed at lower tax rates. 12. The impugned circular dated 31.03.2020 issued by CBITC was challenged before Hon'ble Guwahati High Court in the case of B.M.G. Informatics Pvt. Ltd. (supra). The learned Single bench of Guwahati High Court, vide judgment dated 02.09.2021, held that the supplying dealer would be entitled to claim refund of accumulated unutilised tax credit under Section 54(3)(ii) of the CGST Act irrespective of the fact the input and output supplies are the same by ignoring the circular dated 31.03.2020. Similar view was taken by Hon'ble Calcutta High Court in the case of M/s. Shivaco As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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