TMI Blog2022 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... xure-2) on the strength whereof the petitioner s claim for ITC refund has been rejected, clarifies that refund of accumulated ITC under Clause (ii) of Sub-section (3) of Section 54 of the CGST Act would not be applicable in cases where the input and output supplies are the same. This circular is in the nature of an explanation and was issued on 31.03.2020 whereas the petitioner s claim for refund was a prior period between September, 2018 to September, 2019 on which date, the clarification dated 18.11.2019 was in force which clearly stipulates that a registered dealer who supplies goods at concessional rate is eligible for refund under the Inverted Tax Structure. Clause (ii) of Sub-Section (3) of Section 54 of the CGST Act does not indicate that ITC would be admissible only if the goods supplied had been subjected to some process. The provision allows refund of credit accumulated on account of supplies and does not mention that the credit could be claimed only if the supplier has made any value addition/ enhancement to the goods supplied - The Central Government Notification dated 28.06.2017, in unambiguous terms stipulates that upon being satisfied that it is necessary in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x] 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 Unit No.203, Reliable Tech Park, MIDC, Airoli, Navi Mumbai, entered into a development contract with the company Vedanta Limited which has been granted exclusive rights to carry out petroleum operations in Rajasthan Block RJ-ON-90/1 by the Government of India. For this purpose, a Production Sharing Contract was executed between Vedanta and the Central Government. In order to procure essential goods, materials and/or equipment required for carrying out the petroleum exploration and production operations as prescribed in the Production Sharing Contract, Vedanta entered into a sub contract dated 11.12.2018 with the petitioner for supply of these articles. As per terms of contract, the petitioner was required to procure the specified goods, material and/or equipment from India and abroad for onward dispatch to its Customer i.e. Vedanta. For executing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: (Emphasis supplied) 4 . The petitioner claims to have filed a legitimate refund claim quantified at Rs.27,02,26,876/- in FORM No.GST-RFD-01 bearing Application Reference Number (ARN) AA080920066706Y to the respondent No.3 Deputy Commissioner, State Tax, Circle Barmer for the period between September, 2018 to September, 2019 as per the inverted duty structure in terms of Section 54(3)(ii) of the CGST Act. Pursuant to receiving the Refund Form, the petitioner s representative was summoned by the respondent No.3 Deputy Commissioner, State Tax, Circle Barmer and acting under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 structure as per the provisions of clause (ii) of the first proviso to subsection (3) of section 54 of the CGST Act. The petitioner filed a detailed reply to the show cause notice dated 09.12.2020 claiming that there was no restriction on claiming refund in such cases where the inputs and output supplies are same as outward supplies were made at concessional GST rates under the CGST notification dated 18.11.2019 which approves refund in cases where input and output supplies are same and where GST on output supply is fixed at a lower rate. Pursuant to receiving the aforesaid reply, the respondent No.3 rejected the refund claim submitted by the petitioner with reference to para 3 of the Circular dated 31.03.2020, vide impugned order dated 05.01.2021 (Annexure-1). The petitioner has thus, approached this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 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 representing the Department of Finance, State of Rajasthan and, Shri Rajvendra Saraswat, Advocate representing the GST Department, vehemently and fervently opposed the submissions advanced by the petitioner s counsel. They contended that the petitioner is not entitled to the refund claim for ITC in face of the Circular dated 31.03.2020 and implored the Court to affirm the impugned order and sought dismissal of the writ petition. 9 . We have heard and considered the submissions advanced by learned counsel representing the parties and have gone through the pleadings and the documents placed on record as well as the circulars and statutory provisions referred by the parties. 10 . At the outset, we may note here that Section 54(3)(ii) of the CGST Act is abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 Associates (supra) . 13 . During the course of arguments, this Court made a pertinent query from learned counsel Shri Saraswat as to whether the judgment of the Guwahati High Court in the case of B.M.G. Informatics Pvt. Ltd. (supra) had been challenged any further to which, he fairly conceded that to his information, the judgment has not been challenged so far. 14 . In wake of the discussion made herein above, we are of the firm opinion that the circular dated 31.03.2020, being a subordinate legislation, is repugnant and conflicting to the parent legislation i.e. Section 54(3)(ii) of the CGST Act and hence, the same cannot be applied to oust the legitimate claim for accumulated ITC refund filed by the petitioner. Otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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