TMI Blog2022 (12) TMI 1026X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and the amount equal to the refund claim was debited from the electronic credit ledger in compliance of Rule 89(4) of the CGST Rules. Therefore, the provisions of law and Rules were complied with by the petitioner. Admittedly, the respondent did not issue any deficiency memo within 15 days as provided in Rule 89(4) of the Rules. Furthermore, the appellate authority had accepted the refund claim of the petitioner on merits and the petitioner's entitlement to refund was not in dispute. When the entitlement of the petitioner for refund is not in dispute and the appellate authority has confirmed the claim of the petitioner and the conditions of section 54(3) of the Act and Rule 89(4) of the Rules are complied with, in such facts and circumstances, even if the procedure laid down in the circular for getting refund stands at variance or if it was not observed by the petitioner for nonculpable reasons, the providence and procedure in the circular would not prevail over the statutory prescription under which the right of the petitioner to get refund is established. Even if the procedure of claiming refund, contemplated in paragraph 3.2 of the Circular could not be adhered to, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of Rs. 31,58,80,475/-, comprising of the amounts towards CGST, SGST and the cess under Section 54(3) (i) of the Act read with Rule 89(4) of the CGST Rules on the ground that the petitioner had made zero rated supplies. 3.1 Section 16 of the Act allows registered person to take credit on input tax on the goods and services tax paid by such person. It is the case of the petitioner that in compliance of the relevant rules, the petitioner debited the amount equal to the refund claim in the electronic credit ledger from the balance available in GST and SGST on the date of the application. 3.2 The petitioner debited the amounts, the break-up of which was as under, 1. IGST Balance - Nil 2. CGST Balance - Rs. 8,00,00,000/- 3. SGST Balance - Rs.23,29,91,500/- 4. Cess - Rs. 28,88,975/- ----------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time, allowed the petitioner to file a fresh claim after deducting IGST by following the procedure provided in the aforementioned Circular. The petitioner requested the appellant authority in vein to delete the words after deducting IGST of Rs. 21,71,74,611/- from the electronic credit ledger . 3.7 When the petitioner filed fresh application dated 14.07.2020 seeking refund, it was reponded by the authority with another show-cause notice dated 20.07.2020 proposing to reject the claim of refund. It was for the reason that the petitioner had not reversed the credit of IGST of Rs. 21,71,74,611/-. 3.8 The stand of respondent no.3 is thus that the petitioner was first required to debit IGST of Rs.21,71,74,611/- in terms of procedure contemplated in paragraph 3.2 of the Circular dated 04.09.2018 in order to be eligible to get refund. When the said procedure was not observed, it was viewed that the refund claim was liable to be rejected. 4. Learned senior advocate for the petitioner raised following main submissions, (i) the entitlement of refund to the petitioner was not disputed as the appellate authority held in favour of the petitioner. (ii) the petitioner had debited equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 168(1) of the Central Goods and Services Tax Act, 2017, which could not be said to be in contravention with the provisions of section and rule concerned and when the petitioner had not complied with the provisions of the Circular, the refund claim was rightly rejected. 5. The petitioner claimed refund of untilised input tax credit on the ground that it had made zero rated supplies. Section 16 of the Act permits registered person to take credit of input tax credit of GST paid on capital goods and input services subject to such conditions and restrictions and in the manner as prescribed in Section 49 of the Act. 5.1 Rule 89 of the CGST Rules, 2017, deals with application for refund of tax, interest, penalty, fees or any other amount. Sub-Rule (3) of Rule 89 says that where the application relates to refund of input tax credit, electronic credit ledger shall be debited by the applicant by an amount equal to refund so claimed. It is the uncontroverted fact that petitioner debited the amount equal to the refund claim out of credit of the tax amount lying in its electronic ledger. 5.2 The circular dated 04.09.2018 of which the breach is complained of and made basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression prescribed to mean prescribed by the Rules made under CGST Act on the recommendation of the Council . Therefore, the manner prescribed was to be one prescribed under Rule 89(3) of the Rules. 5.5 The Circular dated 04.09.2018 was the product of exercise of the powers under section 168(1) of the Act. It was an administrative instruction issued by the authority. The Circular of such nature could not substitute, amend or curtail the ambit or operation of the CGST Rules, in particular Rule 89(3), which was duly observed by the petitioner in respect of its refund claim. There was no breach of the 'manner prescribed' in the Rules in relation to lodging of the refund claim. 5.6 As the petitioner had debited the total amount of refund claim prescribed in the Rule in its electronic credit ledger, the requirement was met with. Merely because the debit was not made in the sequence mentioned in the Circular, the refund claim could not have been rejected. Even otherwise, no undue benefit was taken by the petitioner by not adhering to the order of refund. 6. When the entitlement of the petitioner for refund is not in dispute and the appellate authority has confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to claim the refund in law, then non-compliance of the procedure of Circular would only amount to irregularity and not illegality. 6.4.1 In Solanki Parvatikumari Rameshbhai Vs. State of Gujarat being Special Civil Application No. 22981 of 2017, Single Judge of this Court explained the differentiation between illegality and irregularity, 5.2 Law conceives a clear differentiation between illegality and irregularity. This nice distinction brings home the case of the petitioner. An illegality is something which amounts to substantial failure in compliance of requirement. It denotes such breach of rule or requirement which alters the position of a party in terms of his right or obligation. Illegality denotes a complete defect in the jurisdiction or proceedings. Illegality is properly predictable in its radical defects. It is a situation contrary to the principle of law. As against this, an irregularity as defined lexicographically, is want of adherence to some prescribed rule or mode of proceedings. 6.4.2 It was further stated by the Court in same para, It consist in omitting the rule something that is necessary for due and orderly conducting of a suit or doing it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
