TMI Blog2023 (12) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... that although, the Revenue had placed on record orders seeking certified copies of the Orders-in-Original dated 24.10.2018 and 08.08.2019 from respondent no. 2, there is no communication, issued by the Principal Commissioner (respondent no. 1), either protesting or calling for an explanation as to why the Orders-in-Original dated 24.10.2018 and 08.08.2019 were not communicated to the Commissioner by respondent no. 2. The petitioner had filed an appeal against the said Order-in-Original dated 24.10.2018. The Revenue had notice of the said appeal but no one had appeared on behalf of the Revenue at the hearing held by the Appellate Authority on 29.03.2019. There is no allegation that the Order-in-Appeal dated 30.04.2019 disposing of the appeal was passed without affording the Revenue any opportunity to contest the same. The Revenue had taken no steps to challenge the Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority. Whether the order-in-original dated 24.10.2018 merges with the appellate order? - HELD THAT:- It is apparent that the Appellate Authority had upheld the admissibility of the petitioner s claim for refund of IGST as well as the order adjusting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory right and is circumscribed by the statutory provisions. There is little scope for imputing principles of equity in matters of tax, which are covered by the statutory provisions. The interest liability on delayed payment of IGST is the statutory consequence of the assessee s claim that the exports made by it were on payment of IGST. There is no dispute that the IGST on the exports during the months of July, 2017 to March, 2018 was liable to be paid on various dates in August, 2017 to April, 2018 as mentioned in the tabular statement as set out by the Adjudicating Authority in the Order-in-Original dated 24.10.2018 - It is evident that the petitioner has been mulcted with the huge interest liability on delayed payment of IGST, which in one sense is unwarranted, however, that is the consequence of the course adopted by the petitioner. Denial of refund in entirety an account of amendment in return/invoices is impermissible? - HELD THAT:- The revenue s contention that any claim for refund of ITC would be barred is also not persuasive. If the refund of IGST on exports was rejected on the ground that petitioner could not amend the invoices, it would follow that its claim woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the adjustment on account of interest was permissible under Section 75 (12) of the Central Goods Services Tax Act, 2017 (hereafter the CGST Act ) and Section 79(1)(a) of the CGST Act. 2. In addition, the petitioner impugns the Review Order dated 16.10.2019 passed by respondent no. 1 [Principal Commissioner, Central Goods Service Tax, Delhi, South Commissionerate] directing that an appeal be filed for setting aside the impugned Orders-in-Original dated 24.10.2018 and 08.08.2019 to the extent that the said orders accepted the petitioner s claim for a refund of IGST in the sum of ₹24,33,20,306/-. 3. The petitioner also impugns an Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority [Commissioner of Central Tax, Appeals-II, Delhi] rejecting the petitioner s appeal against the impugned Order-in-Original dated 24.10.2018 and remanding the matter for rectification of the said order. The petitioner is aggrieved to the extent that the levy of interest and its adjustment was upheld. Finally, the petitioner also impugns an Order-in-Appeal dated 14.10.2020 passed by the Appellate Authority allowing the Revenue s appeal against the Orders-in-Ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-in-Appeal dated 14.10.2020 that the petitioner having chosen to export the goods under a Letter of Undertaking ( LOU ) without payment of Central Goods and Service Tax (hereafter CGST ) was precluded from changing its option to pay IGST and claim refund on export of services (zero rated supply). It is submitted that the only recourse available to the petitioner was to seek refund of ITC on account of tax paid on RCM in respect of import of input supplies. Since the petitioner had not filed any application seeking refund of the said ITC and had confined its application to the refund of IGST, its claim for refund was unsustainable. 8. The controversy in the present case arises in the following factual context. 8.1 The petitioner is engaged in the business of providing services of digital media management, online advertisement, management of advertisement project, sale and procurement of space and slots for advertisement on social media, planning and management of advertisement campaign and other business support services. The petitioner provides its services to clients located in India as well as abroad. The petitioner claims that it is required to import such services f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of IGST paid against zero rated supplies. 8.5 The refund application was duly acknowledged by respondent no. 2. The said application was disposed of by the Adjudicating Authority by the Order-in-Original dated 24.10.2018. The Adjudicating Authority accepted the petitioner s claim for refund of IGST amounting to ₹24,33,20,306/-, however, it held that the interest due on delayed payment of IGST on RCM, on inputs as well as on the interest liability on delayed payment of IGST, was required to be adjusted under Section 73 of the CGST Act read with Rule 50 of the Central Goods Services Tax Rules, 2017 (hereafter the CGST Rules ). The aggregate of the interest was computed as ₹5,08,03,767/-. Accordingly, the net amount of ₹19,25,16,539/- was sanctioned. Tabular statements indicating the interest liability on delayed payment of IGST on inputs was computed at ₹2,26,71,171/- and the interest liability on delayed payment of IGST on exports was computed at ₹2,81,32,596/-, and the same are set out below: Interest liability on delayed payment of RCM:- Month IGST payable under RCM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oct, 17 280743778 20-Nov,17 24-Aug,18 50533880 278 6927987 Nov, 17 116039258 20-Dec,17 24-Aug,18 20887066 248 2554517 Dec, 17 167134900 22-Jan,18 24-Aug,18 30084282 215 3189758 Jan, 18 243051706 20-Feb,18 24-Aug,18 43749307 186 4012950 Feb, 18 291429265 20-Mar,18 24-Aug,18 52457268 157 4087355 Mar, 18 158543 20-Apr,18 24-Aug,18 28538 127 1787 Total 13517794 77 2433203 06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l also consider the adjustment of refund under Section 75(12) of the CGST Act read with Section 79(1)(a) of the CGST Act as applicable by the virtue of Section 20(xvi) of the IGST Act. 8.9 Pursuant to the order dated 30.04.2019 passed by the Appellate Authority, the Adjudicating Authority once again examined the question regarding adjustment of the petitioner s interest liability quantified at ₹5,08,03,767/-. The Adjudicating Authority held that the refund of IGST of ₹19,25,16,539/- had been sanctioned correctly after making adjustment of the amount of ₹5,08,03,767/-. The Adjudicating Authority held that the said adjustment was permissible under Section 75(12) of the CGST Act read with Section 79(1)(a) of the CGST Act. 8.10 Aggrieved by the Order-in-Original dated 08.08.2019, the petitioner filed an appeal before the Appellate Authority. The petitioner reiterated its contentions that there was no provision for deduction and adjustment of any unconfirmed demand of interest. Further, it reiterated its contention that the entire transaction was revenue neutral and therefore, there was no liability to pay any interest. 8.11 In the meanwhile, respondent no. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying himself as to the legality or propriety of the said decision. He is also empowered to direct a subordinate officer to apply to the Appellate Authority for determination of such points as arising from the decision or order as may be specified by him. The said application is required to be dealt with by the Appellate Authority as an appeal against the decision or order of the Adjudicating Authority. Subsections (2) and (3) of Section 107 of the CGST Act are relevant and are set out below: (2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onerate by endorsement on the Orders-in-Original. The date of receipt of the Order-in-Original was considered as the relevant date for the purpose of computing limitation under Section 107(2) of the CGST Act. According to the Revenue, the Order-in-Original dated 24.10.2018 was not dispatched to the Review Branch but was endorsed to the Pay Accounts Office for disbursement of the refund amount. It is stated that this was an inadvertent error and the delay in filing the appeal was bona fide. 13. The explanation as to how the Order-in-Original dated 24.10.2018 was finally received by the Commissioner makes interesting reading. It is the Revenue s case that steps for examining the matter were triggered with the concerned officer becoming aware of the second Order-in-Original dated 08.08.2019. However, as to how the Review Branch became aware of the said order has not been explained. It is also stated that the Order-in-Original dated 08.08.2019 was endorsed to the Review Branch on 09.08.2019 (the Dispatch Register also evidences that the said order was dispatched to the petitioner as well as to the Review Branch on 09.08.2019). However, according to Revenue the said order was not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or calling for an explanation as to why the Orders-in-Original dated 24.10.2018 and 08.08.2019 were not communicated to the Commissioner by respondent no. 2. 19. As noted above, the petitioner had filed an appeal against the said Order-in-Original dated 24.10.2018. The Revenue had notice of the said appeal but no one had appeared on behalf of the Revenue at the hearing held by the Appellate Authority on 29.03.2019. There is no allegation that the Order-in-Appeal dated 30.04.2019 disposing of the appeal was passed without affording the Revenue any opportunity to contest the same. The Revenue had taken no steps to challenge the Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority 20. It is clearly not open for the Revenue to now claim that it had no knowledge of the Order-in-Original dated 24.10.2018, which was the subject matter of an appeal that was heard by the Appellate Authority on 29.03.2019. 21. We are inclined to accept the contention that the intradepartmental communications seeking certified copies of the Orders-in-Original have been generated for the purpose of reflecting delay in communication of the said Orders-in-Original, for the purpose of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for filing of the appeal. Plainly, no allowance can be made for extending the period of limitation on account of miscommunication of orders intra-departmentally. Thus, the expression communication of the decision or order as used in Sub-section (2) of Section 107 of the CGST Act, in the context of intra-departmental communication must be construed as the date of issue of the order. 25. In view of the above, the Revenue s appeal against the Order-in-Original dated 24.10.2018, was beyond the period of limitation as prescribed and was liable to be rejected on this ground. WHETHER THE ORDER-IN-ORIGINAL DATED 24.10.2018 MERGES WITH THE APPELLATE ORDER. 26. As stated above, the Adjudicating Authority accepted that the petitioner was entitled to a refund of IGST to the extent of ₹24,33,20,306/- that it had paid in respect of services exported by it. The controversy was confined to the adjustment of ₹5,08,03,767/- from the aforesaid amount on account of the petitioner s interest liability on delayed payment of taxes on inputs on RCM and on account of the delayed payment of IGST. The petitioner had preferred the appeal limited to the question of adjustment of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 30.04.2019, only for the reason that it had found that the provisions of law that were pressed in service by the Original Authority for effecting the adjustments of ₹5,08,03,767/- were not applicable. There is a serious question whether the Appellate Authority could have remanded the matter to the Adjudicating Authority as Sub-section (11) of Section 107 of the CGST Act expressly proscribes referring the case back to the Adjudicating Authority. Sub-section (11) of Section 107 of the CGST Act is set out below: (11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order: Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order: Provided further that where the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed if it appears to the Proper Officer that tax is not paid or short paid or erroneously refunded or in case where ITC has been wrongly availed or utilized. In such circumstances, the Proper Officer is required to issue a show cause notice as to why the amount specified in the notice not be paid, along with interest. 33. In cases where there is no dispute as to the payment of tax, the interest thereon is payable as a matter of course and is liable to be recovered under provisions of Section 79 of the CGST Act. 34. Sub-section (12) of Section 75 of the CGST Act expressly provides that where any self-assessed tax in accordance with a return furnished under Section 39 of the CGST Act remains unpaid or any amount of interest payable on such tax remains unpaid, the same is recoverable under Section 79 of the CGST Act notwithstanding the provisions of Sections 73 of the CGST Act or 74 of the CGST Act. Thus, no notice under Section 73 of the CGST Act is required for recovery of interest on the self-assessed tax. 35. Ms. Samiksha Godiyal, learned counsel appearing for the Revenue has also referred to Section 50 of the CGST Act and has rightly pointed out that in terms of Sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of breach of principles of natural justice. However, it is erroneous to suggest that a specific notice under Section 73 of the CGST Act be issued before raising any demand of interest. The principles of natural justice mainly require the taxpayer to be put to notice regarding raising of a demand of interest and he be provided full opportunity to contest the same. In the present case, there is no dispute that the petitioner was afforded full opportunity to contest the claim of interest on GST paid by RCM and IGST. 39. In Godavari Commodities Ltd. v. Union of India through the Commissioner, Central Goods Services Tax Ors. 2019 SCC OnLine Jhar 1839, the Division Bench of the Hon ble High Court of Jharkhand had directed that a letter issued to the taxpayer demanding interest be treated as a notice under Section 73(1) of the CGST Act. The rationale was to provide the taxpayer an opportunity of being heard by the Adjudicating Authority. 40. Section 73 of the CGST Act does not expressly refer to a notice to determine the liability of interest. Sub-section (1) of Section 73 requires a Proper Officer to issue a notice to the person chargeable to tax, if it appears that any tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proper mechanism was introduced for expeditious disposal of refund application. The petitioner claims that since its transactions were revenue neutral, it was not obliged to pay any interest on the delayed payment of IGST on inputs under RCM as in any event, the petitioner would be entitled to refund of the same as the output supplies was for zero rated supplies. 46. We find no merit in the aforesaid contention. Admittedly, the petitioner was liable to pay GST on input supplies on RCM. The liability to pay GST on inputs is not disputed. In fact, the petitioner had discharged its liability to pay GST on inputs on RCM basis and had paid a sum of ₹24,68,39,430/- in respect of input services for the period September, 2017 to March, 2018. Part of the GST payable for the month of September, 2017 was paid on 20.02.2018 which was after a delay of 124 days. The GST on inputs for part of the month of September, 2017 and October, 2017 to March, 2018 was paid on 24.08.2018. In terms of Section 50 of the CGST Act, the petitioner was liable to pay interest on such delayed payment. The contention that the petitioner would be entitled to refund of ITC paid on RCM for discharging its li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether any tax was payable by the assessee. The principal dispute in Jet Airways (I) Ltd. v. Commissioner of Service Tax, Mumbai 2016 SCC OnLine CESTAT 7389 was whether the services availed by the assessee were covered under the category of Online Information Database Access or Retrieval Services . It was the assessee s case that the services availed from service providers located overseas could not be classified as taxable services and therefore, the assessee had no liability to pay the same. The assessee did not prevail in its contention and therefore was held liable to pay the service tax. However, the Tribunal recognized that in such eventuality, the assessee would be entitled to utilize the service tax paid on input services for discharging its liability to pay service tax on rendering the service of transport of passengers by air and other services which the assessee had been discharging in full. Thus, the consequences of the assessee being mulcted with the liability of service tax on inputs was also that it would be entitled to utilize the same for discharge of its service tax liability on the services rendered. Thus, the Tribunal was persuaded to mould the relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of July, 2017 to March, 2018 were amended to reflect that the exports during the said period were made after payment of IGST. The Revenue claims that this is impermissible as at the material time the petitioner had not paid IGST and therefore its exports could not be considered as made after the payment of IGST. It is material to note that the petitioner utilized its ITC available as a result of payment of IGST on RCM for payment of IGST in August, 2018, in respect of export of services. 54. Section 16(3) of the IGST Act as in force at the material time reads as under: 16(3) A registered person making zero rated supply shall be eligible to claim refund of unutilized input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or Rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed: Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on delayed payment of IGST. The petitioner s contention that it is now mulcted with the interest liability twice over once on delayed payment of tax on RCM and yet, once again on delayed payment of IGST, is correct. But that is the statutory consequence of amending invoices reflecting the exports made without payment of IGST as exports made after payment of IGST. 59. Ms. Samiksha Godiyal, learned counsel appearing for the Revenue has rightly pointed out that perhaps the correct course for the petitioner was to seek refund of unutilized ITC arising out of the payment of GST under RCM. However, since the petitioner had elected to amend the export invoices to reflect exports after payment of IGST, the logical consequence is that the petitioner would be liable to pay interest on delayed payment of IGST. Even if this Court accepts that it was open for the petitioner to amend its invoices to reflect export of supplies by payment of IGST during the period July, 2017 to March, 2018, it is not possible for this Court to accept that the petitioner had in fact discharged its liability to pay IGST on the due dates. This is because as the petitioner had neither paid IGST on due dates nor had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on import of services under RCM would be unavailable to the petitioner. In response it was submitted on behalf of the Revenue that such refund would be admissible but the petitioner s application would be barred by limitation. 64. If the Revenue s contention is accepted that the petitioner could not change its option under Section 16(3) of the IGST Act after completing the exports, the natural consequence would be that the petitioner would be entitled to refund of accumulated unutilised ITC, which it had utilized in payment of IGST. In this case, the petitioner would not liable to pay interest on delayed payment of IGST on export of services either. However, in any event, the petitioner would be entitled to refund of tax paid (IGST paid either under the RCM on inputs or the IGST on exports). The revenue s contention that any claim for refund of ITC would be barred is also not persuasive. If the refund of IGST on exports was rejected on the ground that petitioner could not amend the invoices, it would follow that its claim would be required to be considered for the ITC utilised to pay such IGST. It is difficult to accept the Revenue s contention that the petitioner had forfeite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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