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TMI Blog2024 (7) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate Mr. Utkarsh Sharma for respondent no. 4. 3. These petitions are filed arising out the order passed by the Commissioner (Appeals) dated 07.03.2019 in Appeal Nos. 207 and 208/2018-19, whereby the Commissioner (Appeals) allowed the appeals filed by the department setting aside the orders sanctioning the refund for the months of July, 2017 and August, 2017 by the adjudicating authority. Special Civil Application Nos. 17988 and 17989 of 2019 are filed against the common order dated 07.03.2019 passed by the Commissioner (Appeals) in Appeal Nos .207 and 208/2018-19. Special Civil Application No. 18874 of 2021 and Special Civil Application No. 6600 of 2022 are filed challenging the show cause notice dated 02.12.2021 and the common order in original dated 16.02.2021, which were issued and passed for giving effect to the order passed by the Commissioner (Appeals) fore recovery of the refund sanctioned and paid to the petitioner for the month of July, 2017 and August, 2017 by the adjudicating authority. 4. Brief facts of the case are as under:- 4.1 On 27.10.2017 The petitioner filed of FORM GST TRAN-1 and the transitional credit of Rs. 14,30,19,855/- was sanctioned. On 20.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that these petitions are also required to be allowed considering the submissions. 6. The issue arising in these petitions pertaining to the refund of unutilized ITC of zero rated supplies of the petitioners is already considered and decided by the order of even date in Special Civil Application No. 12712 of 2019 wherein it is held as under:- "13. Having heard learned advocates for the respective parties and having considered the facts of the case, short question which arises for consideration in this petition is whether the transitional credit as per the form Trans-1 filed by the petitioner and accepted by the department can be considered as an opening balance in electronic credit ledger as unutilized ITC available for granting refund as per the provisions of Section 54 (3) of the CGST Act to the petitioner as per per the claim made by the petitioner in form RFD-01A. 14. It would, therefore, we germane to refer to the various provisions of CGST Act. 1. Zero-rated supply" has been defined under Section 16 of the Integrated Goods and Service Tax, 2017 (IGST), which reads as under:- "Section 16. Zero rated supply.- (1) "zero rated supply" means any of the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and the incidence of such tax and interest had not been passed on to any other person." Rule 89. Application for refund of tax, interest, penalty, fees or any other amount: "(4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula:- Refund Amount= (Turnover of zero-rated supply of goods+ Turnover of zero-rated supply of services) x Net ITC divided by Adjusted Total Turnover Where,- (A) "Refund amount" means the maximum refund that is admissible; (B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period; (C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking; (D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central Tax and the Commissioner of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be submitted stating that the claim for sanction of refund has been made to only one of the authorities. It is reiterated that the Central Tax officers shall facilitate the processing of the refund claims of all registered persons whether or not such person was registered with the Central Government in the earlier regime." 16. The CBIC thereafter issued a Circular No. 59/23/2018-CGST dated 04.09.2018, whereby it is clarified that measure of the amount of refund, which is eligible to the applicant seeking refund unutilized of credit of ITC on account of zero-rated supply of goods are provided. Relevant formula as prescribed for computing unutilized amount of ITC in para 3 of the said circular is as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Closing balance of credit of erstwhile taxes in the last return filed prior to the introduction of GST: ii) Un-availed credit taxes paid on capital goods procured in the erstwhile regime. iii) Credit of taxes paid on stock of raw materials, work-in-progress and finished goods as on 30.06.2017. iv) Credit relating to goods exempted under the earlier regime which are taxable under the GST regime. v) Credit of in transit goods and services on which taxes are paid in the erstwhile regime and such goods and services are received in the GST regime." 18. Rule 117 of the Rules provides that if a registered person has to claim Transitional Credit under Section 140 of the CGST Act, a declaration in Form GST TRAN-1 was required to be filed within 90 days of the appointed day i.e. on or before 28.09.2017. As per the provisions of Section 140 of the CGST Act read with Rule 117 of the Rules, the transitional credit, closing balance of credit of taxes lying and shown in last return filed by the assessee prior to introduction of CGST i.e. as on 30.06.2017 will be carried forward as credit in Electronic Credit Ledger as on 01.07.2017. in view of the above, GST regime, the credit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t impact and therefore, the Commissioner (Appeals) committed an error by in relying upon Circular No. 59 dated 04.09.2018, which would not be applicable in the facts of the case as the petitioner is entitled to get the benefit of carried forward of CENVAT credit as on 01.07.2017 in view of the provisions of Section 140 (1) read with Section 54 (3) of the CGST Act, 2017 read with Rule 89 (4) and 117 of the Rules. 21. It is not in dispute that the petitioner was entitled to the refund on the zero rated supplies and only ground for allowing the appeal of the department by the CIT appeals is that no balance was available in electronic credit ledger as on the date on which the petitioner was entitled to get refund i.e. end of the month i.e. July, 2017 and August, 2017 because the carried forward of CENVAT credit erstwhile regime was approved by the authority in the month of September, 2017. In such circumstances, the petitioner would never be available to utilize the carried forward of CENVAT credit, which would contrary to the provisions of Section 140 (1) of the CGST Act. 22. In view of the above analysis and foregoing reasons, the petition succeeds and is accordingly allowed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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