In a significant case, the Delhi High Court set aside the order of the Goods and Service Tax (GST) appellate authority rejected the claim of Input Tax Credit (ITC) without stating the reason.
Chegg India Pvt Limited, the petitioner challenged the impugned Order-in-Appeal and prayed for issuing a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the Order-in-Appeal to the extent prejudicial to the Petitioner and consequently direct the Respondent No. 1 to grant refund amounting to Rs. 25,04,738/- along with interest.
The petitioner engaged in the business of software development, content development, marketing and other IT and IT-enabled services in the field of education technology. The petitioner claimed that it exports education services to recipients in seventy countries without payment of GST. The said services are Zero Rated Supplies in terms of Section 16 of the Integrated Goods & Services Tax Act, 2017 (IGST Act). The petitioner is thus entitled to a refund of ITC relating to input services.
The petitioner claimed that the said ITC was accumulated in respect of the Zero Rated Supplies and it was, thus, entitled to a refund of the same. However, the concerned authority rejected the refund to an extent of ₹39,18,756/- and sanctioned the balance amount. The petitioner’s claims for the refund to the aforesaid extent were rejected as attributable to catering charges and Common Area Maintenance Charges (‘CAM’).
The Appellate Authority had merely referred to Section 17(5)(b) of the CGST Act and rejected the appeal. There is no discussion as to how Section 17(5)(b) of the CGST Act applies to CAM charges and catering charges.
Although the Appellate Authority has held that the petitioner has not fulfilled the eligibility conditions for availing of ITC as per Section 16 of the CGST Act, the reasons for the said conclusion are not discernible.
A division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that the concerned authority had not issued any notice as required under Rule 92(3) of the Central Goods and Services Rules, 2017 (hereafter ‘CGST Rules’), setting out the reasons for rejection of the refund. The petitioner, thus, had no opportunity to satisfy the concerned authorities as to its claim for refund to the extent it has been rejected.
While allowing the petition, the Court set aside the Order.
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