The Delhi High Court has directed the revenue to refund the Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) claimed by the petitioner, Balaji Exim as the same was rejected on the ground of alleged availment of fake input tax credit by the supplier, M/s Shruti Exports.
Among other things, it was observed that “Although the petitioner has a statutory right to appeal the impugned order, it is not possible for the petitioner to avail the said remedy as the Tribunal has not been constituted.”
The petitioner had filed its refund application dated 11.09.2020 (GST-RFD – 01) seeking a refund of the unutilized Input Tax Credit ( ITC ) amounting to ₹72,03,961/-, which comprised of Integrated Goods and Service Tax (IGST) amounting to ₹19,53,062/- and Cess of ₹52,50,899/-. The petitioner also filed another refund application in respect of goods exported by the petitioner.
The petitioner’s applications were not processed as the supplier from whom the petitioner had purchased the goods had allegedly received fake invoices from its suppliers. The petitioner wrote several letters requesting for early disposal of his refund applications. However, his requests were not acceded to.
In the meantime, the petitioner became aware of the allegations that its supplier, M/s Shruti Exports, had issued fake invoices and its ITC was blocked. The said supplier had moved the High Court of Calcutta by filing a writ petition seeking unblocking of its Electronic Credit Ledger (ECL).
The petitioner submitted that he was not concerned with any allegation against its supplier M/s Shruti Exports as the purchases made by it were genuine and against genuine invoices.
Further, Aditya Singla, appearing for the petitioner, handed over a copy of the show cause-cum-demand notice issued to M/s Shruti Exports and one other person. However, the said show cause notice indicates that it relates to the period from July 2017 to Financial Year 2019-20.
Thus, he contended that it could not possibly cover the supplies made to the petitioner.
The bench observed that “The allegations of any fake credit availed by M/s Shruti Exports cannot be a ground for rejecting the petitioner’s refund applications unless it is established that the petitioner has not received the goods or paid for them.”
The Division Bench of Justices Vibhu Bakhru and Amit Mahajan further observed that “In the present case, there is little material to support any such allegations.”
The Delhi High Court thereby held that the petitioner would be entitled to the refund of the ITC on goods that have been exported by it, directing the respondent revenue to process the refund claims.
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