Gujarat High Court (HC) presided by Justice J.B. Pardiwala and Justice Nisha M. Thakore quashed the order of Joint Commissioner, CGST and Central Excise. Further, the court directed the authorities to adjudicate the same under 89(4B) of the Central Goods and Services Tax (CGST) Rules, 2017. .
In the instance of the company filing the writ, the manufacturing operations of the company were subject to Central Excise duty collection in the form of a tax on items manufactured. The business was releasing itself from its obligation to pay the Central Excise duty on the yarns produced in and removed from the factory.
According to Rule 18 of the Central Excise Rules, the rebate, or refund of Excise duty paid on exported goods, was permitted by the Central Government. As a result, the department of Central Excise regularly approved and paid the rebate of the Excise duty paid on the exported goods by the writ applicant – company.
The writ applicant – corporation claims that a procedure has been established under Rule 89(4) of the CGST Regulations for the purpose of seeking a refund. The Government has made the formula specified under Regulation 89(4) applicable as of July 1, 2017, the date the GST laws went into effect.
Later, the Sub Rules (4A) and (4B) were added to Rule 89 of the CGST Regulations, and these two Sub Rules have occasionally been substituted. The two Sub Regulations mentioned above, according to the writ petitioner – corporation, do not include any formulas for calculating the refund of the unused credit.
22 refund claims were submitted with all required calculations and supporting documentation for each month’s amount of the refund in line with the methodology specified by the Government under Rule 89(4) of the Regulations.
The same came to be rejected by the authorities essentially on the ground that the writ applicant was supposed to file its claim for refund of the unutilized credit under Rule 89(4B) of the CGST Rules and not on the basis of the formula of Rule 89(4) of the Rules. The writ applicants claimed refund of the unutilized credit aggregating to Rs.85,85,13,169.
The bench directed to adjudicate the claim of the writ applicants in accordance with Sub Rule (4B) of Rule 89 of the CGST Rules, but keeping in mind the formula of input / output ratio of the inputs / raw materials used in the manufacturing of the exported goods.
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