Denial of Legitimate ITC by Deputy Commissioner: Kerala HC Directs Petitioner to file DRC-03 to Enable Sanctioned ITC Credit to Petitioner’s Bank Account [Read Order]

The High Court of Kerala has issued a directive to the petitioner, M/S. HLLLIFECARE LTD., a Government of India Enterprise, regarding the denial of legitimate Input Tax Credit (ITC) by the Deputy Commissioner of Central Goods and Services Tax (CGST) and Central Excise. The court has directed the petitioner to file GST Form DRC-03, a move that will enable the sanctioned ITC credit to be transferred to the petitioner’s bank account.

The petitioner had previously filed an application for the refund of ITC, which was rejected by the Deputy Commissioner, CGST citing that it was “time-barred.” Dissatisfied with this decision, the petitioner pursued legal action, leading to a judgment in their favour.

Following the court’s judgment, the petitioner had applied for a refund of ITC using GST-RFD-01 and had received a refund Application Reference Number (ARN) for the same.

However, despite the court’s ruling and the subsequent refund application, the petitioner had not received the refund by the time the case was brought before the Kerala High Court.

The petitioner was represented by M. Balagopal, R. Devika and Anjali Menon while the respondent revenue, the Assistant Commissioner of Central GST & Central Excise was represented by Sreelal Warrior.

The bench observed that the system required a debit from the Electronic Credit Ledger for the transfer of funds to the petitioner’s bank account. Due to a lack of this debit, the refund amount could not be credited to the petitioner’s account, even though it had been sanctioned.

The single bench of Justice Dinesh Kumar Singh directed the petitioner to file GST Form DRC-03 within a period of two weeks. This specific form, titled “Intimation for Voluntary Payment”, is crucial in enabling the sanctioned refund of ITC to be transferred to the petitioner’s bank account.

The court’s directive to file GST Form DRC-03 is a practical solution to resolve the impasse and ensure that the petitioner receives the rightful refund. It acknowledges the need for procedural compliance to facilitate the smooth transfer of funds from the Electronic Credit Ledger to the petitioner’s bank account.

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