The Delhi High Court has held that the GST department cannot reject a refund without any corroborative evidence and is directed to pay the refund claim along with interest.
G S Industries, the petitioner has filed the present petition to issue directions to the respondent to refund the tax amounting to ₹23,10,333/- claimed by the petitioner for the period September 2017 to March 2018.
The petitioner carries on the business as G.S. Industries and is engaged in manufacturing Handpump parts falling under HSN 8413/9140, which is chargeable to Goods and Services Tax @ 5%.
The petitioner claimed that it has accumulated Input Tax Credit on account of an inverted duty structure and filed an application on 04.07.2019 claiming a refund of ₹23,10,333 accumulated Input Tax Credit for the period September 2017 to March 2018. The petitioner filed another application on 09.07.2019 claiming an amount of ₹14,46,417/- as accumulated Input Tax Credit for the period April 2018 to March 2019.
The applications filed by the petitioner were acknowledged and two separate deficiency memos, both dated 29.11.2019, were issued. The respondent pointed out certain deficiencies and also sought certain clarifications about the said applications. In addition, the respondent also called upon the petitioner to submit a Chartered Accountant’s certificate confirming that the incidence of tax and interest was not passed on to any other person.
The petitioner responded to the said deficiency memos by a communication dated 27.01.2020. However, the respondent did not accept the petitioner’s explanation and issued Show Cause Notices dated 23.11.2020. The petitioner responded to the said Show Cause Notices which was not accepted and by a separate order dated 14.12.2020, the applications for refund were rejected.
On appeal filed by the petitioner, the Appellate Authority allowed the refund. Further held that the Adjudicating Authority had not provided any basis for observing that the product manufactured by the petitioner required very less or no brass at all.
A Coram comprising of Justice Vibhu Bakhru and Justice Amit Mahajan observed that since the petitioner succeeded in its appeal, the petitioner is entitled to the refund as claimed and directed the respondents to forthwith process the petitioner’s claim for a refund including interest.
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