The Delhi High Court allowed a second opportunity to the Petitioner to prove the payment of the inward supplies, in respect of which the Goods and Services Tax (GST)Income Tax Credit (ITC) refund on Export of Zero-Rated Supplies are claimed.
The Petitioner, Rajiv Sharma HUF Proprietor of M/s Sagar Scooter Syndicate through its Karta Rajiv Sharma, a Hindu Undivided Family (HUF), is engaged in the business of trading and export of automotive spare parts, automobile components and other allied products in the name and style of its proprietorship concern, ‘M/s Sagar Scooter Syndicate’. Petitioner is registered under the Central Goods and Services Tax Act, 2017 (CGST Act) and has been assigned the Goods and Services Tax Identification No. (GSTIN) :07AAPHR6437P1Z6.
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The petitioner filed the present petition impugning an Order in appeal dated 24.04.2023, whereby the petitioners appeal under Section 107 of the CGST Act against an Order-in-Original dated 01.11.2022 was dismissed.
Although, the petitioner has the remedy of an appeal u/s 112 of CGST Act, 2017 but the petitioner cannot avail the said remedy as the Appellate Tribunal has not been constituted. In this case it is appropriate to entertain such a petition.
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The Petitioner made an application in proper format, seeking refund of the accumulated Input Tax Credit (ITC) for the period of November, 2021 for an amount of Rs.12,82,643/-.The Petitioner claimed the export of goods is done without payment of tax and was entitled to refund of the accumulated ITC in respect of the zero-rated supply under Section 16 of the Integrated Goods and Services Tax Act, 2017 (IGST Act).
The Adjudicating Authority issued a SCN on 10.10.2022 in FORM GST RFD-08 proposing to reject the petitioner’s application for refund. The petitioner responded to the SCN.
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The Adjudicating Authority accepted the petitioner’s explanation. But rejected the application for refund on the grounds that the petitioner had failed to provide Bank Realization Certificates ( BRC), and the bank statements and the ledger accounts of suppliers were found incomplete.
The Petitioner appealed before the appellate authority over the impugned refund rejection order u/s 107 of the CGST Act. The petitioner’s contention of the petitioner that the furnishing of BRC’s are not necessary to claim a refund of accumulated ITC. As the petitioner would be required to re-deposit the amount to be granted as refund due to the non-receipts of sale proceeds within the period of nine months. The Appellate authority held the refund as an empty formality.
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The Appellate authority also upheld the findings of the adjudicating authority that the ledger account of the suppliers submitted by the petitioner was incomplete, and thus, the petitioner had failed to establish it was entitled to avail the benefits of ITC in terms of Section 16(2)(c) of CGST Act.
The petitioner has also impugned the provision of Rule 96B of the CGST Rules on the ground that it is ultra vires the provisions of the CGST Act and the IGST Act.
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According to the petitioner, there is no requirement for a taxpayer to receive the sale proceeds of export of goods within the period stipulated under FEMA for the taxpayer to claim refund of tax under Section 16 of the IGST Act. However, the learned counsel for the petitioner does not press the challenge to the vires of Rule 96B of the CGST Rules and has confined the present petition to assailing the impugned order on merits.
The petitioner’s application for refund was rejected on four grounds. First, there is a discrepancy in respect of certain invoices. Second, that the petitioner was required to provide E-Way bills of inward and outward supplies. Third, it was required to provide the BRC’s and fourth the petitioner was called upon to provide bank statements and ledger accounts of suppliers for further verification. The refund was not admissible as the proper officer is satisfied in regard to that.
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In the present case, the Proper Officer has not issued any deficiency memo and thus, it must be assumed that all documents necessary for processing the refund claim, as required under Rule 89(2) of the CGST Rules, were filed along with the refund application. In the aforesaid view, the proper officer’s demand to provide BRCs, bank statements and ledger accounts of the suppliers for further evaluation was not sensu stricto in conformity with Rule 92(3) of the CGST Rules inasmuch as there is no ground for the proper officer to be satisfied that the petitioner’s application for refund was required to be rejected on those grounds.
The proper officer had set out four reasons in SCN for rejection of the petitioner’s application for refund. But two reasons are satisfied so only two issues that require further examination.
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In terms of Section 16(3) of the IGST Act, the petitioner is entitled to refund of unutilized ITC on export of goods. The expressions ‘export of goods’ and ‘export of services’ are defined under Sections 2(5) and 2(6) of the IGST Act respectively.
But according to a circular, the petitioner’s claim for refund of ITC could not be rejected by the proper officer on the ground of non-furnishing of BRCs.
The Division Bench comprising of Justice Vibhu Bakhru and Justice Sachin Datta observed that the court considers that the matter have to be remanded to the adjudicating authority for making a decision afresh on the limited question i.e whether the petitioner had made payment to the suppliers for inward supplies in respect of which it claims refund of accumulated ITC.
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So accordingly, the bench set aside the impugned order as well as the impugned refund rejection order and remand the matter to the adjudicating authority to examine the limited question. The petitioner is provided with the liberty to file the necessary documents including bank statements and ledger accounts of the suppliers maintained in its books of account, if not filed. The adjudicating authority shall pass order after providing the petitioner an opportunity of hearing.
The petition is disposed of in the aforesaid terms.
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