GST Refund not admissible to extent of Non-Reversal of ITC, rules Commissioner (Appeals) [Read Order]

GST refund - not admissible - non reversal - ITC rules commissioner - Taxscan

The Commissioner (Appeals) has held that the GST Refund not admissible to the extent of non reversal of Input Tax Credit (ITC).

The appellant, M/s Stone Craft (India) Pvt Ltd is a 100% exporter and engaged in business of buying, processing and exporting natural stone and is not engaged in any domestic supply of its goods, has filed refund claims under Section 54(3) of CGST Act, 2017 in respect of unutilized ITC.

The appellant has contested in their appeal memos that the impugned Orders are not speaking. Since the refund claims have been processed electronically, therefore keeping in limitation of the electronic system, the detailed grounds of Refund sanction/ rejection could not be provided in refund orders i.e. form RFD-06. However, a detailed calculation chart of non-admissible refunds has not been given in Form RFD-06 due to limitations of the electronic system. 

The Commissioner held that the refund claim of Rs.60,06,181/- for the period of March, 2020 to May, 2020. It was noticed that as per GSTR-3B return filed for the month of March, 2020 the applicant along with Zero rated supply of goods Rs.2,44,81,281/- has also shown exempted supply of Rs.11,16,382/- but not reversed ITC in terms of Section 17 (1)(2) of the CGST Act, 2017 read with Rule 42(1) of the CGST Rules, 2017 on account of exempted supply.

It has been reported that Since the applicant not reversed ITC on account of exempted supply of, therefore the JRO during examination of refund quantified “Net ITC” in terms of Section 17 (1)(2) of the CGST Act, 2017 read with Rule 42(1) of the CGST Rules, 2017 for calculation of admissible refund to the applicant and found the amount refundable to the Taxpayer Rs.54,44,354/- and not admissible Refund amount Rs.5,61,827/-.

In view of Verification report submitted by the JRO, SCN was issued to the appellant with the Remarks Refund not admissible to the extent of non reversal of ITC under Rule 42(1) of CGST Rules read with Section 17(2) of the CGST Act, 2017. The submissions made by the appellant in reply of SCN was considered and not found tenable, accordingly Refund of Rs.54,43,390/- found admissible was sanctioned and Rs.5,62,791/- was rejected.

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