The Madras High Court in a matter under its consideration clarified on the scope of responsibilities of a Commercial Tax Officer while issuing refunds of Input Tax Credit claimed by exporters.
The instant Writ Petition was filed by a Commercial Tax Officer, now re-designated as a State Tax Officer, vested with statutory powers and responsibilities vide the Goods and Service Tax Act, 2017 (GST Act) from 01.07.2017. In light of the powers vested, Commercial Tax Officers are entrusted to undertake Quasi-Judicial functions of passing orders on refund claims over Input Tax Credit availed by Exporters.
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A refund claim was made by Khan Traders, a tax entity that represented itself to be a genuine exporter during March, 2023. Khan Traders filed an online application under the statutory form RFD-01 along with a statement, GSTR-2A, Annexure-B, GSTR-3B, GSTR-1, export invoice, declaration, shipping bills and copy of their electronic credit ledger on 19.04.2023, claiming a refund of Rs.69,01,127/-
The Petitioner, upon verifying the submissions of the Exporter through the Indian Customs Electronic Gateway (ICEGATE) website, granted the refund claim of the Exporter under RFD-02 Form for 90% of the claimed amount; remaining 10% was subsequently disbursed under form RFD-05.
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It was subsequently unearthed by the Directorate of Revenue Intelligence on 11.09.2023 that Khan Traders was a fraudulent exporter and had attempted to claim refunds over accumulated Input Tax Credit for supposed “exports” that never even crossed the boundaries of India.
The Commissioner of Commercial Taxes, Chennai being the 2nd Respondent, deemed the fraudulent actions of the Exporter to be aided by the Petitioner Tax Officer while stating that the Petitioner had “issued refund to a fake exporter without properly verifying the relevant details with undue haste and with malafide intention” and caused grave revenue loss to the tune of Rs.6,90,01,127/-
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The Petitioner was placed under suspension by the 2nd Respondent and issued with a charge memo.
The Petitioner via this instant Writ, challenged the suspension order meted out by the 2nd Respondent citing the contents of Circular No-1/2019-2020 dated 23.3.2020 issued by the Commissioner of Commercial Taxes. Point No.18 (Scrutiny of Application) of the Circular affirms that Shipping bill details may be verified by the ‘proper officer’ through the ICEGATE website.
The Single Judge Bench of the Madras High Court presided over by Justice N. Anand Venkatesh, after taking into consideration the facts and arguments raised by all Parties, provisions of the GST Act and the Circular dated 23.03.2020, held that the Petitioner had verified all the particulars available to him and duly discharged all his responsibilities in accordance with law.
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The Court reaffirmed that the Petitioner was not required to “physically” verify the E-way Bills produced by the Exporter while maintaining that the Petitioner was time-bound to process the refund claim within a period of 7 days from the date of application by the Exporter, failing which, would attract interest and sanctions under the GST Act.
The Bench further laid reference to the decision of the Hon’ble Supreme Court in Union of
India and another Vs. Ashok Kumar Aggarwal (2013) to shed light on the need for higher authorities to exercise heightened vigilance while issuing a suspension order to a Quasi-Judicial Authority such as a Commercial Tax Officer. The Court stressed on the need for conclusive evidence proving a prima-facie case before enacting a suspension order while reprimanding the 2nd Respondent’s mistaken exercise of power.
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In conclusion, the Madras High Court issued directives to the Respondents to reinstate the Petitioner in an ‘insensitive post’ in a different station while the departmental proceedings are underway.
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