No denial of Refund of accumulated ITC, on ground of non-filing of Information on Transfer of Business and other Returns to Establish Transfer of Stocks and Capital Goods: Delhi HC

The Delhi High Court observed that no denial of refund of accumulated Input Tax Credit ( ITC ), on ground of non-filing of information on transfer of business and other returns to establish transfer of stocks and capital goods.

The petitioner, Ajay Kumar Jindal, filed the present petition impugning an order passed by respondent no.3 [the Joint Commissioner, Central Goods and Service Tax (CGST)], whereby the petitioner’s appeal against an order passed by respondent no.2 [the Deputy Commissioner], was rejected.

The petitioner is, inter alia, engaged in the business of manufacturing and supply of zipper fasteners, zipper sliders and other related products. The petitioner applied for refund of the amount lying in his Electronic Cash Ledger (ECL), which was allowed by an order.

Thereafter,the petitioner filed an application for refund of the accumulated ITC of ₹24 lakhs for the period April, 2020 to March, 2021. The petitioner claims that the said ITC was accumulated due to inverted tax structure and was liable to be refunded.

Respondent no.1 issued a separate show-cause notice calling upon the petitioner to show cause as to why its GST registration should not be cancelled.Thereafter, the respondent no.1 issued an order cancelling the petitioner’s GST registration on the ground that the petitioner was non-existent at the principal place of business.

In the present case, there is no allegation that the petitioner had obtained its registration by means of fraud, wilful misstatement or suppression of facts. The only ground on which the petitioner’s registration has been cancelled is that he has contravened the provisions of the Act inasmuch as he has not filed the requisite returns for transfer of stock and capital goods.

The Court of Justices Vibhu Bakhru and Amit Mahajan observed that “We are also unable to accept that the petitioner can be denied the refund of accumulated ITC solely on the ground that he had not filedthe necessary information regarding transfer of business and other returns to establish the transfer of stocks and capital goods more so when the petitioner’s claim for inverted tax structure as well as the accumulation of ITC has been verified by respondent no.2.”

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