Payment made under Form GST DRC-03 to be adjusted against Tax erroneously Refunded: Gujarat High Court [Read Judgment]

The Gujarat High Court held that the Payment made under Form GST DRC-03 to be adjusted by the GST Authority against tax erroneously refunded.

The petitioner, Yasho Industries Ltd. is a public limited company engaged in the business of manufacturing and exporting specialized chemicals having its factory set up. The petitioner Company is the holder of Advance Authorization Licences granted in terms of the Scheme set out in Chapter-IV (AA Scheme) of Foreign Trade Policy 2015-2020.

The petitioner has challenged the Summons issued under Section 70 of the Central Goods and Services Tax Act, 2007, calling upon the petitioners to give evidence and produce the documents as mentioned therein in connection with the inquiry initiated against the petitioners. The petitioners also have sought directions against the respondent to issue refund/allow recredit of INR 3 Crore paid by the petitioners vide Form No.GST DCR-03. The petitioners have also sought direction to quash and set aside the impugned Circular, in connection with the assignment of functions to the officers as the ‘proper officers’ in relation to the various functions of the CGST Act and the Rules made thereunder.

Advocate Mr.Abhishek Rastogi appearing for the petitioners challenged the jurisdiction of the respondent in issuing the summons, submitted that the power to issue summons in terms of Section 70 of the CGST Act vests exclusively with the ‘Proper Officer’ as defined in Section 2(91) of the said Act. Pressing into service Section 167 of the CGST Act.

Mr. Rastogi submitted that the delegation of powers by the Commissioner has to be specified by way of the Notification as contemplated in the said section. According to him, the respondent is an officer of Directorate General of Goods and Services Tax Intelligence (DGGI) and holds the designation of a Senior Intelligence Officer and his appointment under the CGST Act could be traced to the Notification dated 1.7.2017 and thus, the respondent is appointed as a Central Tax Officer and is in the rank of Superintendent under CGST Act.

Assailing the impugned Circular dated 5.7.2017, Mr.Rastogi submitted that Section 2(91) is merely a definition clause, which does not confer any powers to assign the functions. The said Circular also makes reference to Section 20 of the IGST, which merely incorporates by reference, certain provisions of the CGST Act and makes them applicable to the IGST Act. Since the delegation of powers by the Commissioner under Section 167 of the CGST Act has to be effectuated through a Notification, such power cannot be exercised in any manner, except in the manner prescribed in Section 167.

The division bench of Justice Bela M. Trivedi and Justice A.C.Joshi the petitioners having made payment under Section 74(5), they appear to have informed the Proper Officer of such payment in the Form GST DRC-03 (Annexure-F) as contemplated in Rule 142(2) of the said Rules. It is needless to say that the said payment shall be dealt with or adjusted by the concerned respondent in accordance with law more particularly as per the provisions contained in Section 74 of the CGST Act.

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