While delivering an assessee-friendly ruling, the Madras High Court has directed the GST department to process the ITC claim since the same was rejected solely on the ground of inadvertent error.
The petitioner, M/s Abi Egg Traders is a sole proprietary engaged in the export of eggs. There is no liability to tax on the export of eggs since the commodity is ‘nil’ rated. Hence, the petitioner was entitled to the Input Tax Credit ITC that had accumulated on the exports. The period in question is 01.08.2017 – 31.03.2018 in respect of which a return in form GSTR-3B was filed in May, 2018.
A notice was issued by the department wherein it was pointed out that the error that had crept in to the filing of the refund application. A refund application requires the assessee to stipulate the grounds on which the refund was claimed.
The petitioner claimed that in the present case is ground 7(b) being ‘export of services – without payment of tax’. However, this ground was unavailable since the refund application, when correlated with thereturn filed under Section GSTR-3B did not permit the assessee to take a stand contrary to that taken in that return.
Justice Anita Sumanth observed that “Nowhere in the counter nor in the course of the oral arguments before me, does Ms.Lydia, learned standing counsel dispute the entitlement of the petitioner to the refund. In fact, she would fairly accede to the position that the error is bonafide and reiterate that the petitioner is, in fact, entitled to the refund of ITC seeing as the export was not liable to tax.”
Allowing relief to the assessee, the Court held that “In such circumstances, I am of the considered view that rejecting the refund solely on the inadvertent error that had transpired would be hypothetical and the conclusion of the officer to this effect is thus set aside. Incidentally, the petitioner has also circulated an order passed by the same respondent officer in the case of another assessee by name ‘Shri Shakti Exports’ wherein refund, as sought in similar circumstances has been granted, the officer, taking a lenient view.”
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