Relief to IOCL: Delhi HC sets aside denial of claims for refund of accumulated ITC [Read Order]
In a major relief to IOCL, the Delhi High Court sets aside the denial of claims for refund of accumulated ITC
Indian Oil Corporation Limited – ITC – input tax credit – Delhi High Court – TAXSCAN
Indian Oil Corporation Limited – ITC – input tax credit – Delhi High Court – TAXSCAN
The Delhi High Court set aside denial of claims for refund of accumulated input tax credit (ITC), thereby granting relief to Indian Oil Corporation Limited (IOCL).
The petitioner (‘IOCL’) has filed the present petition being aggrieved by denial of claims for the refund of accumulated Input Tax Credit (‘ITC’). The same was denied to the petitioner on the ground that the rate of tax on input supply and output supply are the same. According to the Revenue, the refund is not permissible in view of Clause (ii) of the proviso to Section 54(3) of the Central Goods & Service Tax Act, 2017 (‘the CGST Act’).
The petitioner stated that it accumulates unutilized ITC on account of rate of tax on certain inputs being higher than the rate of tax, chargeable on bottled Liquid Petroleum Gas (‘LPG’) – the petitioner’s output supply. Thus, according to the petitioner, refund of unutilized ITC is not proscribed in terms of the proviso to Section 54(3) of the CGST Act.
The question whether IOCL’s claim for refund for accumulated unutilised ITC is admissible, has to be determined with reference to the express provisions of Section 54 of the CGST Act. In terms of Section 54(1) of the CGST Act, any person claiming refund of tax and interest paid on such tax or any amount paid by him, is entitled to make an application for refund before expiry of two years from the relevant date, which is defined under Explanation (2) to Section 54 of the CGST Act.
The Division Bench of Justices Vibhu Bakhru and Amit Mahajan observed that “It is not necessary for this Court to examine whether such clarification falls foul of Section 54(3) of the CGST Act as it is apparent that the same is inapplicable in the facts of the present case. The clarification seeks to address an issue where the ITC is accumulated on account of different rates being applicable at different points of time. It does not seek to address any issue where the principal input and output is the same. In terms of the Circular 135/5/2020, if the rate of tax on input and output is the same and ITC is accumulated on account of different rates being applicable at different points of time, the case would not fall under Clause (ii) of the proviso to Sub-section (3) of Section 54 of the CGST Act.”
“The concerned authority is directed to process the petitioner’s applications for refund along with applicable interest in accordance with law as expeditiously as possible and in any event, within a period of six weeks from date” the Court concluded.
To Read the full text of the Order CLICK HERE
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