In a major relief to Renault Nissan, the Madras High Court quashed revision order passed under the Tamil Nadu Goods and Service Tax Act, 2017 ( TNGST Act ).
The petitioner is engaged in the manufacture and supply of passenger cars. The said supply is made at concessional rates in terms of Notification No.40/2017-Central Tax (Rate) dated 23.10.2017. As a consequence, there is an accumulation of Input Tax Credit ( ITC ) because GST is paid at a higher rate on the inputs and input services procured by the petitioner.
In those circumstances, the petitioner filed a refund application seeking refund of Rs.25,81,17,728/-. Such refund claim was sanctioned to the extent of Rs.25,75,07,243/-. Pursuant to an amendment to the Central Goods and Services Tax Rules, revision proceedings were initiated. The impugned order came to be issued in such revision proceedings.
The counsel for the petitioner assailed the order issued in revision proceedings on multiple grounds. The first ground of challenge is that the refund order did not warrant revision under the facts and circumstances. By contending that the law as it stood, on the date of application, permitted a refund claim in respect of unutilised ITC arising out of both inputs and input services, the counsel submitted that the revision proceedings travel beyond the scope of Section 108 of the TNGST Act.
The second contention is that the levy of interest under the impugned order was contrary to Section 50(3) of the TNGST Act. In this connection, with reference to the impugned order, the counsel submitted that the conclusions are not supported by reasons.
Additional Government Pleader, submitted that the scope of Section 108 of the TNGST Act is wide enough to embrace revision proceedings in the facts and circumstances of this case. As a result of the amended Rule 89(5) and the subsequent upholding of such amendment by a Division Bench of this Court and the Supreme Court, the Additional Government Pleader submits that no interference is warranted with the impugned revision order.
A Single Bench of Justice Senthilkumar Ramamoorthy observed that “No findings were recorded with regard to this objection in the impugned order. The petitioner also contended that interest was not leviable under Section 50(3) of the TNGST Act and that penalty should not be levied in the facts and circumstances. While these contentions were noticed in the impugned order, the respondent did not engage with these contentions and record reasons for not accepting the same. For such reason, the order impugned herein warrants interference.”
“Therefore, the impugned order is quashed and the matter is remanded for reconsideration. The respondent is directed to provide a reasonable opportunity, including a personal hearing, to the petitioner and thereafter issue a speaking order. This exercise shall be completed within a maximum period of two months from the date of receipt of a copy of this order” the Court concluded.
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