The Andhra Pradesh High Court recently granted relief to Shapoorji Pallonji Group, directing the remand of a Goods and Services Tax ( GST ) dispute regarding the refund of Tax Deducted at Source ( TDS ) amounts deposited in the Electronic Credit Ledger.
Shapoorji Pallonji, a prominent construction and infrastructure conglomerate accumulated a credit balance in their cash ledger from TDS amounts that had been credited to their cash ledger by deductors. Consequently, the Petitioner sought refund of the left over TDS in the cash ledger after discharging their tax liability using Input Tax Credit (ITC) available in the ledger.
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The Assessing Officer (AO) rejected the Petitioner’s application against which an appeal was preferred before the Appellate Authority. The AO rejected the refund Application citing ‘Unjust Enrichment’ by the Petitioner against which the present Petition has been instated.
Sai Sundeep Manchikalapudi, appearing for the Petitioner submitted before the High Court that the preceding Appellate Authority had passed a speaking order in contravention of the guidelines set by Circular No.166/22/2021-GST dated 17.11.2021, issued by the Central Board of Indirect Taxes and Customs. Meanwhile, the Respondents were represented by the Additional Advocate General – II and Central Government Counsel Y V Anil Kumar.
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Circular No.166/22/2021-GST permits refund of TDS and Tax Collected at Source ( TCS ) amounts deposited in the electronic cash ledger as per the proviso to Section 54(1) read with Section 49(6) of the Central Goods and Services Tax Act, 2017 (CGST Act).
Point No.3 of the Circular affirms that it is ‘not mandatory for the registered person to utilise the TDS/TCS amount credited to his electronic cash ledger for the purpose of discharging tax liability only; the registered person has the liberty to discharge their tax liability in respect of the supplies made by them during a tax period, either through debit in electronic credit ledger or through debit in electronic cash ledger, as per their choice and availability of balance in the said ledgers.’
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Acceding to the Petitioner’s submissions, the Division Bench of Justice R Raghunandan Rao and Justice Maheswara Rao Kuncheam set aside the Order-in-Appeal and the Order-In-Original passed by the precursory appellate authorities and remanded the matter to the Respondents for reconsideration in light of Circular No.166/22/2021-GST within a period of 3 months from the present Order.
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