In pursuance of section 54(6) of the Central Goods and Services Tax Act (CGST) of 2017 and the Gujarat Goods and Services Tax Act of 2017, the Gujarat High Court (HC), presided over by Justice Sonia Gokhani and Justice Sandeep N. Bhatt, ordered the authorities to refund the claim of Integrated Goods and Services Tax (IGST) that is allegedly withheld illegally.
The bench observed te facts that the petitioner purchased the goods from Sayan Greemochem Private Limited who had purchased goods from Prince Chemicals, who is placed in the list of L2 risky supplier and therefore the IGST refund of the petitioner was withheld on the ground of availing of wrong Input Tax Credit (ITC) by the petitioner.
However, it was discovered from the record that the petitioner had reversed the ITC of Rs. 11,55,726 along with a fine and interest for the aforementioned purchases. Furthermore, owing to the fact that measures are in place to reclaim taxes if the petitioner’s supplier or the supplier’s supplier fail to pay them or use them incorrectly, neither the CGST Act nor the IGST Act require the petitioner to confirm the legitimacy of the suppliers of the supplier.
Further observed that in this case, the supplier’s supplier is placed in the list of L2 risky suppliers and even then, with a hope to get the IGST refund, the petitioner has paid the ITC, but still the refund is not processed and given to the petitioner.
The counsel for petitioner submitted that in spite of various letters and reverting ITC along with interest and penalty, neither the respondent has replied back to the petitioner nor the name of the petitioner was removed from the list of risky exporters.
However, the counsel for respondent submitted that the inquiry initiated against the exporter had been suspended as per the Risk Management Centre for Customs (RMCC) instruction.
Further added that earlier the firm has exported various goods and had duly received the refund of IGST on those exports.
The counsel of petitioner referred various provisions and he submitted that the refund of IGST in violation of provisions of Section 54(6) of the CGST Act and CGST Act read with Rule 91(1) of the CGST Rules and the GGST Rules.
Thusly, pursuant to Section 54(6) of the CGST Act and Rule 91(1) of the CGST Rules, the respondents are obligated to provide the registered person a refund of 90% of the amount requested within seven days of the date on which the application for the refund was affirmed, however if the applicant for the refund has not been prosecuted for a violation of the Act during any time frame of five years immediately prior the tax period to which the claim for refund relates.
Also stated that the petitioner submitted that the case of the petitioner does not fall under any of the above Sections 54(10) or 54(11) of the CGST Act, the refund is withheld by the respondents, which action is arbitrary in nature.
Conversely, the respondent side stated that on the basis of a verification report, of the jurisdictional CGST officer, the Director General of Analysis and Risk Management (DGARM) issued NOC and the department can revoke the suspension only after the receipt of NOC from DGARM.
Moreover, after the suspension is revoked, the Customs Automated Systems will automatically disburse all the pending IGST refund of the exporter.
As shown by Section 54(6) of the CGST Act read with Rule 91 of the CGST Rules, the Division Bench ordered the respondents-authorities to grant the amount of IGST refund to the petitioner as claimed by the petitioner and credit such amount to the petitioner’s account within three weeks of the date of receipt of a copy of this order.
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