Paradeep Phosphates Limited Vs Union of India And Others (Orissa High Court)
Summary: The petitioner-company, engaged in manufacturing fertilizers, challenged the Order-in-Appeal dated 27.11.2024 to the extent it upheld recovery of Rs.11,77,05,976/- relating to refund of accumulated input tax credit under the inverted duty structure. The petitioner sought exercise of jurisdiction under Article 226 of the Constitution of India, including directions for refund of the amount reversed in excess and a declaration concerning the retrospective applicability of the amendment to Rule 89(5) of the CGST Rules.
The petitioner discharged GST at 5% on outward supplies of fertilizers under Notification No.1/2017-CT (Rate) dated 28.06.2017. Since the GST rate on outward supplies was lower than the rate on inputs and input services, the petitioner claimed refund of accumulated input tax credit for seven months ranging from July 2017 to June 2018 under section 54(3) of the CGST Act/OGST Act read with Rule 89(5) of the CGST/OGST Rules. The Assistant Commissioner, GST and Central Excise, Cuttack-II Division sanctioned the refund.
Rule 89(5) was subsequently amended with retrospective effect from 01.07.2017 by Notification No.21/2018-CT dated 18.04.2018 read with Notification No.26/2018-CT dated 13.06.2018. The Supreme Court, in Union of India & Ors. Vs VKC Footsteps India Pvt Ltd., sustained the validity of the amendment. Thereafter, a notice in Form GST-DRC-01 dated 03.07.2019 was issued and the Assistant Commissioner passed the adjudication Order-in-Original in Form GST-DRC-07 dated 08.11.2019 confirming recovery of the refunded amount under section 73 of the GST Act.
