Micro Systems and Services Vs Union of India (Telangana High Court)
Refund of ITC on account of IDS allowed where goods supplied under concessional rate notification
The Hon’ble Telangana High Court in Micro Systems and Services v. Union of India and 5 others [Writ Petition No.37465 of 2021 dated September 5, 2022] remanded back the matter to the assessing authority for reconsidering the refund claimed by the assessee noting that refund of accumulated Input Tax Credit (ITC) on account of inverted duty structure (IDS) is allowed where the goods have been supplied under concessional rate notification.
Facts:
Micro Systems and Services (“the Petitioner”) is a proprietary concern engaged in the business of assembling and supply of computers and computer parts and is also a registered supplier to all the Defense, Research & Development Organization (“DRDO”) Laboratories and affiliates across the country.
The Petitioner filed an refund application dated December 2, 2020 (“the Refund Application”) to the assessing authority (“the Respondent”), claiming a refund of GST under IDS on supply of goods under concessional rate notification.
Further, the Respondent issued a Show-Cause Notice dated December 28, 2020 (“the SCN”), calling upon the Petitioner to show that why the refund application should not be rejected for contravention of Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Notwithstanding the reply submitted by the Petitioner, the Respondent rejected the refund application in the order dated January 04, 2021 (“the OIO”), based on Para 3.2 of the Circular No.135/05/2020- GST dated March 31, 2020 (“Circular No.135/05/2020”).
Being aggrieved by this, the Petitioner appealed under Section 107 of the CGST Act. However, the Respondent by order dated April 9, 2021 (“the OIA” or “the Impugned order”), confirmed the rejection and dismissed the appeal.
Therefore, the Petitioner filed the present writ petition contending that Para 3.2 of the Circular No.135/05/2020, has been further clarified by the Circular No. 173/05/2022-GST dated July 06, 2022 (“Circular No. 173/05/2022-GST”) thus, Refund application should be allowed.
Issue:
Whether or not the Petitioner is eligible for the refund in light ofCircular No. 173/05/2022-GST?
Held:
The Hon’ble Telangana High Court in Writ Petition No.37465 of 2021 dated September 5, 2022, held as under:
