Case Law Details
Indian Oil Corporation Limited Vs Commissioner of Central Goods And Services Tax & Ors. (Delhi High Court)
Introduction: The Delhi High Court recently addressed the denial of Input Tax Credit (ITC) refund to Indian Oil Corporation Limited (IOCL) in a notable case against the Commissioner of Central Goods and Services Tax. The dispute centered around the denial of claims based on the perceived similarity in the tax rates on input and output supplies.
Background: IOCL, a public sector undertaking engaged in bottling and distributing Liquid Petroleum Gas (LPG), sought a refund for accumulated ITC. The denial was grounded in the argument that the tax rates on input supply and output supply were the same, invoking Clause (ii) of the proviso to Section 54(3) of the Central Goods & Service Tax Act, 2017 (CGST Act).
Key Arguments: IOCL contended that it accumulates unutilized ITC due to the higher tax rate on certain inputs compared to the tax rate on bottled LPG, its output supply. The primary question was whether the refund of accumulated ITC was prohibited by Clause (ii) of the proviso to Section 54(3) of the CGST Act.
Factual Overview: IOCL’s LPG production involves a complex process, including bottling and distribution. The rate of tax on bulk LPG and bottled LPG was 5%, but various inputs, such as safety accessories, attracted varying GST rates. IOCL applied for ITC refunds for specific tax periods, leading to show cause notices and subsequent rejection by the Adjudicating Authority.
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