GST Refund claim cannot be rejected for refund application under wrong category

Engineers India Ltd. Vs Assistant Commissioner (Central Tax) (Madras High Court)

Introduction: The Madras High Court recently addressed the issue of rejecting refund claims based on incorrect categorization. In the case of Engineers India Ltd. v. Assistant Commissioner (Central Tax), the court set aside an order rejecting a refund claim solely on this ground. This decision highlights the importance of fair and reasoned consideration of refund applications under GST laws.

The Hon’ble Madras High Court in the case of Engineers India Ltd. v. Assistant Commissioner (Central Tax) [W.P. No. 26927 of 2021 dated February 07, 2024] set aside the Impugned Order and held that, the refund claim should not be rejected on the ground that the refund application was filed under wrong category.

Facts:

Engineers India Ltd. (“the Petitioner”) is a company engaged in providing design, engineering, procurement, supply and related services with respect of large construction projects. As per Section 13 of the Tamil Nadu Value Added Tax Act, 2006 (“the TNVAT Act”), the employer was required to deduct TDS at the time of making payment to contractors including the Petitioner and the contractor was entitled to adjust the TDS amount against the tax liability under the TNVAT Act. The Petitioner, after the implementation of GST, asserted that, he is eligible to claim transitional TDS credit. However, the tax was deposited under protest by the Petitioner, as the subject matter was pending before the Hon’ble High Court. Later, the High Court allowed the writ petitions filed before the Hon’ble Madras High Court wherein it was held that, the Petitioner is entitled to claim transition of credit of TDS under the TNVAT Act. However, the refund application filed by the Petitioner was rejected vide Order dated September 9, 2021 (“the Impugned Order”) on the ground that claim for refund was made under the wrong category i.e. “Any Others”.

Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon’ble High Court contending that, the aforesaid category for refund is not stated in Circular No. 125/44/2019-GST dated November 18, 2019 (“the Circular”).

Issue:

Whether refund claim should be rejected when refund application is filed under wrong category?

Held:

The Hon’ble Madras High Court in the case of W.P. No. 26927 of 2021 held as under: