MO Industries Vs Union of India (Rajasthan High Court)
Summary: The Rajasthan High Court, in M/s MO Industries v. Union of India, ruled that an Appellate Authority cannot quash a refund order based solely on a circular that conflicts with the Central Goods and Services Tax (CGST) Act. The petitioner, M/s MO Industries, sought a refund of ₹19,62,616 on accumulated Input Tax Credit (ITC) due to an inverted tax structure. While the refund was initially granted, it was later quashed on appeal, relying on Circular No. 135/05/2020-GST, which had previously been declared repugnant to Section 54(3)(ii) of the CGST Act. The Court observed that the circular could not override the parent legislation, as held in previous cases like Baker Hughes Asia Pacific Ltd. v. Union of India. Consequently, the Court set aside the Appellate Authority’s order and remitted the case for reconsideration based on legal principles rather than the circular. The judgment reaffirms that subordinate legislation, like circulars, cannot invalidate statutory provisions or legitimate claims for tax refunds. Similar rulings in B.M.G. Informatics (P.) Ltd. v. Union of India and Shivaco Associates v. Jt. Commissioner of State Tax have supported this position.
Introduction: The Hon’ble Rajasthan High Court Bench at Jaipur in M/s MO Industries v. Union of India [D.B. Civil Writ Petition No. 9660 of 2024 dated July 08, 2024] set aside the order of the Appellate Authority denying refund solely relying upon Circular No.135/05/2020-GST dated March 31, 2020 (“the Circular”) because the said circular had already been held to be in conflict with section 54(3)(ii) of the CGST Act, 2017 (“the CGST Act”).
