Case Law Details
Commercial Tax Officer-GD-III Vs Suzlon Energy Limited (Madras High Court)
Madras High Court held that refund of inverted duty structure available u/s 54(3)(ii) of the GST Act even when the supplier has inadvertently charged higher rate i.e. 18% instead of applicable rate i.e. 5%.
Facts- According to the petitioner, the first respondent had procured the materials from the supplier, where the supplier paid IGST at the rate of 18% and made the supply. However, for the final product, the first respondent is liable to pay IGST only at the rate of 5%. Further he would contend that the supplier of the first respondent is also supposed to have paid only 5% IGST on the input product, but he had wrongly paid 18% IGST and since there is no inverted duty structure in this case, the refund application can be rejected on this ground. Hence, he would contend that since the second respondent had passed the impugned order without considering the above aspect, the said impugned order is liable to be set aside.
The another stand taken by the petitioner is that since the supplier of the first respondent had paid IGST for the input products at the rate of 18%, the first respondent also should have paid IGST for the final products at the rate of 18%. However, this aspect was also not considered by the second respondent while passing the impugned order and hence, the same is liable to be set aside.
Conclusion- Held that in terms of Section 54(3)(ii) of the GST Act, if the rate of tax on input is higher than the rate of tax on output, certainly, the person can claim the refund. Accordingly, in the present case, the duty paid on input is 18% though it is chargeable at 5%. Therefore, this Court is of the considered view that the petitioner is entitled for refund in terms of the provision of the Section 54(3)(ii) of the GST Act and the said view was also held by the second respondent in the impugned order. Hence, this Court does not find any error or illegality in the order passed by the second respondent on this aspect.
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