Abi Egg Traders Vs Assistant Commissioner (Madras High Court)
The Hon’ble Madras High Court in the case of Abi Egg Traders v. Assistant Commissioner, Salem II Division, O/o The Assistant Commissioner of Goods and Services Tax Central Excise [W.P.No.3773 of 2020] ruled in favor of the assessee by directing the department to process the Input Tax Credit (“ITC”) claim that were previously rejected solely on the ground of inadvertent error.
Facts:
Abi Egg Traders (“the Petitioner”) is a sole proprietor engaged in the business of export of eggs. Since eggs are a “nil” rated commodity, there is no tax burden associated with their export. Hence, the Petitioner was entitled to the Input Tax Credit that had accumulated on the exports. The period in question is August 1, 2017 to March 31, 2018, for which return in form GSTR-3B was filed in May 2018.
The Petitioner made a mistake while exporting as it opted for column ‘with payment of tax ‘ instead of ‘without payment of tax‘.
Issue:
Whether department can reject ITC claim solely on the basis of inadvertent error?
Held:
The court observed and directed the following:
- Department nowhere mentioned dispute the Petitioner’s right to refund and in fact conceded that the mistake was made bonafide and reaffirmed that the petitioner was entitled to the ITC return because the export was exempt from tax.
- Therefore, in such circumstances, rejecting the refund solely on the inadvertent error was set side.
- The Court granted 8 weeks from the date of Order to the officer to issue refund within stipulated time period.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner is a sole proprietary engaged in the export of eggs. There is no liability to tax on the export of eggs since the commodity is ‘nil’ rated. Hence, the petitioner was entitled to the Input Tax Credit (in short ‘ITC’) that had accumulated on the exports. The period in question is 01.08.2017 – 31.03.2018 in respect of which a return in form GSTR-3B was filed in May, 2018.
2. Inter alia, the petitioner states that a mistake had crept in insofar as the petitioner had, in stead of opting for exports ‘without payment of tax’, had opted for the column ‘with payment of tax’. As on 31.03.2018, the ITC available in the Electronic Credit Ledger (in short ‘ECL’) was a sum of Rs.7,04,851/-, whereas, according to the petitioner, on filing of the return, the ITC stood enhanced to a sum of Rs.11,63,200/-.
3. No documentary evidence has been provided to substantiate the enhanced figure of ITC available as on date of filing of the return in May, 2018. A claim for refund of ITC of an amount of Rs.11,63,200/- as on date of filing of return was made on 12.08.2019, under Section 54(3) of the Central Goods and Service Tax Act, 2017 (in short ‘CGST’) read with Section 16(3) of the Integrated Goods and Service Tax Act, 2017 (in short ‘IGST’).
4. A notice of deficiency had been issued on 05.09.2019 wherein the officer points out the error that had crept in to the filing of the refund application. To be noted that, a refund application requires the assessee to stipulate the grounds on which the refund was claimed and the grounds in column 7 are as follows:
