GST Refund application filed without debiting Electronic Credit Ledger not lawful: Writ not entertained

Pallava Textiles Private Limited Vs State Tax Officer (ST) (Madras High Court)

Madras High Court didn’t entertain the writ as refund application filed without debiting extent of refund claim amount from Electronic Credit Ledger. Accordingly, writ dismissed as mandatory requirement of filing refund application not complied.

Facts- The present petition has been preferred by the petitioner. The challenge in these writ petitions is to the impugned orders passed by the respondents dated 02.04.2025,05.04.2025 and 07.04.2025 rejecting the refund claims applications claimed by the petitioner on the ground that the petitioner without debiting the extent of refund claim amount from electronic credit ledgers, has filed the refund applications.

Conclusion- Held that the main contention of the learned counsel for the petitioners is that though they are eligible for refund, the respondents without properly verifying the documents filed by the petitioners have rejected the refund claim applications filed by the petitioners. If that being the case, the petitioners ought to have filed the appeal before the appellate authority challenging the impugned orders. This Court is not inclined to go into the factual issues raised by the petitioners. That apart, without debiting the extent of the refund claim amount from the Electronic Credit Ledger, the petitioners have filed the refund applications. Therefore, the mandatory requirement for filing the refund applications have not been complied with by the petitioner. In such view of the matter, this Court is not inclined to entertain these writ petitions and the same are liable to be dismissed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

As the issue involved in all these Writ Petitions are identical in nature and the relief sought thereunder is interconnected, they were heard together and disposed of vide this Common Order.

2. The challenge in these writ petitions is to the impugned orders passed by the respondents dated 02.04.2025,05.04.2025 and 07.04.2025 rejecting the refund claims applications claimed by the petitioner on the ground that the petitioner without debiting the extent of refund claim amount from electronic credit ledgers, has filed the refund applications.

3. The learned counsel for the petitioners would submit that the petitioners are the ISO 9001:2001 certified Companies involved in Textile manufacturing with the process of weaving fabrics using the latest equipment and technology. They have been doing both domestic sales as well as exports.

In the case of Domestic, the petitioner will apply for an inverted duty structure refund and the same is regularly sanctioned by the department. In the case of export sales, the petitioner will claim a refund of IGST of 5% from customs and they were informed by the department that if they make IGST 5%, then they are not eligible to make a claim under the Inverted duty structure as per Section 54(3) and therefore they could not file the refund under Inverted duty structure, including the exports made with IGST at 5%. After getting legal advice from their consultant, the petitioners have filed refund claims on the part of the inverted duty structure for different months pertaining to 2021, 2022 and 2023, along with supporting documents. But, the respondent concerned, without properly verifying the documents filed by the petitioner has issued show cause notices alleging certain discrepancies, for which the petitioners also filed their replies along with supporting documents. But the respondent concerned withoug considering the documents filed by the petitioners, passed the impugned orders, rejecting the refund claim applications made by the petitioner. He therefore prays to set aside the impugned orders.

4. It is contended by the learned counsel for the respondents that this is the 2^nd round of litigation. Already the petitioners have filed the refund applications for the very same period under the head ‘inverted duty structure’, and the same were considered and the refund were also been granted. Subsequently, the petitioners filed 2^nd refund applications, claiming the further claim under the head ‘other heads’, instead of ‘inverted duty structure’. Since the refund claims have been filed under the wrong head, the system has not debitted any amount from the Electronic Credit Ledger and that apart the petitioners are also not eligible for the refund as they have already been granted refund for the very same periods.

5. In reply, the learned counsel for the petitioner would submit that they may be granted permission to file DRC 03, so as to enable them to debit refund claim amounts from the Electronic Credit Ledger, for which the learned counsel for the respondents would submit that no such permission is required. Further, they would submit that as per Section 54 of the Central Goods and Services Tax Act,2017 (in short ‘the Act’) refund applications has to be filed within two years and the present applications pertains to 2021, 2022 and 2023 and therefore they are barred by limitation. That apart, if the petitioners are aggrieved by the orders impugned, the alternative remedy available to them is to file appeal before the appellate authority. Without doing so, the petitioners haves approached this Court by way of these writ petitions. Therefore, the learned

6. Heard both sides. Perused the records.

7. The main contention of the learned counsel for the petitioners is that though they are eligible for refund, the respondents without properly verifying the documents filed by the petitioners have rejected the refund claim applications filed by the petitioners. If that being the case, the petitioners ought to have filed the appeal before the appellate authority challenging the impugned orders. This Court is not inclined to go into the factual issues raised by the petitioners. That apart, without debiting the extent of the refund claim amount from the Electronic Credit Ledger, the petitioners have filed the refund applications. Therefore, the mandatory requirement for filing the refund applications have not been complied with by the petitioner.

8. In such view of the matter, this Court is not inclined to entertain these writ petitions and the same are liable to be dismissed.

9. Accordingly, these writ petitions stands dismissed with liberty to the petitioner to file appeals before the appellate authority challenging the impugned orders, within a period of four weeks from the date of receipt of receipt of a copy of this order. On such appeals, being filed, the appellate authority shall take the appeals on record, if they are otherwise in order. No costs.