I-Tech Plast India Pvt. Ltd. Vs State Of Gujarat (Gujarat High Court)
In so far as the erroneous grant of refund and return of such refund amount together with interest by the writ-applicant is concerned, the same is undisputed. That being the case, the first part of the transaction is nullified inasmuch as the amount erroneously refunded has already been repaid by the writ-applicant along with interest. However, once both these transactions are taken out from the equation, what survives is the reduction of the ITC originally effected from the electronic credit ledger of the writ-applicant. The respondent authorities are of the view that the writ-applicant is not entitled to such a refund of the ITC at all. According to Mr.Sharma, the learned AGP, such a refund is not permissible under sub-rule (10) of rule 96 of the CGST Rules. However, in the present case, refund as contemplated under sub-rule (10) of rule 96 of the CGST Rules is not at all an issue. Here, the simple issue is one of restoration of the ITC, which was erroneously refunded and subsequently recovered. If the authorities have accepted that there was an error and resultantly, accepted repayment of the erroneous refund, as a corollary, the credit of the ITC must be restored. It cannot be that for the purpose of repayment, there was an error, and for the purpose of restoration of the ITC, there was no error. There is no question of any refund of the ITC at all. The question is one of restoration of the ITC in the electronic credit ledger and not a refund thereof. Hence, any reference to sub-rule (10) of rule 96 of the CGST Rules is completely misconceived and not tenable.
In such circumstances, We direct the respondent authorities to re-credit/restore the ITC to the tune of 1,39,49,810/- in the electronic tax ledger of the writ-applicant.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs:
“….this Hon’ble court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to :
(a) direct the Respondent authorities, more particularly the Respondent No.2, to re-credit / restore the ITC of Rs. 1,39,49,8 1 0/- in the electronic credit ledger along with interest;
(b) pending the admission, hearing and final disposal of this petition, direct the Respondent authorities, more particularly the Respondent No.2, to re-credit/ restore the ITC of Rs. 1,39,49,810/- in the electronic credit ledger along with interest;
(c) any other and further relief deemed just and proper be granted in the interest of justice;
(d) to provide for the cost of this petition.”
2. The facts giving rise to the present writ-application may be summarised as under :
2 (1) The writ-applicant is a Company registered under the provisions of the Companies Act, 1956 (for short, the ‘Act 1956’). The writ-applicant is engaged in the business of manufacturing various types of toys. The writ-applicant is duly registered under the provisions of the Goods and Services Tax Act (for short, the ‘GST Act’) and it has been issued ‘advance license’, whereby the writ-applicant is permitted duty free import of its raw material, i.e. import without payment of any import duty. Thus, the writ-applicant is importing its raw material by availing the benefit of the Notification No.79/2017-Customs dated 13.10.17 issued by the Government of India, Ministry of Finance, New Delhi. The raw material so imported is used in the manufacturing of its products which, in turn, are exported by the writ applicant.
2(2) During the period in question, i.e. Financial Year 2017-18 to Financial Year 2020-2021, the writ-applicant, inadvertently and due to oversight, cleared and exported its finished goods (produced using material imported under the advance license) upon payment of the Integrated Goods and Services Tax (for short, the ‘IGST’) instead of exporting it under the ‘Letter of Undertaking’ (LoU). Since the exports were made upon the payment of the IGST, the writ-applicant periodically received auto-refund of the IGST paid at the time of exports. Upon realizing this inadvertent mistake, the writ-applicant voluntarily paid the requisite IGST along with the interest to the department for the period in question and filed the statutory forms GST DRC – 03 on 13.08.2020 for the period in question. The aforesaid fact was also brought to the notice of the GST Department vide letter dated 13.08.2020. The details of the IGST and the interest paid by the writ-applicant for the period in question are as follows:
