Case Note & Summary
The petitioner, Soorajmull Bajinath Private Limited, filed a writ petition challenging an order dated 18 August 2021 passed by the Joint Commissioner (Appeals) declining refunds. The appeal against that order lay before the GST Tribunal, but since the Tribunal was not functioning, the petitioner approached the High Court. The Department filed an affidavit-in-reply on 5 September 2023, acknowledging that the petitioner was eligible to receive the refunds claimed. The affidavit referred to the retrospective amendment of Section 50 of the CGST Act, 2017 by the Finance Act, 2022 with effect from 1 July 2017, and Rule 88B of the CGST Rules, 2017. It stated that on a combined reading of these provisions, interest is payable only when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed. In the petitioner's case, the balance never fell below the wrongly availed amount, so no interest was payable. The Court, considering the affidavit and the position reflected therein, set aside the impugned order and directed the respondents to refund the claimed amount of Rs. 9,26,570/- within four weeks. No order as to costs was made, considering the fair approach of the respondents and their counsel.
Headnote
A) Goods and Services Tax - Refund - Eligibility - Petitioner challenged order denying refund - Department filed affidavit acknowledging petitioner's eligibility for refund - Court set aside impugned order and directed refund within four weeks (Paras 2-6).
B) Goods and Services Tax - Interest - Section 50(3) CGST Act, 2017 - Interest on wrongly availed input tax credit - Amended provision and Rule 88B clarify interest payable only when balance in electronic credit ledger falls below amount wrongly availed - Petitioner's credit balance never fell below that amount - No interest payable (Paras 4-5).
Issue of Consideration
Whether the petitioner is entitled to refund of amounts claimed despite the impugned order denying refund, and whether interest is payable on excess TRAN-1 credit availed and subsequently reversed.
Final Decision
The impugned order dated 18 August 2021 is set aside. Respondents are directed to refund to the petitioner the amount claimed i.e., Rs. 9,26,570/- within four weeks from the date of the order. Rule made absolute. No order as to costs.
Law Points
- Interest under Section 50(3) of CGST Act
- 2017 is payable only when balance in electronic credit ledger falls below the amount of input tax credit wrongly availed
- retrospective amendment by Finance Act
- 2022
- Rule 88B of CGST Rules
- 2017
Case Details
2024 LawText (BOM) (10) 161
Writ Petition No. 4121 of 2022
M.S. Sonak, Jitendra Jain
Bharat Raichandani i/by UBR Legal for petitioner; M. P. Sharma a/w Ms. Mamta Omle for respondent nos.1,3,4,5 & 6; Ms. Nazia Sheikh for respondent no.2-State
Soorajmull Bajinath Private Limited
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition challenging order denying refund under GST laws.
Remedy Sought
Petitioner sought refund of amounts claimed and setting aside of impugned order.
Filing Reason
Impugned order dated 18 August 2021 by Joint Commissioner (Appeals) declining refunds; GST Tribunal not functioning.
Previous Decisions
Order dated 18 August 2021 by Joint Commissioner (Appeals) denying refund.
Issues
Whether the petitioner is entitled to refund of amounts claimed despite the impugned order denying refund.
Whether interest is payable on excess TRAN-1 credit availed and subsequently reversed under Section 50(3) of CGST Act, 2017.
Submissions/Arguments
Petitioner challenged the order denying refund.
Department filed affidavit acknowledging petitioner's eligibility for refund and stating that no interest is payable under amended Section 50(3) and Rule 88B.
Ratio Decidendi
Under the amended Section 50(3) of the CGST Act, 2017 read with Rule 88B of the CGST Rules, 2017, interest on wrongly availed input tax credit is payable only when the balance in the electronic credit ledger falls below the amount of input tax credit wrongly availed. Since the petitioner's credit balance never fell below the wrongly availed amount, no interest was payable, and the petitioner was entitled to refund.
Judgment Excerpts
Considering the above affidavit and the position reflected therein, we set aside the impugned order dated 18 August 2021 and direct the respondents to refund to the petitioner the amounts claimed i.e., Rs.9,26,570/- within four weeks from today.
On combined reading of the above provisions, it is clear that interest is payable only when the balance in electronic credit ledger falls below the amount of input tax credit wrongly availed.
Procedural History
The petitioner filed a writ petition challenging the order dated 18 August 2021 of the Joint Commissioner (Appeals) denying refund. The Department filed an affidavit-in-reply on 5 September 2023 acknowledging the petitioner's eligibility. The High Court heard the matter and disposed of the petition on 16 October 2024.
Acts & Sections
- Central Goods and Services Tax Act, 2017 (CGST Act): Section 50(3)
- Central Goods and Services Tax Rules, 2017 (CGST Rules): Rule 88B
- Finance Act, 2022:
