Pitambra Books Pvt. Ltd VS Union Of India

The petitioner in question is a business entity specializing in the manufacturing and trading of books. This business is duly registered under the Goods and Services Tax (GST) Act, indicating that it is compliant with the relevant tax regulations governing the sale and distribution of goods and services in the jurisdiction.

As a registered entity under the GST regime, the petitioner is required to adhere to all the statutory obligations, including the proper filing of GST returns, maintaining accurate financial records, and ensuring that all transactions are conducted in accordance with the GST laws. The business must also collect and remit GST on the sale of books, and it is eligible to claim input tax credit (ITC) on the goods and services used in its business operations, subject to compliance with GST rules.

Given the nature of the business, the petitioner faces various challenges typical to the book manufacturing and trading sector, such as fluctuating demand, competition from digital media, and the need to maintain a robust supply chain. Additionally, compliance with GST regulations adds another layer of complexity, requiring the business to stay updated with any changes in tax rates, rules, and regulations.

In summary, the petitioner’s operations are intricately linked with GST compliance, which impacts their pricing strategies, financial planning, and overall business operations. As a GST-registered entity, the petitioner must navigate these regulatory requirements to ensure smooth business functioning and to capitalize on available tax benefits.

The petitioner, a company involved in the manufacturing and trading of books, is duly registered under the Goods and Service Tax Act (the Act). The company procures raw materials and allied goods from the domestic market, which are processed through its in-house manufacturing facility. The final products are then exported to various markets including Sudan, Russia, Ethiopia, Guinea, and other countries in Africa and Asia. These export activities are classified as zero-rated supplies under Section 16(1)(a) of the Integrated Goods and Services Tax Act, 2017 (the IGST Act).

The current legal challenge involves the petitioner’s grievance against Circular No. 37/11/2018-GST, dated March 15, 2018, and Circular No. 125/44/19-GST, dated November 18, 2019. The petitioner contends that these circulars have imposed restrictions that have deprived them of the ability to claim a refund for the unutilized input tax credit for the period from April to June 2018. The petitioner estimates that over Rs. 30 crores of eligible input tax credit is currently stuck due to these restrictions, causing significant financial distress to the company.

The petitioner’s counsel, Mr. Puneet Agrawal, argues that the root of the problem lies in paragraph 8 of the Circular No. 125/44/2019-GST, which prevents refund claims for two separate financial years that are not successive. Mr. Agrawal asserts that this stipulation is in violation of Section 44 and Rule 89 of the IGST rules, which presumably govern the procedures and eligibility for such refunds. The petitioner’s position is that the restriction imposed by these circulars is overly restrictive and contrary to the provisions of the GST Act, thereby necessitating a legal remedy to facilitate the refund process and alleviate the financial burden on the petitioner.

The petitioner, a business engaged in the manufacturing and trading of books, is registered under the Goods and Services Tax (GST) Act. The company sources raw materials and related goods domestically for production at its in-house facility, with the final products being exported to various markets, including Sudan, Russia, Ethiopia, Guinea, and other African and Asian countries. These export activities are classified as zero-rated supplies under Section 16(1)(a) of the Integrated Goods and Services Tax Act, 2017 (IGST Act).

The petition challenges the legality and impact of Circular No. 37/11/2018-GST dated March 15, 2018, and Circular No. 125/44/19-GST dated November 18, 2019. The petitioner argues that these circulars, due to their restrictive nature, have resulted in the denial of the refund claim for unutilized input tax credit for the period from April 2018 to June 2018. This denial has led to severe financial difficulties for the petitioner, with over Rs. 30 crores of input tax credit being stuck and unclaimed. The issue has been exacerbated by the GSTN portal, which has disabled the option for filing the refund of tax, as mandated by the circulars.

A major point of contention is paragraph 8 of Circular No. 125/44/2019-GST, which prevents refund claims for two separate (not consecutive) financial years. The petitioner argues that this restriction is contrary to Section 44 and Rule 89 of the IGST rules, which stipulate the conditions under which refund claims should be filed. Specifically, the petitioner asserts that the refund claim period cannot span across different financial years and that the claims must be filed in a sequential manner. For registered persons with an aggregate turnover of up to Rs. 1.5 crore in the preceding or current financial year, who opt to file GSTR-1 quarterly, refunds must also be applied for on a quarterly basis or by clubbing successive quarters. However, the refund claims under certain categories (a, c, and e) must be submitted chronologically. This means that applicants, after filing a refund application for a specific period, cannot file for the same category for previous periods. This limitation does not apply if a fresh application is filed following a deficiency memo issued earlier.

In summary, the petitioner seeks relief from the restrictive conditions imposed by the circulars, which have hindered their ability to claim a substantial amount of unutilized input tax credit, thereby causing significant financial strain.

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