Case Title | Baker Hughes Asia Pacific Limited vs Union of India |
Court | Rajasthan High Court (Jodhpur Bench) |
Honorable Judges | Justice Sandeep Mehta & Justice Vinod Kumar Bharwani |
Citation | 2022 (6) GSTPanacea 88 HC Rajasthan W.P.A. 5714 /2021 |
Judgement Date | 30-June-2022 |
Council for Petitioner | Tushar Jarwal Sheetal Kumbhat |
Council for Respondent | Mukesh Rajpurohit Sandeep Shah Nishant Bafna Hemant Dutt Rajvendra Saraswat |
The Jodhpur High Court bench of Justice Sandeep Mehta & Justice Vinod Kumar Bharwani has held that Refund of Input Tax Credit (ITC) as per inverted duty structure cannot be denied where input & output supplies are same.
FACTS OF THE CASE
Refund on Input Tax Credit (ITC) was denied of the Petitioner on Inverted Supply on the ground that input & output supplies are being same as arbitrary, Illegal and constitutionally invalid.
Petitioner challenged the Impugned Refund rejection Order.His main contention was that the Refund claim on ITC is as per provision of law & relying upon all the supporting relevant documents required under law.
The Petitioner has entered into development contract with Vedanta limited which has been granted exclusive rights to carry out petroleum operations in Rajasthan by Government of India. For this purpose, a Production Sharing Contract was executed between Vedanta and the Central Government. Vedanta Limited entered into a sub contract dated 11.12.2018 with the petitioner for supply essential goods, materials and/or equipment required for carrying out the petroleum exploration and production operations as prescribed in the Production Sharing Contract.
Petitioner in order to reduce the burden of tax and the cascading effect and as per the Central Government issued a Notification No.3/2017- CGST dated 28.06.2017 providing for an effective GST Rate of 5% on all supplies made for specified operations subject to fulfilment of condition that certificate from the Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas which clears the transfer of said goods obtain. essentiality certificate was issued bearing the name of the petitioner as the supplier and Vedanta as recipient. The petitioner, procured the goods by paying GST from 5% to 28% (Input Tax) and supplied the same to the Vedanta at the fixed GST rate of 5% (Output Tax) under the notification No.3/2017-Central Tax (Rate), dated 28.06.2017.
Petitioner claimed that Input Tax Credit available is much higher than its Output Tax Liability and as a consequence, after complete utilization of the credit towards the Output Tax Liability, a significant percentage of Input Tax Credit accumulated in favour of the petitioner on account of difference in rate of tax (GST) which was much higher than the rate of output tax. The petitioner has thus claimed that it is entitled to refund under the inverted duty structure as provided by the CGST and RGST Acts. For this purpose, the petitioner has relied upon Section 54 of the CGST Act.
Petitioner claim to have filed a legitimate refund claim within the due date and there was no restriction on claiming refund in such cases where the inputs and output supplies are same as outward supplies were made at concessional GST rates under the CGST notification dated 18.11.2019 which approves refund in cases where input and output supplies are same and where GST on output supply is fixed at a lower rate.
COURT HELD
Considering the facts as recorded, held that the supplying dealer would be entitled to claim refund of accumulated unutilized tax credit under Section 54(3)(ii) of the CGST Act irrespective of the fact the input and output supplies are the same by ignoring the circular dated 31.03.2020. being a subordinate legislation, is repugnant and conflicting to the parent legislation i.e. Section 54(3)(ii) of the CGST Act and hence, the same cannot be applied to oust the legitimate claim for accumulated ITC refund filed by the petitioner. Thus, the refund rejection order dated is hereby quashed and set aside. The respondents are directed to forthwith, refund the accumulated input tax credit to the petitioner as per its entitlement.
ANALYSIS OF THE JUDGEMENT
As Taxpayer has fulfilled all the conditions relevant to the GST Laws Refund cannot be denied on the ground that input and output supplies are the same. Therefore, in this case Court has ordered Department to refund the accumulated input tax credit to the Taxpayer as per entitlement.
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Baker-Hughes
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