Appario Retail Private Limited VS Union Of India

In this Writ Petition, the petitioner challenges the Order-in-Appeal No. HYD-GST-RRC-APP-091-20.21 (APPI), dated 29.12.2020, issued by the 4th respondent. The petitioner contends that the 4th respondent’s order improperly overturned a previous decision made by the 5th respondent in Appeal No. 03/2020-RR(GST)IC-D-D, dated 24.06.2020. The primary issue at hand is the denial of a refund of the excess amount in the petitioner’s electronic cash ledger, which is maintained under the Central Goods and Services Tax Act, 2017 (CGST Act).

The sequence of events is as follows:

1. Initial Appeal Decision: The 5th respondent, in their order dated 24.06.2020, denied the petitioner a refund of the excess amount in the electronic cash ledger.

2. Subsequent Appeal: The petitioner appealed this decision, resulting in the Order-in-Appeal No. HYD-GST-RRC-APP-091-20.21 (APPI) by the 4th respondent, dated 29.12.2020.

3. Overturning of the Initial Decision: The 4th respondent’s order set aside the 5th respondent’s initial decision, which effectively denied the refund.

The petitioner is seeking judicial review of the 4th respondent’s decision to overturn the 5th respondent’s denial of the refund. The petitioner’s primary contention is that the denial of the refund of the excess amount in the electronic cash ledger is unjust and not in accordance with the provisions of the CGST Act. The petitioner argues that they are entitled to a refund of the excess amount, and the 4th respondent’s order incorrectly interprets or applies the relevant legal provisions.

The Writ Petition, therefore, requests that the court reassess the 4th respondent’s decision, uphold the petitioner’s right to the refund, and ensure that the refund is processed as per the provisions of the CGST Act.

This Writ Petition challenges the Order-in-Appeal No.HYD-GST-RRC-APP-091-20.21(APPI), dated 29.12.2020, issued by the 4th respondent. The decision in question overturned the earlier order by the 5th respondent, issued on 24.06.2020, in Appeal No. 03/2020-RR(GST)IC-D-D’, which had denied the refund of excess amounts credited to the petitioner’s electronic cash ledger under the Central Goods and Services Tax Act, 2017 (CGST Act).

The petitioner is a business entity involved in trading electronic goods via an e-commerce platform. It has registered under the Goods and Services Tax (GST) laws and procures electronic goods from various vendors based on forecasted business demand, maintaining substantial inventory to ensure timely deliveries. Consequently, the petitioner has accumulated a significant balance of input tax credit (ITC) from GST paid on these purchases in its electronic credit ledger.

When orders are received through an Electronic Commerce Operator (ECO), the sales are processed via this e-platform, and the goods are dispatched to customers. The petitioner discharges its tax liability by debiting the Electronic Credit Ledger. Upon completion of sales through the ECO platform, the consideration is collected by the ECO from the customers and subsequently remitted to the petitioner.

The crux of the petitioner’s contention is the challenge to the Order-in-Appeal that reversed the decision to deny a refund of the excess ITC balance. The petitioner argues for the rightful refund of this excess credit, asserting it meets the legal prerequisites under the CGST Act for such a refund and that the initial denial was not justified. The case revolves around interpretations of GST regulations concerning the refund of excess ITC and the procedural aspects of managing electronic cash ledgers.

This Writ Petition challenges the Order-in-Appeal No.HYD-GST-RRC-APP-091-20.21(APPI), dated 29.12.2020, issued by the 4th respondent, which overturned the decision of the 5th respondent in Appeal No. 03/2020-RR(GST)IC-D-D’, dated 24.06.2020. The latter had denied the refund of excess amounts in the electronic cash ledger of the petitioner, who is a business entity dealing in the trading of electronic goods via an e-commerce platform under the Central Goods and Services Tax Act, 2017 (CGST Act).

The petitioner’s business operations involve procuring electronic goods from various vendors based on forecasted demand, maintaining substantial inventory to ensure timely deliveries. Consequently, a high balance of input tax credit (ITC) on GST paid for these purchases accumulates in the electronic credit ledger. When sales are made through an Electronic Commerce Operator (ECO), the goods are dispatched to customers, and the tax liability is settled using the electronic credit ledger.

The ECO receives payment from customers and remits it to the petitioner after retaining a percentage as tax collection at source (TCS) under Section 52 of the CGST Act. This retained amount is deposited with the government and can be claimed as credit by the petitioner based on the ECO’s statement in Form GSTR-3B, as per Rule 67 of the CGST Rules, 2017.

The petitioner argues that due to the substantial inventory maintained to meet demand, there is often an excess balance of ITC in the electronic credit ledger, which is used to discharge GST liabilities when sales are made through the ECO. This results in the TCS amount deposited by the ECO remaining unutilized. The petitioner claims that this unutilized balance in the electronic cash ledger should be refundable under Section 49(6) read with Section 54 of the CGST Act. Refunds have been granted to the petitioner across India, including in Telangana, where they operate.

Furthermore, the petitioner compares their electronic cash ledger to an e-wallet, where funds are stored to be used against specific liabilities. This unutilized balance, therefore, should be eligible for a refund, aligning with the provisions of the CGST Act, which allows such refunds to ensure that businesses do not suffer from blocked funds in their electronic cash ledger.

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