Atibir Industries Co. Ltd VS Union Of India

In a recent court hearing, Mr. Sumeet Gadodia, representing the petitioner, argued for the issuance of a mandamus directing the respondents to either open the GSTN Portal for the petitioner to file its refund application in Form GST RFD-01, or to manually accept the petitioner’s refund application for the periods 2017-18 and 2018-19. The petitioner seeks refund of unutilized Input Tax Credit (ITC) related to compensation cess, claiming entitlement under the law. Mr. Ratnesh Kumar appeared for Respondent Nos. 1 to 4, while Mr. Rajiv Ranjan, along with Mr. P.A.S. Patti, Advocate General of Jharkhand, represented the Respondent-State. The writ petition also includes a prayer for a direction to process and determine the petitioner’s refund claim following the acceptance of the refund application for the aforementioned periods.

The case involves a writ petition where Mr. Sumeet Gadodia, representing the petitioner, seeks a mandamus to either open the GSTN Portal for the petitioner to file a refund application in Form GST RFD-01, or to manually accept the refund application for the periods 2017-18 and 2018-19. The petitioner, primarily engaged in manufacturing Sponge Iron, requires coal as raw material sourced domestically through Coal India Ltd. subsidiaries or imported. The Goods and Services Tax (GST) Act, 2017 and the Goods and Services Tax (Compensation of States) Act, 2017 (Compensation Act) came into effect from July 1, 2017. The Compensation Act includes provisions for levying Compensation Cess on specified commodities, with coal being one such commodity. The petitioner claims entitlement to a refund of unutilized Input Tax Credit (ITC) related to Compensation Cess and seeks direction for processing and determining their refund claim after acceptance of the application by the authorities.

The case involves a writ petition where Mr. Sumeet Gadodia, representing the petitioner, seeks a mandamus to either open the GSTN Portal for filing refund applications or to manually accept the refund application for unutilized Input Tax Credit (ITC) related to compensation cess for the periods 2017-18 and 2018-19. The petitioner, engaged in the manufacture of Sponge Iron, requires coal as raw material sourced domestically and imported. The Goods and Services Tax (GST) Act and the GST Compensation Act, effective from July 1, 2017, are relevant to the petitioner’s claim for refund of excess ITC under these laws.

The Compensation Act imposes compensation cess, including on imported coal under the Reverse Charge Mechanism. Section 16 of the Central Goods and Services Tax Act, 2017, and/or the Jharkhand State Goods and Service Tax Act, 2017, allow for refund claims of excess ITC. Section 11 of the Compensation Act specifies that compensation cess on inputs can only be adjusted against liability of compensation cess.

The petitioner, exporting Sponge Iron without export duty under a Letter of Undertaking, emphasizes the need for timely processing and determination of its refund claims by the authorities.

has paid the same would be entitled to take the credit of the said compensation cess against the output tax liability under the GST Act. This circular aimed to clarify the confusion among dealers regarding the availability of Input Tax Credit (ITC) for compensation cess under the CGST Act. It confirmed that dealers could indeed claim ITC for compensation cess paid on inputs, even if their final products were not subject to compensation cess.

Furthermore, the petitioner in the case mentioned had paid compensation cess on coal purchases, which was eligible for ITC but remained unutilized. As per the circular and subsequent understanding, the petitioner was entitled to a refund of the unutilized ITC of the compensation cess under the GST Act. This clarification was crucial in resolving the ambiguity surrounding the applicability and utilization of ITC related to compensation cess, ensuring clarity for taxpayers and facilitating correct compliance with the GST regulations.

The petitioner, having paid compensation cess on coal purchases without liability for compensation cess on their sponge iron, found themselves with unutilized Input Tax Credit (ITC). This led them to seek a refund of the amount paid. There was initial confusion among dealers regarding the availability of ITC for compensation cess under the CGST Act, given its separate enactment from the Compensation Act. To clarify this, a circular issued on December 31, 2018, stated that dealers who exported goods without compensation cess could claim refunds for the cess paid on inputs.

Despite this circular, the petitioner claimed the entire compensation cess paid between July 2017 and December 2018 as ITC in their GSTR-3B Return for December 2018. They attempted to file for a refund through GST RFD-01 Form on March 4, 2019, following the guidelines of Section 54(3) of the CGST/SGST Act and Rule 89 of the CGST/SGST Rules. However, technical issues prevented them from submitting the form online despite preparing the application and capturing a refundable amount of Rs. 1,78,38,970 for the financial year 2017-18. This issue was documented with a PDF screenshot of the unsuccessful attempt.

In response to the technical failure, the petitioner promptly filed a complaint on the same day, March 4, 2019, to address the portal’s malfunction and ensure their refund application could be processed correctly.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law: