HC directs GST refund not to be denied due to non-compliance with circular where entitlement not in question

Case Details: Balkrishna Industries Ltd. v. Union of India - [2022] 145 taxmann.com 629 (Gujarat)

Judiciary and Counsel Details

• • N.V. Anjaria & Bhargav D. Karia, JJ.
  • Dhaval Shah for the Petitioenr.
  • Ankit Shah & Dhaval D. Vyas for the Respondent.

Facts of the Case

The taxpayer claimed the refund of unutilised ITC with interest under Section 54(3)(i) of the Act read with Rule 89(4) of the CGST Rules on the ground that the petitioner had made zero rated supplies. The refund on unutilised ITC is allowed where the conditions to claim such refund are fulfilled. One such condition is debiting of Electronic Credit Ledger (‘ECL’) by the amount for which the refund is being claimed. Also, a circular in this regard has been issued which prescribes the manner of claiming such refund. This circular provides the order in which the ECL is to be debited.

The refund claim of the taxpayer claim was rejected on the ground that the order of utilisation of ITC was not correctly followed. The taxpayer was entitled to claim refund as per the CGST Rules. However, the revenue rejected the claim merely on the grounds that the procedure to claim such refund as provided in the circular is not complied with.

High Court Held

The High Court, in this case, has directed that Non-compliance of procedure as provided by the circular would not dis-entitle taxpayer from claiming refund. Hence the refund should be sanctioned with the applicable interest.