SC Remands HC to Rehear GST Inverted Duty Refund Writ

Case Details: Ganpati Motors vs. Chief Commission, Central GST and Central Excise - [2025] 174 taxmann.com 133 (SC)

Judiciary and Counsel Details

• J.B. Pardiwala & R. Mahadevan, JJ.
• Rahul Pandey, Adv., Atul Kumar, AOR, Ms Sweety Singh, Harsh Kumar, Ashutosh Upadhyay, VB Pandey, Avs Kadyan, Ms Diksha Joshi, Advs. for the Petitioner.
• N. Venkatraman, A.S.G., V C Bharathi, Adv., Gurmeet Singh Makker, AOR, Udai Khanna, Padmesh Mishra, Navanjay Mahapatra, Advs. for the Respondent.

Facts of the Case

The petitioner, who was engaged solely in trading activities, sought a refund under the provisions of the inverted duty structure of GST, claiming excess input tax credit (ITC) due to the higher tax rate on goods purchased as compared to those sold. The appellant filed a writ petition before the Patna High Court, requesting a refund. The Patna High Court rejected the writ petition on the grounds that the appellant, being involved only in trading, did not satisfy the necessary condition of adding value to goods or engaging in manufacturing activities.

The Court considered this a critical requirement for claiming a refund under the inverted duty structure. Furthermore, the High Court observed that the appellant had an alternative, efficacious remedy available in the form of filing an appeal before the Tribunal and dismissed the writ petition on this basis, without addressing the merits of the refund claim. The petitioner, dissatisfied with the rejection, appealed to the Hon’ble Supreme Court.

Supreme Court Held

After considering the arguments, the Hon’ble Supreme Court held that the High Court’s dismissal was improper, as it failed to examine the merits of the petitioner’s refund claim. The Court, therefore, set aside the impugned order of the Patna High Court and remanded the case for fresh consideration. The matter was directed to be restored to the original file of the High Court, with instructions to hear and adjudicate the writ petition in accordance with the law, giving due consideration to the merits of the appellant’s refund claim under the inverted duty structure.