Wrongly utilised ITC for export of goods should be re-credited if later paid back to Govt.:HC

Case Details: I-Tech Plast India (P.) Ltd. v. State of Gujarat - [2022] 137 taxmann.com 432 (Gujarat)

Judiciary and Counsel Details

• • J.B. Pardiwala and Ms. Nisha M. Thakore, JJ.
  • Ms. Vaibhavi K Parikh, Adv. for the Petitioner. 
  • Utkarsh R. Sharma for the Respondent.

Facts of the Case

The assessee exported finished goods produced using material imported under Advance License on payment of IGST by utilizing accumulated ITC instead of exporting it under Letter of undertaking. The IGST paid was automatically refunded and later it paid the refunded IGST with interest and then requested authorities to re-credit/restore ITC utilized for payment of IGST. The details of such ITC to be restored in the electronic credit ledger were also furnished. Despite repeated attempts, when the ITC was not restored as requested, the assessee filed the writ petition.

High Court Held

The Honorable High Court observed that in the instant case there was erroneous grant of refund and it was also undisputed that the assessee had returned such refund amount together with interest. However, once both these transactions were taken out from the equation, what survived was the reduction of the ITC originally effected from the electronic credit ledger. If the authorities have accepted that there was an error and resultantly, accepted repayment of the erroneous refund, as a corollary, the credit of the ITC must be restored. Therefore, the authorities were directed to re-credit/ restore ITC in electronic credit ledger.