The revenue authorities are reluctant and unwilling to grant refund to the taxpayers and therefore, repeatedly issued show cause notices denying the legitimate refund amount merely on the basis of inadvertent errors. There had been catena of cases in the beeline wherein Courts have granted relief to aggrieved taxpayers by sanctioning refund. Yet another case was reported before Andhra Pradesh High Court in the case of Mafatlal Industries Limited V/s Union of India. The decision imparted in this case is subject matter of our present update.
The petitioner is allotted a GSTN and is quarterly return filer and submitted the common returns and details of outward supplies through the common portal reporting the intra and inter state supplies.
The petitioner is engaged in business of telecom pipe laying service in Telangana like M/s Vodafone Mobile Services Limited, Telangana whose another office is situated at Mumbai. The petitioner supplied the cable laying service at Telangana State. However, erroneously two invoices were issued by the petitioner covering the supply of cable services to M/s Vodafone Mobile Services Limited, Mumbai and two other invoices and also issued a credit note reducing the value of original supply consideration charged in the two tax invoices issued to M/s Vodafone, Mumbai.
The details of these were furnished in GST returns as well. However, while keying the details, mistakenly the GSTIN of M/s Vodafone, Mumbai was keyed instead of M/s Vodafone, Telangana. In reality the service is inter-state supply in Telangana. Because of this inadvertent mistake, the actual recipient at Telangana is not able to claim credit of IGST.
Although the petitioner tried to rectify the mistake in May, 2020 but it was in vain since GST portal was not permitting the same as time available for rectification is only upto 20.10.2019.
A letter was addressed to the department as well to either refund the amount or adjust against existing liabilities. The department directed to petitioner to follow Circular No. CBEC-20/16/04/18-GST dated 18.11.2019. However, the said letter of department is wholly untenable and arbitrary. Further, it was argued that the time period of 2 years is not applicable in present case and it is not possible to follow the said circular as well. Therefore, the communication received from department regarding denial of claim of petitioner is illegal and arbitrary. This is against the law as declared by Apex Court in the case of Mafatlal Industries Limited V/s Union of India. Therefore, the communication of department is liable to be set aside and either rectification should be permitted or refund of IGST should be granted. Further, it was argued that a human error was committed in keying the GST portal and after its detection, several attempts were also made to rectify the same. However, the portal is not permitting such rectification. Further, it was submitted that the actual recipient is Vodafone, Telangana and not Mumbai and as per Article 265 of the Constitution, no tax shall be levied or collected except by authority of law.
Furthermore, as per Section 72 of Indian Contract Act, a person to whom money is paid by mistake is to be returned. Also, Rule 97(A) permits manual filing of refunds as well which the petitioner would have been in a position to submit successfully. Therefore, the inability of assessee to submit claim through electronic mode does not enable respondent to contend that claim of petitioner is barred by Limitation. Therefore, the procedure under Section 54 has no application. Reliance was placed on the decision of Madras High Court in the case of Pentacle Plant Machineries Private Limited v. Office of the GST Council, New Delhi and others, Bombay High Court in the case of Commissioner of CGST & Central Excise v. Shriram Transport Finance Company Limited and Laxmi Organic Industries Limited v. Union of India and others, Telangana High Court in the case of Vasudha Bommireddy, Hyderabad and another v. Assistant Commissioner of Service Tax, Hyderabad, Gujarat High Court in M/s. Cosmol Energy Private Limited v. State of Gujarat.
The counsel of respondent argued that refund should be claimed in accordance with section 54 of CGST Act, 2017. It is the duty of petitioner to follow the procedure as per the said Circular. Further, it was argued that decision of Apex Court and various other citations as referred to by the petitioner is not applicable in the present case. Reliance was placed on decision of Apex Court in the case of V.K.C. Footsteps India Private Limited.
In the present case, the Court observed that there is no dispute that the real recipient is M/s Vodafone, Telangana having specific GSTIN. Reference was also made to various provisions of the Act in this respect. Further, the Para 3 of the Circular was also referred and it was observed that the claim of the petitioner would not come under its purview. Further, since rule 97A permits manual filing, it was not clear as to why the Circular restricts electronic filing only. Therefore, the submission of the petitioner is tenable. The various decisions as referred to by the petitioner were also studied and it was concluded that Rule 97A also permits manual filing of refund claim. Further, the amount paid by petitioner furnishing the incorrect details cannot be taken as a tax due to the department and the tax authorities cannot contend that the claim of petitioner is time barred. Hence, one cannot enrich themselves and they are bound to return the amount paid wrongly.
Hence, the submissions of the revenue are not tenable and it is crystal clear that the assessee cannot be pressurised to follow the Circular which debars assessee from manual filing. The respondent cannot retain the disputed amount erroneously paid. Hence, petitioner is entitled to the relief. The petitioner was directed to make a manual application of refund.
The above decision is once again another example wherein the Courts have delivered favourable decision granting relief to taxpayers and setting aside the impugned order. It is well settled that inadvertent mistakes should not result into undue harassment of the taxpayers. However, it seems that revenue authorities fail to acknowledge this issue. It is high time that proper attention should be paid before passing impugned order like these failing which will result into sheer wastage of time of Government and taxpayers.
Team – Intellex Strategic Consulting Private Limited
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