Remanded GST refund matter where supply made as inter-State was subsequently held as intra-State to decide in light of Circular No. 162/18/2021-GST

The Chhattisgarh High Court has overturned a decision that rejected a GST refund claim of over £12,000. The case involved a supply initially treated as inter-State but later identified as intra-State. The High Court has sent the matter back for a fresh decision, specifically instructing the authorities to consider Circular No. 162/18/2021-GST, which clarifies the meaning of 'subsequently held' in relation to such supply classifications.

The Hon'ble Chhattisgarh High Court in M/S Radhemani and Sons v. the Additional Commissioner (Appeals) CGST and Central Excise & Ors. [W.P.(T) No. 213 of 2021 dated December 7, 2021] set aside the order rejecting the refund claim of the assessee amounting to INR 12,69,255/- passed by the Appellate Authority and remanded back the matter to decide the same afresh in accordance with law and in light of the Circular No. 162/18/2021-GST dated September 25, 2021 ("the Circular") interpreting the phrase "subsequently held" in the provisions of Section 77 of Central Goods and Services Tax Act, 2017 ("the CGST Act") and Section 19 of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act").

Facts

M/s Radhemani And Sons ("the Petitioner") a proprietorship firm had filed an application for refund claim of INR 12,69,255/- on March 18, 2020 under Rule 89 (1) of Central Goods and Services Tax Rules, 2017 ("CGST Rules") on account of "Excess payment of IGST in February, 2018 in GSTR 3B Return" for the tax period February, 2018 in RFD-01. After considering the said application, a Show Cause Notice dated March 31, 2020 ("the SCN") was issued by the Deputy Commissioner ("the Respondent No. 2") in Form GST-RFD-08 and the Petitioner failed to submit any reply w.r.t. the SCN, therefore, the Respondent No. 2, vide order dated April 23, 2020 rejected the refund application of the Petitioner.

Being aggrieved, an appeal was preferred by the Petitioner before the Additional Commissioner (Appeals) CGST and Central Excise, Raipur ("the Respondent No. 1") who, in turn, while considering the provisions prescribed under Section 77 of the CGST Act, and Section 19 of the IGST Act, vide order dated June 25, 2021 ("the Impugned Order") rejected the appeal while affirming the order of the Respondent No. 2.

Aggrieved therewith, the Petitioner has filed this writ petition

The Petitioner contended that the word "subsequently held", referred in Section 77 of the CGST Act, read with Section 19 of IGST Act, has been interpreted in the Circular by observing inter alia that the refund under the said sections is also available when the inter-State or intra-State supply made by a taxpayer, is subsequently found by taxpayer himself as intra-State and inter-State respectively.

Issue

Whether the refund would be available to the Petitioner for the inter-State or intra-State supply made?

Held

The Hon'ble Chhattisgarh High Court in W.P.(T) No. 213 of 2021 dated December 7, 2021 held as under:

• Observed that, considering the contention of the Petitioner, vis-a-vis, the Circular interpreting and/or clarifying the word "subsequently held", it would, be appropriate to remit the matter back to the Respondent No. 1, in the interest of justice.
• Set aside the Impugned Order and remanded the matter back to the Respondent No. 1.
• Further clarified that, the Court has not expressed any opinion on merits of the case, directed the Respondent No. 1 to decide the same afresh in the light of the Circular in accordance with law.