Kerala HC Permits GST Refund as CBIC Clarified Exemption on Employees’ Notice Pay

Kerala High Court in a ruling permitting the petition by M/s Manappuram Finance Ltd has stated that the circular which has been provided by the Central Board of Indirect Taxes and Customs (CBIC), saying that the GST would not be applied for the notice pay obtained via an employee and has a retrospective effect rendered that the GST department to refund the amount which would be taken from the applicant (employee).

The applicant would be a non-banking finance firm, the GST council, the applicant is obligated to furnish the tax on the notice pay obtained via the former employees of the applicant.

Appellate authority carried the original authorities order on the appeal that would have been refused the claim towards the refund that the applicant has made for the GST refund furnished on the notice pay obtained via the former employees.

To the High court, the applicant laid on the CBIC circular and specified that by providing the mentioned circular the same would have been transparent, the applicant would not need to file the GST on the notice obtained via employees.

Justice Gopinath P while permitting the contention specified that the circular would merely explain the current law.

“In that view of the matter, the question as to whether the Circular has any retrospective effect need not be considered. Even otherwise, in the light of the law laid down in Suchitra Components Ltd (supra), the provisions of a Circular in the nature of Ext.P8 will have to be deemed to apply retrospectively,” the Court marked.

The court denied the council’s contention, the applicant would have the other effective cure to the GST appellate tribunal that does not plea before the court towards the easier reason, the GST appellate tribunal shall be comprised.

The petitioner is not comforted by the fact that the limitation period will begin to run only from the date of the Appellate Tribunal’s constitution. This Court has jurisdiction over the petitioner to challenge the orders impugned in this writ petition under Article 226 of the Constitution of India.

Important: Goods and Services Tax Applicability on Employees Structure

Permitting the applicant’s contentions, “As a result of the aforesaid findings, this writ petition is allowed. Ext.P1 and all orders rejecting the application of the petitioner for a refund of GST paid on notice pay received by the petitioner from its employees will stand quashed. The applications filed by the petitioner for refund shall stand restored to the file of the 1st respondent, who shall reconsider the matter, having regard to the findings contained in this judgment.”