With respect to the GST input tax credit refund claimed on the inputs of electric vehicle manufacturing, the Orissa high court filed a writ petition before it rendered the refund of the balance claim amount.
The stated observation was incurred by the Orissa High Court when the writ petition was furnished before it via the applicant, asking to cancel the order on 2.8.2022 through which the Deputy Commissioner of State Tax, CT & GST Circle, Bhubaneswar, denied the application of the refund of the petitioner in Form GST-RFD-06 under Annexure-10 and the refund rejection order on 2.08.2022 for the duration from December 2021 to January 2022 in Annexure-11.
The applicant asks for a refund before the High Court for providing directions to the opposite party no 1 for allocating the refund according to the refund application in Form GST RFD-01 under Annexure-2, on the basis of accumulated ITC because of the Inverted Tax Structure and for issuing the direction to opposite party no.1 to pay interest on the refundable amount, the factual matrix of the case, in brief, was that the petitioner, a holder of Goods and Services Tax Registration Number 21AACCO7477Q1ZU under the CGST/OGST Act, was engaged in the business of manufacture of e-vehicles in various processes including chassis punching, colouring, wiring, etc., and following supply thereof.
The applicant procured domestically and imports different items with different HSN, which were integral parts and parcel of manufacturing of e- vehicles, among which the inputs (goods) for manufacturing of e-vehicles were procured at various rates, such as 5%, 12%, 18% and 28% with separate HSN, in which the outward supply was of the new product, namely, ‘e-vehicles’, with different HSN on which GST is charged at 5%.
As a result of the decreased rate of GST on an outward supply of products, i.e., e-vehicles, the Input Tax Credit (ITC) accrued in the hands of the applicant, which was legally and statutorily directed as an ‘Inverted Duty Structure’. The applicant acquired and delivered spare parts subject to GST at 18% and 28% to its channel partners (dealers), since they were bound to furnish the product warranties.
As the input and output GST rates on the spare parts were identical, there is no ITC obtained for the spare parts, and therefore the supply of the spare parts was not considered inverted sales.
At the time of the tax period from December 2021 to January 2022, the applicant had filed the return in GSTR-1 for the information on outward supplies of goods or services and also, the return in Form GSTR3B, for the information on outward supplies and inward supplies of goods or services.
As per the regular practices complied via the petitioner for the former tax periods, i.e., filing of periodic refund application, it filed a refund application dated 02.06.2022, for accumulated unutilized ITC of the input goods in Form GST-RFD-01 to the tune of Rs.1,57,92,298.00 for the period December 2021 to January 2022, and it was issued with a receipt of refund application, i.e., Refund ARN Receipts.
On 22.06.2022, the applicant provided all the related documents in support of its refund application, claiming a refund of Rs.1,57,92,298.00 for the period December 2021 to January 2022, in strict adherence to column no.5 of CBIC Circular No.125/44/2019-GST, on 18.11.2019 and in the way as specified in Rule-89(5) of the CGST Rules.
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Hence the applicant would appear for the opposite party no.1 dated 22.06.2022 and provided all the pertinent documents. But the applicant provides that all the documents would incur the compliance of column no 5 under Annexure-A and B appended to the CBIC circular under Annexure-4, the same was asked to show cause for the elimination of the application for the refund in Form-GST-RFD-08 on 28.06.2022 for the refund of the application for the duration of December 2021 to January 2022 through asking the applicant to provide the documents as mentioned in column no 5 of the Circular No.125/44/2019-GST and the books of accounts for the respective tax periods, physically through setting the date to 13.07.2022.
The applicant appeared to the opposite party no 1 on the date 6.7.2022 and filed Form GST RFD-09 for the refund of the application for the duration of December 2021 to January 2022, including all the supported documents. With the show cause answer praying for the required order granting the refund on the basis of the ITC obtained because of the inverted tax structure.
But the applicant provided all the documents in the physical mode prior to furnishing the show cause notice in RFD-08 that was uploaded including with Form GST RFD-09, the same was due to the appearance including with its books of account to the opposite party no.1 dated 13.07.2022. Such books of account were being investigated and the applicant’s authorized individual elaborated the books of account for the column no.5 of the CBIC Circular bearing No. 125/44/2019-GST in association with Section- 54 (3) read with Rule-89 (5) appertaining to refund on account of inverted duty structure.
The authorized person of the applicant’s company obtained a call dated 28.07.2022 from the opposite party no 2 for the submission of the soft copies of the data that were uploaded and submitted according to the column no.5 of the circular of CBIC and as per that on an identical day, the applicant would provide all the soft copies of the information for the verification of the opposite party no.2.
The opposite party no.2 asked the applicant on the date 29.07.2022 via email in which the applicant was asked to furnish the documents within 2 days of the service of the letter in association with the application provided under Section-54(3) of CGST/OGST Act, for the period from December 2021 to January 2022 complying for that, the applicant furnished its answer dated 30.07.2022 to the questions provided via producing the books of account to the opposite party no.2 who would have investigated that.
The petitioner asked that the opposing party would grant the reimbursement claim as soon as feasible in view of the statutory provision by making this request. However, the petitioner was given and served with Form GST-RFD-06 dated 02.08.2022, which stated that opposing party no.1 had rejected its refund claim dated 02.06.2022 for the period from December 2021 to January 2022 on the grounds that it had not provided the complete books of account. And it is in this context that the petitioner has approached the Orissa High Court with the current writ petition.
Listening to the opposing contentions of both sides as submitted by Mr R.P. Kar, the counsel on behalf of the petitioner, and by Mr Sunil Mishra, the Additional Standing Counsel appearing for CT & GST Department, the Bench of Justice Dr B.R Sarangi and Justice M.S Raman ruled that: “In view of facts and law, as discussed above, this Court directs the opposite parties to refund the balance amount, excluding Rs.5,18,230/- from out of the total amount of Rs.2,22,97,228/-, to the petitioner pending final adjudication of the disputed amount in accordance with the law.”
| Case Title | M/s. Omjay EV Limited Vs Deputy Commissioner of State Tax |
| Order No. | W.P(C) NO. 21008 OF 2022 |
| Date | 19.04.2023 |
| Counsel for Appellant | M/s. B.P. Mohanty, N. Paikray, R.P. Kar |
| Counsel for Respondent | Mr Sunil Mishr |
| Orissa HC | Read Order |
