Delhi High Court
M/S Hcc Vccl Joint Venture vs Union Of India & Ors. on 5 November, 2024
Author: Yashwant Varma
Bench: Yashwant Varma
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 05.11.2024
+ W.P.(C) 10940/2023
M/S HCC VCCL JOINT VENTURE .....Petitioner
Through: Mr. Bharat Raichandani, Mr.
Deepak Kumar Khokhar & Ms.
Anweshaa Laskar, Advs.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Ravi Prakash, CGSC for
Resp./ UOI.
Mr. Aditya Singla, SSC with
Mr. Ritwik Saha & Ms. Medha
Navami, Advs.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE RAVINDER DUDEJA
JUDGMENT
YASHWANT VARMA, J. (Oral)
1. The writ petitioner assails the validity of the order dated 05 July
2023 made in purported exercise of powers conferred by Section 108
of the Central Goods & Services Tax Act, 20171 and which has
principally placed in abeyance an order of refund dated 09 December
2022. That order had sanctioned the refund of a sum of INR
5,50,00,000/- in favour of the writ petitioner.
2. While considering the petition on 21 October 2024 we had,
upon hearing learned counsels for respective sides, passed the
following order
1
CGST Act
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
“1. Having heard learned counsels for respective sides at some
length, we take note of the following facts which emerge.
2. The petitioner is principally aggrieved by the order dated 05 July
2023 and which has essentially placed in abeyance the Refund
Sanction Order dated 09 December 2022. The Refund Sanction
Order undisputedly pertained to the amounts standing to the credit
of the Electronic Cash Ledger of the writ petitioner.
3. Undoubtedly, the said ledger would embody amounts which
have been deducted under Section 51 of the Central Goods and
Services Tax Act, 2017 by a department or establishment of the
government, a local authority, or other governmental agencies. In
this case, these were amounts which were deducted by the Delhi
Metro Rail Corporation and credited to the Electronic Cash
Ledger of the deductee, namely, the petitioner herein.
4. We also take note of the provisions contained in Section 49(5) of
the Act and which prescribe the manner in which the Input Tax
Credit available in the Electronic Credit Ledger of a registered
person could be utilized. Of equal significance is sub-section (6) of
Section 49 which provides that the balance in the Electronic Cash
or Credit Ledger may be refunded in accordance with Section 54
after payment of tax, interest, penalty, fee or any other amount
payable under the Act.
5. As per the facts which emerge from the record, presently there
does not appear to be any quantified demand or liability that stands
created against the writ petitioner. As we peruse the impugned
order, we find that the principal allegation against the petitioner is
of an incorrect utilization of ITC alone.
6. We further take note of the provisions made in Section 54 and
which while addressing various contingencies in which a refund of
unutilized ITC may be stalled or paused, incorporates no
corresponding prohibitions with respect to amounts standing to the
credit of the Electronic Cash Ledger.
7. In order to enable Mr. Singla, learned counsel appearing for the
respondents to address submissions in the aforesaid light, let the
matter be called again on 05.11.2024.”
3. The submission which was essentially addressed before us on
that date was that no restraint on withdrawal of sums standing to the
credit of the Electronic Cash Ledger could be placed under the
provisions of the CGST Act. Learned counsel for the petitioner had on
that occasion contended that the restrictions with respect to utilization
of funds that may stand to the credit of a ledger as contemplated under
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
the CGST Act would be confined to the Electronic Credit Ledger
alone. It was in the aforesaid context that we had granted time to Mr.
Singla, learned counsel appearing for the respondents, to address
further submissions.
4. For completeness, we also bear in consideration that while the
original order of stay under Section 108 was ordained to operate for a
period of six months, the same came to be amended by way of a
Corrigendum issued thereafter. That Corrigendum dated 04 December
2023 reads thus: –
“Attention is invited to Revision/Stay order dated 05.07.2023 under
Section 108 of CGST Act 2017 for Refund applied under ARN
AA0710220365371 dated 14.10.2022 issued from
CGST/DW/HQ/Review/RFD-06/HCC-VCCL/379/2022/Pt-1/19849 by
the undersigned in respect of M/s HCC-VCCL Joint Venture (GSTIN-
07AACAH8776P12T), DC-06, PROJECT ROAD NO 235
KESHOPUR, KESHOPURI, MAJOR BHUPINDER SINGH NAGAR
KRISHNA PARK, Vikaspuri, New Delhi, West Delhi, Delhi, 110018.
In the said Revision/Stay order dated 05.07.2023, “SIX MONTHS”
may be read as “TWO YEARS” The above Revision/Stay order dated
05.07.2023 stands corrected to that extent.”
5. Mr. Singla at the outset contended that Section 108 confers a
power on the revisional authority to stay the operation of a decision or
order made under the CGST Act in the interregnum and till it
concludes an inquiry with respect to the validity of the said decision or
order. In view of the aforesaid, it was contended that there exists no
justification for the Court to interdict those proceedings initiated by
the revisional authority at this stage and where only an interim stay
had been granted and all rights and contentions of the writ petitioner
stand preserved.
6. Taking us through the provisions enshrined in Sections 49, 51
and 54 of the CGST Act, Mr. Singla submitted that the power to
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
restrain implementation of an order of refund would apply equally to
sums standing to the credit of either the Electronic Credit or the
Electronic Cash Ledger. Mr. Singla laid emphasis on Section 49(3) in
terms of which the statute provides that the amount available in the
Electronic Cash Ledger may be used for making payments towards
tax, interest, penalty, fee or any other amount payable under the CGST
Act, and thus, standing on an equal pedestal with amounts which may
stand in the balance of an Electronic Credit Ledger. This, according to
Mr. Singla, would be the position which would indisputably emerge
when one reads sub-sections (2) and (3) of Section 49.
7. The fact that the CGST Act places sums standing to the credit
of those ledgers on an equal pedestal, according to Mr. Singla, is
further fortified from a reading of Section 49(6) and which prescribes
that the balance in both those ledgers may be refunded in accordance
with the provisions of Section 54.
8. For the purposes of evaluating the submissions which were
addressed, we deem it apposite to extract Sections 49, 51 and 54
hereunder:
“49. Payment of tax, interest, penalty and other amounts.–(1)
Every deposit made towards tax, interest, penalty, fee or any other
amount by a person by internet banking or by using credit or debit
cards or National Electronic Fund Transfer or Real Time Gross
Settlement or by such other mode and subject to such conditions
and restrictions as may be prescribed, shall be credited to the
electronic cash ledger of such person to be maintained in such
manner as may be prescribed.
(2) The input tax credit as self-assessed in the return of a registered
person shall be credited to his electronic credit ledger, in
accordance with [Section 41 [* * *]], to be maintained in such
manner as may be prescribed.
(3) The amount available in the electronic cash ledger may be used
for making any payment towards tax, interest, penalty, fees or anySignature Not Verified
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By:KAMLESH KUMAR
Signing Date:13.11.2024
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other amount payable under the provisions of this Act or the rules
made thereunder in such manner and subject to such conditions and
within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be
used for making any payment towards output tax under this Act or
under the Integrated Goods and Services Tax Act in such manner
and subject to such conditions [and restrictions] and within such
time as may be prescribed.
(5) The amount of input tax credit available in the electronic credit
ledger of the registered person on account of–
(a) integrated tax shall first be utilised towards payment of
integrated tax and the amount remaining, if any, may be utilised
towards the payment of central tax and State tax, or as the case
may be, Union territory tax, in that order;
(b) the central tax shall first be utilised towards payment of
central tax and the amount remaining, if any, may be utilised
towards the payment of integrated tax;
(c) the State tax shall first be utilised towards payment of State
tax and the amount remaining, if any, may be utilised towards
payment of integrated tax:
[Provided that the input tax credit on account of State tax shall be
utilised towards payment of integrated tax only where the balance
of the input tax credit on account of central tax is not available for
payment of integrated tax;]
(d) the Union territory tax shall first be utilised towards payment
of Union territory tax and the amount remaining, if any, may be
utilised towards payment of integrated tax:
[Provided that the input tax credit on account of Union territory
tax shall be utilised towards payment of integrated tax only where
the balance of the input tax credit on account of central tax is not
available for payment of integrated tax;]
(e) the central tax shall not be utilised towards payment of State
tax or Union territory tax; and
(f) the State tax or Union territory tax shall not be utilised towards
payment of central tax.
(6) The balance in the electronic cash ledger or electronic credit
ledger after payment of tax, interest, penalty, fee or any other
amount payable under this Act or the rules made thereunder may be
refunded in accordance with the provisions of Section 54.
(7) All liabilities of a taxable person under this Act shall be
recorded and maintained in an electronic liability register in such
manner as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
under this Act or the rules made thereunder in the following order,
namely:–
(a) self-assessed tax, and other dues related to returns of previous
tax periods;
(b) self-assessed tax, and other dues related to the return of the
current tax period;
(c) any other amount payable under this Act or the rules made
thereunder including the demand determined under Section 73 or
Section 74 [or Section 74-A].
(9) Every person who has paid the tax on goods or services or both
under this Act shall, unless the contrary is proved by him, be
deemed to have passed on the full incidence of such tax to the
recipient of such goods or services or both.
Explanation.–For the purposes of this section,–
(a) the date of credit to the account of the Government in the
authorised bank shall be deemed to be the date of deposit in the
electronic cash ledger;
(b) the expression,–
(i) “tax dues” means the tax payable under this Act and does not
include interest, fee and penalty; and
(ii) “other dues” means interest, penalty, fee or any other amount
payable under this Act or the rules made thereunder.
[(10) A registered person may, on the common portal, transfer
any amount of tax, interest, penalty, fee or any other amount
available in the electronic cash ledger under this Act, to the
electronic cash ledger for,–
(a) integrated tax, central tax, State tax, Union territory tax or
cess; or
(b) integrated tax or central tax of a distinct person as specified in
sub-section (4) or, as the case may be, sub-section (5) of Section
25, in such form and manner and subject to such conditions and
restrictions as may be prescribed and such transfer shall be
deemed to be a refund from the electronic cash ledger under this
Act:
Provided that no such transfer under clause (b) shall be allowed if
the said registered person has any unpaid liability in his electronic
liability register.]
[(11) Where any amount has been transferred to the electronic
cash ledger under this Act, the same shall be deemed to be
deposited in the said ledger as provided in sub-section (1).]
[(12) Notwithstanding anything contained in this Act, the
Government may, on the recommendations of the Council, subject
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
to such conditions and restrictions, specify such maximum
proportion of output tax liability under this Act or under the
Integrated Goods and Services Tax Act, 2017 (13 of 2017) which
may be discharged through the electronic credit ledger by a
registered person or a class of registered persons, as may be
prescribed.]
xxxx xxxx xxxx
51. Tax deduction at source.–(1) Notwithstanding anything to the
contrary contained in this Act, the Government may mandate,–
(a) a department or establishment of the Central Government or
State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) such persons or category of persons as may be notified by the
Government on the recommendations of the Council, (hereafter in
this section referred to as “the deductor”), to deduct tax at the rate
of one per cent. from the payment made or credited to the supplier
(hereafter in this section referred to as “the deductee”) of taxable
goods or services or both, where the total value of such supply,
under a contract, exceeds two lakh and fifty thousand rupees:
Provided that no deduction shall be made if the location of the
supplier and the place of supply is in a State or Union territory
which is different from the State or as the case may be, Union
territory of registration of the recipient.
Explanation.–For the purpose of deduction of tax specified above,
the value of supply shall be taken as the amount excluding the
central tax, State tax, Union territory tax, integrated tax and cess
indicated in the invoice.
(2) The amount deducted as tax under this section shall be paid to
the Government by the deductor within ten days after the end of the
month in which such deduction is made, in such manner as may be
prescribed.
[(3) A certificate of tax deduction at source shall be issued in such
form and in such manner as may be prescribed.]
(4) [* * *]
(5) The deductee shall claim credit, in his electronic cash ledger, of
the tax deducted and reflected in the return of the deductor
furnished under sub-section (3) of Section 39, in such manner as
may be prescribed.
(6) If any deductor fails to pay to the Government the amount
deducted as tax under sub-section (1), he shall pay interest in
accordance with the provisions of sub-section (1) of Section 50, in
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
addition to the amount of tax deducted.
(7) The determination of the amount in default under this section
shall be made in the manner specified in Section 73 or Section 74
[or Section 74-A].
(8) The refund to the deductor or the deductee arising on account of
excess or erroneous deduction shall be dealt with in accordance
with the provisions of Section 54:
Provided that no refund to the deductor shall be granted, if the
amount deducted has been credited to the electronic cash ledger of
the deductee.
xxxx xxxx xxxx
54. Refund of tax.–(1) Any person claiming refund of any tax and
interest, if any, paid on such tax or any other amount paid by him,
may make an application before the expiry of two years from the
relevant date in such form and manner as may be prescribed:
Provided that a registered person, claiming refund of any balance in
the electronic cash ledger in accordance with the provisions of sub-
section (6) of Section 49, may claim such refund in [such form and]
manner as may be prescribed.
(2) A specialised agency of the United Nations Organisation or any
Multilateral Financial Institution and Organisation notified under
the United Nations (Privileges and Immunities) Act, 1947 (46 of
1947), Consulate or Embassy of foreign countries or any other
person or class of persons, as notified under Section 55, entitled to a
refund of tax paid by it on inward supplies of goods or services or
both, may make an application for such refund, in such form and
manner as may be prescribed, before the expiry of 167[two years]
from the last day of the quarter in which such supply was received.
(3) Subject to the provisions of sub-section (10), a registered person
may claim refund of any unutilised input tax credit at the end of any
tax period:
Provided that no refund of unutilised input tax credit shall be
allowed in cases other than–
(i) zero rated supplies made without payment of tax;
(ii) where the credit has accumulated on account of rate of tax on
inputs being higher than the rate of tax on output supplies (other
than nil rated or fully exempt supplies), except supplies of goods or
services or both as may be notified by the Government on the
recommendations of the Council:
[* * *]
Provided also that no refund of input tax credit shall be allowed, ifSignature Not Verified
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
the supplier of goods or services or both avails of drawback in
respect of central tax or claims refund of the integrated tax paid on
such supplies.
(4) The application shall be accompanied by–
(a) such documentary evidence as may be prescribed to establish
that a refund is due to the applicant; and
(b) such documentary or other evidence (including the documents
referred to in Section 33) as the applicant may furnish to establish
that the amount of tax and interest, if any, paid on such tax or any
other amount paid in relation to which such refund is claimed was
collected from, or paid by, him and the incidence of such tax and
interest had not been passed on to any other person:
Provided that where the amount claimed as refund is less than two
lakh rupees, it shall not be necessary for the applicant to furnish any
documentary and other evidences but he may file a declaration,
based on the documentary or other evidences available with him,
certifying that the incidence of such tax and interest had not been
passed on to any other person.
(5) If, on receipt of any such application, the proper officer is
satisfied that the whole or part of the amount claimed as refund is
refundable, he may make an order accordingly and the amount so
determined shall be credited to the Fund referred to in Section 57.
(6) Notwithstanding anything contained in sub-section (5), the
proper officer may, in the case of any claim for refund on account
of zero-rated supply of goods or services or both made by registered
persons, other than such category of registered persons as may be
notified by the Government on the recommendations of the Council,
refund on a provisional basis, ninety per cent. of the total amount so
claimed, [* * *] in such manner and subject to such conditions,
limitations and safeguards as may be prescribed and thereafter make
an order under sub-section (5) for final settlement of the refund
claim after due verification of documents furnished by the
applicant.
(7) The proper officer shall issue the order under sub-section (5)
within sixty days from the date of receipt of application complete in
all respects.
(8) Notwithstanding anything contained in sub-section (5), the
refundable amount shall, instead of being credited to the Fund, be
paid to the applicant, if such amount is relatable to–
(a) refund of tax paid on [“export” and “exports”] of goods or
services or both or on inputs or input services used in making such
zero-rated supplies;
(b) refund of unutilised input tax credit under sub-section (3);
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By:KAMLESH KUMAR
Signing Date:13.11.2024
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(c) refund of tax paid on a supply which is not provided, either
wholly or partially, and for which invoice has not been issued, or
where a refund voucher has been issued;
(d) refund of tax in pursuance of Section 77;
(e) the tax and interest, if any, or any other amount paid by the
applicant, if he had not passed on the incidence of such tax and
interest to any other person; or
(f) the tax or interest borne by such other class of applicants as the
Government may, on the recommendations of the Council, by
notification, specify.
[(8-A) The Government may disburse the refund of the State tax in
such manner as may be prescribed.]
(9) Notwithstanding anything to the contrary contained in any
judgment, decree, order or direction of the Appellate Tribunal or
any court or in any other provisions of this Act or the rules made
thereunder or in any other law for the time being in force, no refund
shall be made except in accordance with the provisions of sub-
section (8).
(10) Where any refund is due [* * *] to a registered person who has
defaulted in furnishing any return or who is required to pay any tax,
interest or penalty, which has not been stayed by any court,
Tribunal or Appellate Authority by the specified date, the proper
officer may–
(a) withhold payment of refund due until the said person has
furnished the return or paid the tax, interest or penalty, as the case
may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or any
other amount which the taxable person is liable to pay but which
remains unpaid under this Act or under the existing law.
Explanation.–For the purposes of this sub-section, the expression
“specified date” shall mean the last date for filing an appeal under
this Act.
(11) Where an order giving rise to a refund is the subject matter of
an appeal or further proceedings or where any other proceedings
under this Act is pending and the Commissioner is of the opinion
that grant of such refund is likely to adversely affect the revenue in
the said appeal or other proceedings on account of malfeasance or
fraud committed, he may, after giving the taxable person an
opportunity of being heard, withhold the refund till such time as he
may determine.
(12) Where a refund is withheld under sub-section (11), the taxable
person shall, notwithstanding anything contained in Section 56, be
entitled to interest at such rate not exceeding six per cent. as may be
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notified on the recommendations of the Council, if as a result of the
appeal or further proceedings he becomes entitled to refund.
(13) Notwithstanding anything to the contrary contained in this
section, the amount of advance tax deposited by a casual taxable
person or a non-resident taxable person under sub-section (2) of
Section 27, shall not be refunded unless such person has, in respect
of the entire period for which the certificate of registration granted
to him had remained in force, furnished all the returns required
under Section 39.
(14) Notwithstanding anything contained in this section, no refund
under sub-section (5) or sub-section (6) shall be paid to an
applicant, if the amount is less than one thousand rupees.
[(15) Notwithstanding anything contained in this section, no refund
of unutilised input tax credit on account of zero rated supply of
goods or of integrated tax paid on account of zero rated supply of
goods shall be allowed where such zero rated supply of goods is
subjected to export duty.]
Explanation.–For the purposes of this section,–
(1) “refund” includes refund of tax paid on zero-rated supplies of
goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply of
goods regarded as deemed exports, or refund of unutilised input tax
credit as provided under sub-section (3).
(2) “relevant date” means–
(a) in the case of goods exported out of India where a refund of tax
paid is available in respect of goods themselves or, as the case may
be, the inputs or input services used in such goods,–
(i) if the goods are exported by sea or air, the date on which the ship
or the aircraft in which such goods are loaded, leaves India; or
(ii) if the goods are exported by land, the date on which such goods
pass the frontier; or
(iii) if the goods are exported by post, the date of despatch of goods
by the Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports
where a refund of tax paid is available in respect of the goods, the
date on which the return relating to such deemed exports is
furnished;
[(ba) in case of zero-rated supply of goods or services or both to a
Special Economic Zone developer or a Special Economic Zone unit
where a refund of tax paid is available in respect of such supplies
themselves, or as the case may be, the inputs or input services used
in such supplies, the due date for furnishing of return under section
39 in respect of such supplies;]
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(c) in the case of services exported out of India where a refund of
tax paid is available in respect of services themselves or, as the case
may be, the inputs or input services used in such services, the date
of–
(i) receipt of payment in convertible foreign exchange [or in Indian
rupees wherever permitted by the Reserve Bank of India], where the
supply of services had been completed prior to the receipt of such
payment; or
(ii) issue of invoice, where payment for the services had been
received in advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence of
judgment, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court, the date of communication of such
judgment, decree, order or direction;
[(e) in the case of refund of unutilised input tax credit under clause
(ii) of the first proviso to sub-section (3), the due date for furnishing
of return under Section 39 for the period in which such claim for
refund arises;]
(f) in the case where tax is paid provisionally under this Act or the
rules made thereunder, the date of adjustment of tax after the final
assessment thereof;
(g) in the case of a person, other than the supplier, the date of
receipt of goods or services or both by such person; and
(h) in any other case, the date of payment of tax.”
9. The sums which come to be deposited in the Electronic Credit
Ledger comprise of the Input Tax Credit2 as self-assessed by a
registered person. That amount is available to be utilised in
accordance with the priorities as fixed in Section 49(5). The sums
which come to be credited to the Electronic Cash Ledger represent the
tax deducted by the authorities specified in Section 51 from the
payment made or credited to a supplier of taxable goods or services or
both. Thus, both sums standing either in the Electronic Credit or
Electronic Cash Ledgers constitute tax.
10. Section 54 prescribes the manner in which a person claiming
2
ITC
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refund may apply for disbursal of those amounts. Hereto, the Proviso
to Section 54(1) stipulates that a registered person claiming refund of
sums standing in balance in the Electronic Cash Ledger would have to
follow the procedure as prescribed. Of crucial significance is the usage
of the phrase “in accordance with the provisions of sub-section (6) of
Section 49” as they appear in Section 54(1). Thus refund, be it from
the Electronic Cash or the Electronic Credit Ledger, are essentially
treated at par. By virtue of Section 54(11), the Commissioner stands
independently empowered to withhold a refund if it be of the opinion
that the grant thereof would adversely affect the Revenue either in an
appeal which may be pending or in any other proceedings on account
of malfeasance of fraud that may have been committed.
11. Undisputedly, there is no outstanding demand against the
petitioner and which may have perhaps legitimately constituted one of
the possible reasons to withhold the refund. While it is true that
Section 54 while making specific provisions with respect to refund of
unutilized ITC in terms of sub-sections (5) and (8) thereof, stops short
of incorporating similar restrictions on utilization of the balance
standing in the Electronic Cash Ledger in terms which may be
described as explicit, the position, in our considered opinion, would be
no different.
12. This we note since Section 108 empowers the revisional
authority to place in abeyance “any order” made under the CGST Act
and which in its opinion could be said to be illegal, improper or
prejudicial to the interest of the Revenue.
13. We, therefore, find ourselves unable to sustain the contention of
the petitioner who had sought to canvass a position of distinction
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which we should recognise to exist and governing sums which stand
in balance in the Electronic Cash and Electronic Credit Ledgers.
14. However, and notwithstanding the above, we find merit and
force in the second submission which was addressed in challenge to
the impugned order and which proceeded on the following lines.
Taking us through the order impugned, learned counsel for the writ
petitioner, laid emphasis on a complete absence of any finding which
may have been indicative of the revisional authority having come to
even a prima facie conclusion that the order dated 09 December 2022
was either illegal, improper or prejudicial to the interest of the
Revenue. According to learned counsel, absent any such conclusion,
the power as conferred by Section 108 could not have possibly been
invoked.
15. We take note of Section 108 of the Act and which reads thus:-
“108. Powers of Revisional Authority.–(1) Subject to the
provisions of Section 121 and any rules made thereunder, the
Revisional Authority may, on his own motion, or upon information
received by him or on request from the Commissioner of State tax,
or the Commissioner of Union territory tax, call for and examine the
record of any proceedings, and if he considers that any decision or
order passed under this Act or under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act by any
officer subordinate to him is erroneous in so far as it is prejudicial
to the interest of revenue and is illegal or improper or has not taken
into account certain material facts, whether available at the time of
issuance of the said order or not or in consequence of an
observation by the Comptroller and Auditor General of India, he
may, if necessary, stay the operation of such decision or order for
such period as he deems fit and after giving the person concerned an
opportunity of being heard and after making such further inquiry as
may be necessary, pass such order, as he thinks just and proper,
including enhancing or modifying or annulling the said decision or
order.
(2) The Revisional Authority shall not exercise any power under
sub-section (1), if–
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By:KAMLESH KUMAR
Signing Date:13.11.2024
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(a) the order has been subject to an appeal under Section 107 or
Section 112 or Section 117 or Section 118; or
(b) the period specified under sub-section (2) of Section 107 has not
yet expired or more than three years have expired after the passing
of the decision or order sought to be revised; or
(c) the order has already been taken for revision under this section
at an earlier stage; or
(d) the order has been passed in exercise of the powers under sub-
section (1):
Provided that the Revisional Authority may pass an order under
sub-section (1) on any point which has not been raised and
decided in an appeal referred to in clause (a) of sub-section (2),
before the expiry of a period of one year from the date of the order
in such appeal or before the expiry of a period of three years
referred to in clause (b) of that sub-section, whichever is later.
(3) Every order passed in revision under sub-section (1) shall,
subject to the provisions of Section 113 or Section 117 or Section
118, be final and binding on the parties.
(4) If the said decision or order involves an issue on which the
Appellate Tribunal or the High Court has given its decision in some
other proceedings and an appeal to the High Court or the Supreme
Court against such decision of the Appellate Tribunal or the High
Court is pending, the period spent between the date of the decision
of the Appellate Tribunal and the date of the decision of the High
Court or the date of the decision of the High Court and the date of
the decision of the Supreme Court shall be excluded in computing
the period of limitation referred to in clause (b) of sub-section (2)
where proceedings for revision have been initiated by way of issue
of a notice under this section.
(5) Where the issuance of an order under sub-section (1) is stayed
by the order of a court or Appellate Tribunal, the period of such stay
shall be excluded in computing the period of limitation referred to
in clause (b) of sub-section (2).
(6) For the purposes of this section, the term,–
(i) “record” shall include all records relating to any proceedings
under this Act available at the time of examination by the
Revisional Authority;
(ii) “decision” shall include intimation given by any officer lower
in rank than the Revisional Authority.”
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
16. In order to evaluate the correctness of that submission we deem
it apposite to extract the following paragraphs from the order
impugned:
“3. After examining the electronic cash ledger of the tax payer, it
appeared to the adjudicating authority that TDS has been credited
in the cash ledger as detailed in para 2 above and the same has been
debited in the electronic cash ledger while claiming the refund
claim. Therefore the adjudicating authority sanctioned an amount
of Rs5,50,00,000/- (CGST- 2,75,00,000/- & SGST 2,75,00,000) as
electronic cash refund the tax payer i.e. M/s HCC-VCCL Joint
Venture under rule 92 of CGST Rules, 2017 read with section 54 of
the CGST Act, 2017.
4. After issuance of impugned RFD-06 a copy of the same was
endorsed to the undersigned for information. On specific
intelligence inputs and further data analysis thereon, it came to the
notice that the impugned order is erroneous insofar as it is
prejudicial to the interest of revenue and is improper and has not
taken into account certain material facts which were not available
at the time of issuance of the said order as detailed herein below:
(i) As per the data available, the taxable value of Inward Supplies is
Rs 348 crores from the date of registration in Feb 2020 to
September 2022, which is not supported by the bank statements of
the taxpayer.
(ii) Balance Sheet for the F.Y. 2020-21 shows that the taxpayer had
capitalized a vehicle amounting to Rs. 16 crores which leads to
infer that ITC has been availed on this item. Since the party was
engaged in construction activity, as per section 17 of the CGST
Act, the ITC is inadmissible on vehicles.
(iii) Further, from the scrutiny of GSTR-2A and the Bank
Statement, it is seen that 75% of the supplies were made by the
following three suppliers (a) M/s VCCL, (b) M/s Terratec India
Pvt. Ltd. and (c) LR Sharma. Further, it has come to the notice that
till July 2022, only the aforementioned three major parties have
issued invoices amounting to Rs. 132 Crore to HCC-VCCL(JV),
whereas the bank statement shows that the payment against these
invoices have been made to the extent of Rs. 16.25 crores only
within the stipulated time of 180 days u/s Section 16(2) of the
CGST Act, 2017 read with Rule 37 of CGST Rules, 2017.
xxxx xxxx xxxx
13. I have carefully gone through all the material facts provided
by the taxpayer and the contentions of the taxpayer is summarized
below:-
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
(i) The payment of invoices issued by VCCL, Terratec India
Pvt. Ltd. and LR Sharma & Co. has been partially paid
by the Joint Venture. The taxpayer has provided partial
bank statements and ledgers for the same.
(ii) Any inquiry or investigation can continue and may take
it own course, but these proceedings cannot have any
bearing on this ECL refund. In other words, no provision
under GST restricts the refund of ECL unless there is an
outstanding demand of tax.
(iii) In F.Y. 2020-21 the Tunnel Boring Machine (TBM)
amounting to Rs. 16.56 crores approximately have been
mentioned as vehicle instead of ‘Plant & Machinery’.
Such a mistake of presentation in the Financials is an
error only in FY 2020-21 due to change in the Statutory
Auditor. This mistake was rectified by the same Auditor
in the Financials of the subsequent year i.e. FY 2021-22.
But this error may not change the nature and purpose of
TBM.
13.1 For taxpayer contention mentioned at sub para (i) above:
The taxpayer has claimed ITC on all the purchase invoices
issued by the suppliers, however, during preliminary inquiry
payment for invoice word Rs. 115.75 crores (Rs. 132 Crores –
16.25 crores) have been found short paid to the surprise as per
Bank Statement involving tax amount of Rs. 20.83 crores (@ 18%)
which is in contravention of Section 16(2) of the CGST Act, 2017,
read with Rule 37 of the CGST Rules, 2017. Further ITC utilized
for which complete payment has not been made within 180 days is
liable for interest as per under Section 50 of CGST Act, 2017.
The relevant provision of Section 16 (2) is reproduced below.
Section 16. Eligibility and conditions for taking input tax
credit.-
(1) Every registered person shall, subject to such conditions and
restrictions as may be prescribed and in the specified in section 49,
be entitled to take credit of input tax charged on any supply of
goods or services or both to him which are used or intended to be
used in the course or furtherance of his business and the same
amount shall be credited to the electronic credit ledger of such
person.
(2) Notwithstanding anything contained in this section, no
registered person shall be entitled to the credit of any input tax in
respect of any supply of goods or services or both to him unless,-
(a) he is in possession of a tax invoice or debit note issued by a
supplier registered under this Act, or such other tax paying
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51
documents as may be prescribed;
1[(aa) the details of the invoice or debit note referred to in clause
(a) has been furnished by the supplier in the statement of outward
supplies and such details have been communicated to the recipient
of such invoice or debit note in the manner specified under section
37;]
(b) he has received the goods or services or both.
2 [Explanation.- For the purposes of this clause, it shall be
deemed that the registered person has received the goods or, as the
case may be, services-
(i) where the goods are delivered by the supplier to a recipient or
any other person on the direction of such registered person,
whether acting as an agent or otherwise, before or during
movement of goods, either by way of transfer of documents of title
to goods or otherwise;
(ii) where the services are provided by the supplier to any person
on the direction of and on account of such registered pereon;]
3 [(ba) the details of input tax credit in respect of the said supply
communicated to such registered person under section 38 has not
been restricted;]
(c) subject to the provisions of 4[section 41 5[***]], the tax
charged in respect of such supply has been actually paid to the
Government, either in cash or through utilisation of input tax credit
admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
The relevant portion of Rule 37 of CGST Rules, 2017 is
reproduced below:
Rule 37. Reversal of input tax credit in the case of non-payment
of consideration.-
[(1) A registered person, who has availed of input tax credit on any
inward supply of goods or services or both, other than the supplies
on which tax is payable on reverse charge basis, but fails to pay to
the supplier thereof, the amount towards the value of such supply
[whether wholly or partly,] along with the tax payable thereon,
within the time limit specified in the second proviso to sub-section
(2) of section 16, shall pay [or reverse] an amount equal to the
input tax credit availed in respect of such supply [proportionate to
the amount not paid to the supplier,] along with interest payable
thereon under section 50, while furnishing the return in FORM
GSTR-3B for the tax period immediately following the period of
one hundred and eighty days from the date of the issue of the
invoice:
Provided that the value of supplies made without consideration as
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By:KAMLESH KUMAR
Signing Date:13.11.2024
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specified in Schedule I of the said Act shall be deemed to have been
paid for the purposes of the second proviso to sub-section (2) of
section 16:
Provided further that the value of supplies on account of any
amount added in accordance with the provisions of clause (b) of
sub-section (2) of section 15 shall be deemed to have been paid for
the purposes of the second proviso to sub-section (2) of section 16.
(2) Where the said registered person subsequently makes the
payment of the amount towards the value of such supply along
with tax payable thereon to the supplier thereof, he shall be entitled
to re-avail the input tax credit referred to in sub-rule (1).]
(3) [****]
(4) The time limit specified in sub-section (4) of section 16 shall not
apply to a claim for re-availing of any credit, in accordance with
the provisions of the Act or the provisions of this Chapter, that had
been reversed earlier.”
17. As is manifest from the aforesaid conclusions as appearing in
the order impugned, the revisional authority appears to have doubted
the ITC which was claimed by the writ petitioner in the tax period in
question. While that conclusion and tentative view as expressed would
be open to be tested under the CGST Act, the question which merits
consideration is whether that conclusion would have justified the
invocation of Section 108.
18. That issue, in our opinion, must necessarily be answered in the
negative. The pre-requisite condition for invocation of Section 108 is
the formation of an opinion that an order made under the CGST Act is
erroneous, prejudicial to the interest of the Revenue, illegal or
improper. By virtue of Section 108 the Commissioner is also
empowered to invoke its revisional authority in a situation where it
comes to the conclusion that the order under scrutiny was made
without taking into account certain material facts whether available at
the time of making of that order or not as well as in consequence of an
observation rendered by the Comptroller and Auditor General of
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By:KAMLESH KUMAR
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India.
19. Admittedly, the allegation of wrongful availment of ITC is
based on intelligence inputs received subsequent to the passing of the
order dated 09 December 2022. The allegation of improper utilization
of ITC is one which is clearly distinct and unconnected with the order
sanctioning refund. While that allegation, when tested and examined,
may ultimately lead to the creation of prospective liabilities, it has no
correlation with the question of whether the order sanctioning refund
was rendered invalid or was liable to be corrected under Section 108.
20. Absent any finding or conclusion having been rendered by the
Commissioner in this respect, and which may have tended to indicate
that the opinion expressed in the order dated 09 December 2022 was
rendered unsustainable, illegal or invalid, we find ourselves unable to
sustain the order impugned.
21. We, accordingly, allow the instant writ petition and quash the
order dated 05 July 2023.
22. We, however, in the facts and circumstances of the case accord
liberty to the respondents to proceed afresh and in accordance with
law. This order, however, shall thus be without prejudice to the rights
and contentions of respective parties which would be open to be
canvassed in case any further proceedings as permissible in law are
initiated by the respondents.
YASHWANT VARMA, J.
RAVINDER DUDEJA, J.
NOVEMBER 5, 2024/kk
Signature Not Verified
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By:KAMLESH KUMAR
Signing Date:13.11.2024
12:20:51