Order Date – 10 June 2022

Facts:

• The Petitioner, Electrosteel Castings Limited, has filed the instant Writ Petition, being aggrieved by inaction and refusal in disbursing the refund amount of Rs.1,71,20,724/- with applicable interest.
• The adjudicating authority had taken Net ITC for computation of refund, which is after considering reversal of a sum of Rs.7,01,82,060/- on account of supply of finished goods not subject to Cess. However, while in determination of refund amount, the supply of finished goods not subject to Cess has been included in the adjusted total turnover computed the refund by adding the supply of finished goods not subject to Cess in the adjusted total turnover. 
• Aggrieved, the Assessee preferred an appeal before the Appellate Authority who by its order dated 05 February 2021, allowed the aforesaid appeal of the Petitioner and consequently, allowed the refund of Rs. 1,71,20,724/-. 
• Thereafter, the Assessee filed application for refund of cess in terms of Circular No. 111/30/2019-GST dated 03 October 2019 which has not been considered by the CGST authority concerned till date in spite of its repeated request.

Issue:

• Whether for the purpose of computing refund of credit of compensation cess to be made under Section 54 (3) of the CGST Act read with Rule 89 (4) of the CGST Rules as applicable mutatis mutandis to the Cess Act, the domestic turnover of final products which are not taxable under the Cess Act, could be excluded to arrive at the adjusted total turnover under Rule 89(4) of the CGST Rules having regard to the definition of ‘Adjusted Total Turnover” contained in Clause (E) of the said Rule. ?

Order:

• The Court observed that since “exempt supply” has not been defined under the Cess Act, definition of exempt supply contained in Section 2 (47) of the CGST Act shall apply mutatis mutandis for computation of refund of ITC of Cess by application of provisions of Section 11, Section 9 and Section 2 (2) of the Cess Act.
• It is clear that goods which are subject to Nil rate of cess would be construed as exempt supplies for purposes of the formula prescribed Rule 89 (4) of the CGST Rules and therefore, deserves to be excluded from the calculation of adjusted total turnover.
• The Court held that Appellate authority while passing the impugned order has neither committed any procedural irregularity nor any jurisdictional error nor any violation of principles of natural justice.
• The Court directed to refund the amount of Rs.1,71,20,724/ as per the order of the Appellate authority dated 05 February 2021, along with applicable interest till the date of such payment.