Order Date – 15 September  2023

Parties: Pee Gee Fabrics Private Limited Vs Union of India

Facts –

• The Petitioner, Pee Gee Fabrics Private Limited, are eligible to avail refund of Input Tax Credit due to inverted duty tax structure as per section 54(3)(ii) of the GST Act. The petitioner wrongly claimed on capital goods for the Financial Year 2017, and it had reversed the ITC in Form GSTR-3B for the month of August 2018 due to non-availability of DRC-03 on GST Portal. 
• The amount of refund filed by the petitioner got reduced in GSTR-3B and in FORM GST RFD-01A as it is automatically generated. Thus, the petitioner was allowed to file a refund application for the remaining amount under the head "any other Specify". 
• The refund was duly received but a show cause notice was issued alleging that as per circular no. 94/13/2019-GST dated 28.03.2019, there is no provision that second refund application can be filled for the same particular month under the category "Any Other Specify" in inverted rate of structure and refund of reversed ITC on capital goods cannot be claimed as refund.

Issue –

• Whether the petitioner is entitled to ITC as per inverted duty tax structure?

Order – 

• The Divisional Bench of Hon’ble High Court observed that the petitioners have not filed second refund application for the same month, but it has filed application for claiming the balance amount of refund which was not granted though the petitioners were eligible for the same. The petitioners had therefore, no other option but to file refund application in view of Circular No.94/2019 dated 28.03.2019 under the head “any other”.
• Circular No.94/2019 permitted a onetime measure for availing refund of ITC on account of inverted duty tax structure as per Notification No.20/2018 read with Circular No.56/2018 as the assessees were not able to claim refund of the accumulated ITC to the extent to which they were eligible.
• Therefore, it was clarified by Circular No. 94/2019 that when the assessee was not eligible to claim the refund then ITC is required to be claimed under the category “any other” instead of under the category "refund of unutilized ITC on account of accumulation due to inverted tax structure" in FORM GST RFD-01A for the same tax period in which said reversal has been made.
• Thus, the respondent authorities have by adopting such a pedantic approach could not have rejected the legitimate claim of the petitioner company for balance amount of refund claim. Hence the writ petition is allowed.