-Report by Radhika Mittal
The case involves a petitioner who filed two separate refund applications, seeking a refund of the unutilized Input Tax Credit (ITC) amounting to ₹72,03,961/- and ₹12,40,270/-, respectively. The refund was in respect of goods exported by the petitioner. However, the applications were not processed due to allegations that the supplier from whom the petitioner had purchased the goods had received fake invoices from its suppliers.
FACTS :
The petitioner has filed petitions challenging the Order-In-Appeal dated 31.03.2022 which dismissed two separate appeals. The petitioner filed two refund applications, dated 11.09.2020 and 12.09.2020, for the unutilized Input Tax Credit (ITC) amounting to ₹72,03,961/- and ₹12,40,270/-, respectively, in respect of goods exported by the petitioner. Respondent no.2 issued an acknowledgment (in Form GSTRFD-02) dated 27.09.2020, in respect of the petitioner’s refund application for the amount of ₹12,40,270/-. In respect of the first application dated 11.09.2020, respondent no.2 issued a deficiency memo dated 21.09.2020, stating that the supporting documents were not uploaded on the GST portal.
Accordingly, the petitioner filed another application dated 23.09.2020 along with all documents in support of its refund application. The same was acknowledged by the respondent on 01.10.2020. The petitioner’s applications were not processed as the supplier from whom the petitioner had purchased the goods had allegedly received fake invoices from its suppliers. A search was conducted by the officers of Central GST, Anti Evasion Branch, Delhi West Commissionerate in the petitioner’s premises on 21.10.2020. The petitioner (its proprietor) was summoned to the office of respondent no.1 on 23.10.2020 to tender certain documents. The petitioner appeared before the Superintendent, Anti Evasion Branch on 23.10.2020 and furnished documents as sought for. Notwithstanding the same, the petitioner was issued another summons dated 28.12.2020 for furnishing the documents, which, according to the petitioner, had already been submitted.
The petitioner wrote several letters to respondent no.2 requesting early disposal of his refund applications. However, his requests were not acceded to. In the meantime, the petitioner became aware of the allegations that its supplier, M/s Shruti Exports, had issued fake invoices and its ITC was blocked. The said supplier had moved the High Court of Calcutta by filing a writ petition seeking to unblock its Electronic Credit Ledger (ECL).
A show cause notice dated 04.06.2021 was issued by respondent no.2 to the petitioner proposing to reject the petitioner’s refund applications. This show cause notice indicated that respondent no.2 had sought a report regarding the legitimacy and genuineness of the export of goods from the Customs Station, Kolkata, which were purchased by the petitioner from M/s Shruti Exports (proprietor Sh. Vijander Kumar Goel). The petitioner responded to the said show cause notice on 12.06.2021. The petitioner was also afforded a personal hearing by respondent no.2 on 01.07.2021. During the course of the said proceedings, the petitioner also submitted additional documents in support of its refund claim. The petitioner submitted that he was not concerned with any allegation against its supplier M/s Shruti Exports (proprietor Vijander Kumar Goel) as the purchases made by it were genuine and against genuine invoices.
Plaintiff’s Contentions:
The petitioner contended that it was not concerned with any allegation against its supplier as the purchases made by it were genuine and against genuine invoices. The petitioner further argued that it had submitted all the relevant documents in support of its refund claim, and the delay in processing the refund applications was causing financial hardship.
Defendant’s Contentions:
The respondent argued that the petitioner’s refund applications were rightly rejected as the supplier from whom the petitioner had purchased the goods had allegedly received fake invoices from its suppliers. It was also alleged that the said supplier had availed CGST and SGST amounting to ₹1,35,21,489/- and Cess of ₹21,76,132/- on the strength of fake invoices issued by certain persons. The respondent further contended that the delay in processing the refund applications was due to the investigation into the alleged fake invoices.
Judgment:
The court held that the petitioner’s refund applications could not be rejected merely on the basis of allegations against its supplier. The court further noted that the petitioner had submitted all the relevant documents in support of its refund claim, and the delay in processing the refund applications was causing financial hardship. The court directed the respondent to process the petitioner’s refund applications within a specified time.
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