The Delhi High Court in the case Ohmi Industries Asia Private Limited Versus Assistant Commissioner observed and has held that Rule 89(4) of the Central Goods and Services Tax Rules, CGST 2017 Rules is applicable to the cases of refund of integrated tax which is paid on zero-rated supply.
The bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan in the case observed and has noted that the opening sentence of Rule 89(4) makes it amply clear that it is being applied only to the cases of zero-rated supply of goods or services without payment of tax under a bond or the letter of undertaking.
The bench in the case observed and has stated that Rule 89(4) of the Rules applies only to the refunds with regards to exports made without payment of the integrated tax. Thus, it has also been pointed out by the petitioner that it was not seeking a refund of accumulated ITC but integrated tax as paid by him and there being no such dispute that the petitioner had discharged his liability for the payment of integrated tax.
In the present case, the application is filed by the petitioner or assessee for seeking the refund of an amount of Rs. 3,99,187, being the integrated tax paid on the export of services i.e., the zero-rated supply, in respect of the invoices raised in the month of October 2018. Thus, the petitioner in the case received the Foreign Inward Remittance which being against the invoices in November 2018.
Therefore, the adjudicating authority issued a deficiency memo wherein calling upon the petitioner to furnish the Foreign Inward Remittance Certificate. Thus, the petitioner complied with it and the show cause notice has been issued by the Adjudicating Authority while setting out certain queries with regard to the difference in the payment of tax.
Further, the Adjudicating Authority raised a query on the ground that the Input Tax Credit, ITC which is being shown in respect of the four invoices was not been reflected in the corresponding GSTR 2A which is filed by the petitioner.
The court observed that the petitioner provided the necessary clarifications in a letter dated July 21, 2020 and the claim of the petitioner for refund of integrated tax was rejected by the petitioner. Thus, the order passed by the Adjudicating Authority indicates that the Adjudicating Authority had verified that the petitioner had paid integrated tax which amounts to Rs. 12,02,165 in respect of invoices raised in the month of October 2018 and the same was reflected in GSTR 3B.
Therefore, the Adjudicating Authority while determining the quantum of the refund, which is being applied to the formula as it has been stated under Rule 89(4) of the Central Goods and Services Tax Rules, 2017, and the court rejected the claim of the petitioner while referring to Sub-clause (D) of Rule 89(4) of the Central Goods and Services Tax Rules, CGST 2017. Further, the Adjudicating Authority was of the view that the turnover reflected for the month of October 2018 ought to be considered as the turnover for the month of November 2018 when the remittances were being received.
The petitioner in the plea seek for the refund of integrated tax in respect of zero-rated supplies made after the payment of integrated tax under the Integrated Goods and Services Tax Act, 2017.
It has also been noted by the said court that the appellate authority has mechanically rejected the petitioner’s appeal on the ex-facie erroneous assumption that the petitioner was seeking a refund of accumulated ITC.
Accordingly, the court set aside the order of the Adjudicating Authority and rejected the assessee’s refund claim with regards to the zero-rated supply.
The counsel, Sparsh Bhargava appeared for the petitioner. The counsel, Anish Roy represented the Respondent.
