Gulshan Kapoor vs. Commissioner Of Delhi Goods And Services Tax & Ors.

Facts

The petitioner, Gulshan Kapoor, filed a writ petition challenging a Deficiency Memo dated July 15, 2020, issued by respondent no. 4 for the period July 2018 to September 2018. The petition also challenged a Show Cause Notice dated July 15, 2020, and a Refund Sanction Order dated September 3, 2020, both issued by respondent no. 3 concerning refund applications for October 2018 to December 2018 and January 2019 to March 2019, respectively. The core of the dispute was that the refund claimed by the petitioner was credited to the consumer welfare fund instead of being paid to the petitioner, and the petitioner sought directions to grant the refund along with interest. The petitioner argued that the respondents were repeatedly asking for documents already on record and that the notices lacked specific reasons for refund inadmissibility.

Held

The Court did not decide the issues on merits. Instead, it directed the petitioner to take all their pleas in the replies to the show cause notice, deficiency memo, and representation seeking credit of refund in their account. The Court accepted the statement made by the counsel for respondents 1, 3, and 4, who assured that the replies and representations would be decided expeditiously after giving an opportunity of hearing to the petitioner's authorized representative, through a reasoned order in accordance with law. It was also stated that the petitioner need not appear personally. The Court clarified that all rights and contentions of the parties were left open, but the replies and representations filed by the petitioner would not be rejected or dismissed on the ground of limitation. The writ petition and pending application were disposed of with these directions.

Key Issues

1. Whether the Deficiency Memo and Show Cause Notice, which relied on Circular no. 125/44/2019-GST dated November 18, 2019, were valid, considering the petitioner's argument that the circular placed additional compliance requirements beyond the Act and Rules? 2. Whether the Deficiency Memo was issued within the mandatory period stipulated under Sub-rule 2 and 3 of Rule 90 of the CGST Rules, given it was issued approximately 90 days after the refund application? 3. Whether, as per Section 54(8)(b) of the CGST Act, 2017, the refundable amount claimed on account of an inverted duty structure should be paid to the applicant instead of being credited to the consumer welfare fund? Petitioner's arguments: The petitioner contended that the impugned notices were nullities as they relied on a circular that imposed additional compliance burdens. They argued that the Deficiency Memo was issued beyond the prescribed 15-day period, citing the judgment in Jian International Vs. Commissioner of Delhi Goods and Services Tax. Furthermore, they asserted that Section 54(8)(b) mandates payment of refund to the applicant in cases of inverted duty structure, not crediting it to the consumer welfare fund. Revenue's arguments: The judgment records no specific arguments from the revenue regarding the validity of the circular or the timeliness of the deficiency memo. However, their counsel accepted notice and made a statement regarding the expeditious decision of the petitioner's replies.