M/S Shri Shyam Footwear vs. The Commissioner Of Central Goods And Services Tax And Anr.

Facts

The petitioner, M/s Shri Shyam Footwear, filed a writ petition challenging orders dated 09.02.2022 and 17.06.2021, and seeking release of unutilised Input Tax Credit (ITC) amounting to ₹4,28,400/-. The petitioner had applied for a refund of unutilised ITC for the period October 2020 to December 2020 on 07.04.2021. A notice dated 22.05.2021 was issued by the respondent authority stating the application was defective due to incomplete information in Annexure-B, specifically column 7 regarding the category of input supplies. The petitioner responded on 07.06.2021, rectifying the error, but claimed the revised annexure was not reflected on the portal. Subsequently, the refund application was rejected on 17.06.2021, and an appeal was dismissed on 09.02.2022, both citing the incomplete Annexure-B.

Held

The Court held that the impugned orders dated 17.06.2021 and 09.02.2022 were unsustainable. The Court found that the rectified information submitted by the petitioner on 07.06.2021 was not taken into account by either the adjudicating authority or the appellate authority. The Court emphasized that the petitioner should not be penalized for an inadvertent error in the initial submission, especially when it was rectified. The ratio decidendi is that tax authorities must consider rectified submissions and cannot reject refund claims solely based on initial clerical errors if they are promptly corrected. The Court set aside the impugned orders and remanded the matter to the Adjudicating Authority to reconsider the petitioner's response dated 07.06.2021 and decide the matter afresh. The petitioner was granted liberty to submit a fresh copy of the revised annexure, and the refund application is to be processed within four weeks, with an opportunity for a hearing if rejection is contemplated.

Key Issues

1. Whether the authorities below erred in rejecting the petitioner's refund application and appeal without considering the rectified Annexure-B submitted by the petitioner on 07.06.2021, thereby failing to comply with the principles of natural justice and the provisions of the CGST Act and Rules? Petitioner's Contention: The petitioner argued that they had rectified the inadvertent error in Annexure-B and submitted the corrected information on 07.06.2021. They contended that the authorities failed to consider this rectified information when passing the rejection order dated 17.06.2021 and the appellate order dated 09.02.2022. The petitioner asserted they should not be penalized for a minor clerical error that was promptly corrected. Revenue's Contention: The judgment does not record any specific arguments made by the revenue or state.