Kelvion INDIA PVT. LTD. vs. The Union Of INDIA Thr Secretary And Ors

Held

The Court held that the GST Tribunal was not operational, and therefore, relegating the Petitioner to that remedy would serve no useful purpose in the peculiar facts of the case. The Court noted that the impugned orders dealt with allegations of breach of Rule 96(10) and the issue of Rule 86(4B). The Court referred to its recent decision in *Hikal Ltd. (supra)*, which held that the omission of Rule 96(10) was without saving provisions for pending proceedings. The Court found that the adjudicating and appellate authorities did not have the benefit of this decision. Therefore, without making observations on the merits of the case or the impact of *Hikal Ltd.*, the Court decided that the interest of justice would be met by setting aside the impugned orders and remanding the matter to the adjudicating authority. The adjudicating authority was directed to decide afresh the Petitioner's refund application and the show cause notice, considering the impact of the *Hikal Ltd.* decision, all other contentions raised by both parties, including the retrospectivity of Rule 86(4B) and the bar for filing two refund claims. The parties were granted leave to file written submissions.

Facts

The Petitioner, Kelvion India Pvt. Ltd., engaged in manufacturing and exporting heat exchangers, imported raw materials under advance authorisation, claiming duty exemptions. The Petitioner exported finished goods, some manufactured using these raw materials, between June 2019 and December 2019, and paid IGST on these exports, subsequently receiving IGST refunds. The Directorate of Revenue Intelligence (DRI) alleged breach of Rule 96(10) of the CGST Rules, 2017. To avoid controversy, the Petitioner repaid the refunds received for June 2019-December 2019 and July 2020-September 2020, totaling Rs. 2,82,39,137/- plus interest. The Petitioner then applied for a refund of this amount, claiming it exceeded the actual liability under Rule 96(10). This refund application was rejected, and an appeal was also dismissed. The Petitioner filed these writ petitions challenging the rejection orders.

Key Issues

1. Whether the Petitioner is entitled to a refund of the excess amount paid back, considering the alleged breach of Rule 96(10) of the CGST Rules, 2017 and the subsequent omission of this rule. Petitioner's arguments: The Petitioner contended that the amount repaid exceeded the actual liability under Rule 96(10), which was significantly more than what would have been payable if the rule was breached. Furthermore, the Petitioner relied on the High Court's decision in *Hikal Ltd. Vs. Union of India & Ors.*, which held that Rule 96(10) was omitted without provisions for saving pending proceedings, rendering arguments about its breach or the invocation of Rule 86(4B) inapplicable. The Petitioner sought to set aside the impugned orders and remand the matter for fresh adjudication. Revenue's arguments: The Revenue argued that Rule 86(4B) cannot be interpreted retrospectively and that there were no errors in the impugned orders. They also contended that the Petitioner had an alternate remedy before the GST Tribunal.