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

Held

The Court noted that the GST Tribunal is not yet operational, making it impractical to relegate the Petitioner to that remedy in this peculiar case. The Court acknowledged the Petitioner's contention that the amount repaid exceeded the requirement under Rule 96(10) and the impact of the Hikal Ltd. decision on the issues of Rule 96(10) and Rule 86(4B). Without making definitive observations on the merits of these issues, the Court found that the interest of justice would be served by setting aside the impugned orders. The matter was remanded to the adjudicating authority to decide afresh the Petitioner's refund application and the show cause notice, considering the impact of the Hikal Ltd. decision, and all other contentions raised by both parties, including the retrospectivity of Rule 86(4B) and the bar on filing two refund claims. The adjudicating authority was directed to decide expeditiously, within six months, and to consider written submissions from both parties.

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 received 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-December 2019 and July-September 2020, amounting to Rs. 2,82,39,137/-, plus interest of Rs. 38,19,915/-. The Petitioner then applied for a refund of this excess payment on August 20, 2021. The application was rejected, and an appeal was also dismissed. The present writ petitions challenge these rejections.

Key Issues

1. Whether the Petitioner is entitled to a refund of the amount paid back, which they claim exceeds the amount payable under Rule 96(10) of the CGST Rules, 2017? The Petitioner argues that the amount repaid was four times more than what would have been payable if Rule 96(10) was applicable and violated. They rely on the Bombay High Court's decision in Hikal Ltd. Vs. Union of India, which held that Rule 96(10) was omitted without saving pending proceedings, rendering arguments about its breach or Rule 86(4B) inapplicable. The Petitioner seeks to remand the matter for fresh adjudication. 2. Whether the impugned orders are erroneous, and if the Petitioner has an alternate remedy before the GST Tribunal? The Respondents contend that Rule 86(4B) cannot be interpreted retrospectively, that the impugned orders are correct, and that the Petitioner has an alternate remedy before the GST Tribunal.