Kelvion INDIA PVT. LTD. vs. The Union Of INDIA Thr Secretaryand Ors

Held

The Court decided to set aside the impugned orders dated January 10, 2022, and March 27, 2023, and remanded the matter to the adjudicating authority (the second Respondent). The Court reasoned that while the GST Tribunal is not operational, making it impractical to relegate the Petitioner to that remedy, the recent decision in Hikal Ltd. (supra) regarding the omission of Rule 96(10) would have a significant impact on the issues. The adjudicating and appellate authorities did not have the benefit of this decision. Therefore, to meet the interests of justice, the matter was remanded for a fresh decision. The adjudicating authority is directed to decide afresh the Petitioner's refund application dated August 20, 2021, and the show cause notice dated December 1, 2021, after 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 decision was to be made expeditiously, within six months from the uploading of the order.

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, paying IGST and subsequently receiving 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, totaling Rs. 2,82,39,137/- plus interest. The Petitioner then applied for a refund of this amount on August 20, 2021, claiming it exceeded the amount payable under Rule 96(10). The refund application was rejected, and the appellate authority upheld this rejection. The Petitioner filed these writ petitions challenging the rejection orders.

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, and whether the impugned orders rejecting the refund application and appeal were erroneous. The Petitioner argued that the amount repaid was significantly more than what would have been payable if Rule 96(10) was violated. They also relied on the High Court's decision in Hikal Ltd. Vs. Union of India & Ors., which held that Rule 96(10) was omitted without saving pending proceedings, rendering arguments about its breach or Rule 86(4B) inapplicable. The Petitioner sought to set aside the impugned orders and remand the matter for fresh adjudication. The Respondents argued that Rule 86(4B) cannot be interpreted retrospectively, that the impugned orders were correct, and that the Petitioner had an alternate remedy before the GST Tribunal.