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

Held

The Court noted that the GST Tribunal is not yet operational, making it impractical to relegate the Petitioner to that alternate remedy in this specific case. The Court acknowledged that the Petitioner was asked to return refunds based on an alleged breach of Rule 96(10) and that the issue of Rule 86(4B) was also involved, with the impugned orders holding it could not be given retrospective effect. The Court referred to its recent decision in Hikal Ltd., which held that the omission of Rule 96(10) was without provisions to save 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 Hikal Ltd. decision's impact or the issues raised, the Court deemed it in the interest of justice to set 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, including those about retrospectivity and the bar for filing two refund claims. The adjudicating authority was directed to decide the matter expeditiously, within six months, and to allow parties to file written submissions.

Facts

The Petitioner, Kelvion India Pvt. Ltd., manufactures and exports heat exchangers. They imported raw materials under an advance authorisation, claiming exemption from basic customs duty and IGST. The Petitioner used these materials to manufacture goods for export. For exports between June 2019 and December 2019, the Petitioner paid IGST and subsequently received a refund. The Directorate of Revenue Intelligence (DRI) alleged that the Petitioner breached Rule 96(10) of the CGST Rules, 2017, by not exclusively using the imported raw materials for exported goods. To avoid controversy, the Petitioner repaid the IGST refund received for June-December 2019 and July-September 2020, amounting to Rs. 2,82,39,137, along with 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 the appellate authority upheld the rejection. The Petitioner filed these writ petitions challenging these orders.

Key Issues

1. Whether the Petitioner is entitled to a refund of the amount repaid, which they claim exceeds the amount payable under Rule 96(10) of the CGST Rules, 2017, considering the subsequent omission of Rule 96(10)? 2. Whether Rule 86(4B) of the CGST Rules, 2017, can be applied retrospectively? The Petitioner argued that the omission of Rule 96(10) without saving provisions renders arguments about its breach or the invocation of Rule 86(4B) inapplicable. They relied on the High Court's decision in Hikal Ltd. Vs. Union of India & Ors. The Petitioner proposed setting aside the impugned orders and remanding the matter for a fresh decision on their refund application and the show cause notice. The Respondents argued 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.