M/S.Kashvi Power And Steel PVT. LTD. vs. Union Of INDIA

Held

The Court held that the impugned notice issued by Opposite Party No.6 under Section 73 of the CGST/OGST Act was a result of the earlier circulars that had been withdrawn or superseded. The Court referred to paragraphs 5, 8, and 9 of its previous order in W.P.(C) No.34402 of 2021. Paragraph 5 detailed the clarification from the GST Council and CBIC, stating that the restriction under Section 54(3) of the CGST Act applies only to goods actually subjected to export duty. Paragraph 8 noted that the instruction dated June 25, 2021, was withdrawn, rendering the earlier instruction dated June 8, 2021, also non-operative. Consequently, the challenge to these circulars by the petitioner did not survive. Paragraph 9 concluded that since the impugned Show Cause Notice (SCN) was issued solely based on these circulars, it also did not survive and was accordingly set aside. The Court quashed the impugned notice issued under Section 73 of the CGST/OGST Act.

Facts

The petitioner, M/s Kashvi Power & Steel Private Limited, approached the Orissa High Court via a writ petition. The petitioner sought disposal of their case in terms of a previous order passed by the same court in W.P.(C) No.34402 of 2021 (M/s B.S. Minerals v. State of Odisha and others). This previous order dealt with a clarification issued by the GST Council and the Central Board of Indirect Taxes and Customs (CBIC) on September 17, 2021, and September 20, 2021, respectively. These clarifications pertained to the interpretation of Section 54(3) of the CGST Act, 2017, concerning the refund of accumulated Input Tax Credit (ITC) for goods subjected to export duty. The petitioner's case involved an impugned notice issued by Opposite Party No.6 under Section 73 of the CGST/OGST Act.

Key Issues

1. Whether the restriction on the refund of unutilized Input Tax Credit (ITC) under the first proviso to Section 54(3) of the CGST Act, 2017, is applicable to exports of goods that attract a Nil rate of export duty or are otherwise not subjected to export duty? The petitioner argued that the clarification issued by the GST Council and CBIC on September 17 and 20, 2021, respectively, resolves this issue. This clarification states that only goods actually leviable to and suffering export duty at the time of export are covered by the restriction. Goods with a Nil rate of export duty, fully exempted, or not covered under the Second Schedule to the Customs Tariff Act, 1975, are not subject to this restriction. The revenue or State did not record any specific arguments in the judgment.