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

Held

The Court held that the Petitioner's case should be disposed of in terms of the order dated 25th November 2021 in W.P.(C) No.34402 of 2021. This previous order had quashed the impugned SCN. The reasoning was based on the clarification issued by the GST Council and CBIC on September 20, 2021. This clarification stated that the term 'subjected to export duty' in the first proviso to Section 54(3) of the CGST Act means goods that are actually leviable to and suffering export duty. 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 considered 'subjected to export duty'. Consequently, the restriction under Section 54(3) does not apply to such goods for the purpose of refund of accumulated ITC. Since the impugned SCN was issued based on earlier circulars that were superseded by this clarification, the SCN itself was rendered unsustainable and was accordingly quashed. The writ petition was disposed of on this basis.

Facts

The Petitioner, M/s Kashvi Power & Steel Private Limited, filed a writ petition before the High Court of Orissa at Cuttack. The Petitioner sought disposal of its 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 20, 2021, regarding the refund of accumulated Input Tax Credit (ITC) for goods subjected to export duty. The Petitioner's challenge was directed against a Show Cause Notice (SCN) issued by Opposite Party No.6 under Section 73 of the CGST/OGST Act, which was stated to be a result of the earlier circulars.

Key Issues

1. Whether the restriction imposed under the first proviso to Section 54(3) of the CGST Act, 2017, on the availment of refund of accumulated ITC, is applicable to goods that are not actually subjected to export duty, including those with a NIL rate of export duty or fully exempted from export duty? Petitioner's Contention: The Petitioner relied on the order dated 25th November 2021 in W.P.(C) No.34402 of 2021, which adopted the clarification issued by the GST Council and CBIC. This clarification stated that the restriction under Section 54(3) only applies to goods actually subjected to export duty. Therefore, the impugned SCN, issued as a result of the earlier circulars that are now clarified, should not survive. Revenue's Contention: The judgment does not record any specific arguments made by the Revenue or the Opposite Parties.