M/S.Kashvi Power And Steel PVT. LTD. vs. Ministry Of Finace

Held

The Court held that the present writ petition should be disposed of in terms of its previous order in W.P.(C) No.34402 of 2021. In that previous order, the Court had relied on a clarification issued by the GST Council and the CBITC on September 20, 2021. This clarification stated that the restriction under the first proviso to Section 54(3) of the CGST Act, 2017, on the refund of unutilized ITC, applies only to goods that are actually subjected to export duty. Goods in respect of which either a Nil rate of export duty is specified, or which are fully exempted from export duty, or which are not covered under the Second Schedule to the Customs Tariff Act, 1975, are not considered to be subjected to export duty. Consequently, the restriction under Section 54(3) does not apply to such goods. The Court noted that an earlier instruction dated June 25, 2021, which was the basis for the impugned action, had been withdrawn. Therefore, the impugned SCN, having been issued as a result of these withdrawn circulars, was also set aside. The Court quashed the impugned notice issued by Opposite Party No.6 under Section 73 of the CGST/OGST Act.

Facts

The Petitioner, M/s Kashvi Power & Steel Private Limited, filed a writ petition before the Orissa High Court challenging an action by the revenue authorities. The Petitioner sought to dispose of the present petition in terms of a previous order passed by the 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 (CBITC) on September 20, 2021, regarding the restriction on availing refund of accumulated Input Tax Credit (ITC) under Section 54(3) of the CGST Act, 2017. The previous order noted that a subsequent instruction dated June 25, 2021, which was the basis for the impugned action, stood withdrawn. Consequently, the Show Cause Notice (SCN) issued as a result of these circulars was also set aside in the previous order.

Key Issues

1. Whether the restriction imposed under the first proviso to Section 54(3) of the CGST Act, 2017, prohibiting refund of unutilized ITC, is applicable to exports of goods that are subject to Nil rate of export duty or are exempted from export duty? Petitioner's Argument: The Petitioner contended that the present petition should be disposed of in terms of the Court's previous order in M/s B.S. Minerals. This order, relying on a GST Council clarification and a subsequent circular dated September 20, 2021, held that the restriction under Section 54(3) applies only to goods actually subjected to export duty. Goods not subject to any export duty, including those with a Nil rate or fully exempted, are not covered by this restriction. The Petitioner argued that the impugned Show Cause Notice (SCN), being a result of withdrawn circulars, should also be quashed. Revenue/State's Argument: The judgment does not record any specific arguments from the Opposite Parties (Union of India and others).