Hooghly Motors Private Limited vs. State Of West Bengal And Ors.

Held

The Court held that the petitioner is entitled to the refund. This conclusion was primarily based on the instructions received from the Additional CCT/Law, which were presented by the State's counsel. The instructions clarified that 'input' is defined under Section 2(59) of the GST Act as any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. The definition of 'business' under Section 2(17) is expansive. Crucially, the instructions noted that Section 54(3)(ii) of the GST Act allows refund of unutilised ITC where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies, and it does not prescribe that inputs must be used in manufacturing. The instructions concluded that ITC involved in the purchase of a 'stereo system' to be used in an e-rickshaw would be eligible for refund. Consequently, the impugned appellate order was set aside, and the respondents were directed to verify records and refund the entitled amount to the petitioner.

Facts

Hooghly Motors Pvt. Ltd. (Petitioner) filed a writ petition challenging an order dated December 12, 2024, passed by the Appellate Authority under Section 107 of the WBGST/CGST Act, 2017. This order rejected the petitioner's appeal against an order dated October 11, 2023, by which their refund claim of Rs. 8,94,583/- was rejected by the adjudicating authority. The petitioner had previously obtained an order from the appellate authority on May 30, 2024, allowing a refund in a similar situation. During the hearing, the State's counsel presented instructions from the Additional CCT/Law, indicating that the petitioner is eligible for the refund.

Key Issues

1. Whether 'stereo system' qualifies as an 'input' or raw material in the manufacturing of e-rickshaws, thereby making the Input Tax Credit (ITC) involved in its purchase eligible for refund under Section 54(3)(ii) of the GST Act, 2017, where the tax rate on inputs is higher than on output supplies? Petitioner's contention: The petitioner argued that based on a previous order in their own case, and similar situations where refunds were allowed by the respondents, the stereo system should be considered an input for manufacturing e-rickshaws. They relied on the definition of 'input' and the principle that items used in the course or furtherance of business are eligible. Revenue's contention: Initially, the adjudicating and appellate authorities rejected the claim. However, based on instructions from the Additional CCT/Law, the Revenue conceded that the petitioner is eligible for the refund. The instructions elaborated on the definitions of 'input' and 'business' under the GST Act and concluded that the stereo system, used in e-rickshaws, would be eligible for refund under the inverted duty structure provision.