BharatTaxGST

M/S. Sai Micro Systems Private Limited vs. Assistant Commissioner (St) And 3 Others

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WP/26100/2022HC TelanganaGSTCNR HBHC01036444202220 July 2022Bench: SUREPALLI NANDA,UJJAL BHUYAN7 pages
For Petitioner: Dr. S.R.R. VISWANATHFor Respondent: SRr L. VENKATESWAR RAo, SENIOR S.C, FOR COMMERCIA L TAX

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Cause title — parties, addresses and appearances
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTIETH DAY OF JULY TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION NO:26100 OF 2022 Between: M/s. Sai Micro Systems Private Limited, 13 and 14,2nd Floor, Srinath Commercial Complex, S. D. Road, Secunderabad 500 003. Represented by its Managing Director sri'Jung Bahadur Singh' ...pETrroNER AND 1. Assistant Commissioner (ST), M.G. Road and S.D. Road Circle Begumpet Division, 4th Floor, Pavani Prestige Buildings Ameerpet, Hyderabad. 2. Appellate Joint Commisioner of State Tax, Punjagutta Division, Sth Floor, Commercial Tax Complex Nampally, Hyderabad - 500001. 3. State of Telangana, Represented by its Principal Secretary to Revenue(CT), Secretariat, Saifabad, Hyderabad. 4. Union of lndia, Rep. by its Finance Secretary, North Block, New Delhi - 110 001. ...RESPONDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to i) ii) issue a writ, order or direction one more in the nature of MANDAMUS declaring the impugned order vide Appeal No.B/10/2021 daled 2OlO4l2O22 (Ex' P 1) passed bv the 2 respondent contrary to section 54(3xii) of the Central Goods And ServicesTaxAct,20lTandTelanganaGoodsAndServicesTax Act of 2017 and in violation of articles 1a' 19(1)(g)' 265 and 300- A of the Constitution as arbitrary' illegal' without jurisdiction and set aside the same, and issue a suitable writ declaring the impugned order vide Ref.No.MGSD/AA 360820027208E/36AANFK53B0N1ZM dated SgtlVlz[zl (Ex P 2) passed by the 1St respondent (which has merged with the order of the 21 respondent mentioned above) contrary to section 54(3)(iD of the GST Act as arbitrary' illegal' without iurisdiction and set aside the same; and I il2t/ iii) issue a suitable writ declaring the para 3 of the circular No.l35/05/2020- GST dated 31/03/2020 (Ex. P B) issued u/s 168 of the CGST Act by the Central Board of lndirect faxes and Customs, Government of lndia contrary to section tr4(3)(ii) as arbitrary, illegal, without jurisdiction as already held by the Honourable Gauhati High Court in BMG Informatics Pvt Ltd V Union of lndia and Others (2021) 94 GSTR'1(Gauhati) and set aside the same; and iv) Direct the authorities to refund the amount of Rs.77,01 ,1 1 1 to which the petitioner is entitled under section 54r,3)(ii) within certain specified time; and. Counsel for the Petitioner: Dr. S.R.R. VISWANATH counsel for the Respondent Nos.1 to 3: SRr L. VENKATESWAR RAo, SENIOR S.C, FOR COMMERCIA L TAX Counsel for the Respondent No.4: THE ASSISTANT SOLICITOR GENERAL

The Court made the following: ORDER

THE HON'BLE THE CHIEF JUSTIC E UJJAL BIIUYAN AND THE HON'BLE MRS JUSTICE SUREPALLI NANDA ORDER: Per ttle Ho^'ble the Chief Justi.e UjjaL llhuyen) Heard Dr. S.R.R.Viswanath, learned counsel for the petitioner and Mr. L.Venkateswar Rao, learned counsel for respondents No.1 to 3. 2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a declaration that para 3.2 of Circular No.135/05/202O-GST, dated 31.03.2020, of the Central Board ol Indirect Taxes and Customs (briefly, the Board' hereinafter) is ultra uires Section 54(3)(ii) of the Centra1 Goods and Services Tax Act, 2017 (briefly, 'the CGST Act' hereinafter). Petitioner further seeks a direction to respondent No.1 lor refund of Rs.77,01,111.00 in terms of Section 54(3[ii) of the CGST Act.

3.

When the matter was listed on 20 '06 ''2022, = Mr. L.Venkateswar. Rao, lea-rned counsel for respondents I I WRIT PETITION No.261OO of 2022

2 No. 1 to 3, u'as granted time to obtain instructions on the grievance expressed by the petitioner for refund.

4.

In the hearing today, Mr. L.Venkatesrvara Rao, learned counsel for respondents No.l to 3 has placed before us a copy of Circular No.l73/05/2022-GST, dated 06.07.2022, of the Board. As per the said circular, it has been clarified that in cases where the supplier is ma-king supply of goods under a concessional notification and the rate of tax of output supply is less than the rate of ta:. on input supply (of the same goods) at the same point of time due to supply of goods by the supplier under such concessional notification, refund of accumulated input tax credit on account of inverted structure as per clause (ti) of sub-section (3) of Section 54 of the CGST Act would be allowed in those cases where accumulation of inpul_ tax credit is on account of rate of tax on outward supply treing less than the rate of tax on inputs (same goods) a1_ the same point of time, as per some concessional notification issued by the Government providing for lower rate of tax lor some specified supplies subject to fulfiiment of cther I

conditions. As per the said circular pal"a 3.2 of the Circular No.135/05/2020-cST, dated 31.03.2020, has been substituted in the following manner:- "3.2 It mag be noted that refund of accumulated ITC in term.s of clause (ii) of first prouiso to sub-section (3) of section 54 of the CGST Act is auailable uhere the: credit has accumulated on account of rate of tox on inputs being higher than the rate of tax on output supplies. If is noteuorthg thlt, the input and output being the same in such cases, though attracting dffirent tax rates at different points in time, do not get couered under the prouisions of ctause (ii) of the first prouiso to sub-section (3) of section 5a of the CGST Act. \ \

3.

3 There mag howeuer, be cases where though inputs and output goods are same but the output supplies are mad'e under a corrcessional notification due to which the rote of tox on output supplies is less fhan the rate of tux on inputs. In suchcoses' as th'e rate of tax of output supptg is less than the rate of tox on inputs at the same point o7 dme due to supplg of goods bg tle supplier under such concessional notification' the credtt accumulated on accountofthesomeisodmissibleforrefundunderthe O*t*.,* of clause (ii) of the ftrst prouiso to sub'section 'P) of u*,on 54 of the GGST Act' other than the cases where output supplg is either Nit rated or fultg exernpted' and also prouid'ed thot suppt! of such goods or seraces dre not notified ba the Gouemment for their exclusion from refund of accumutated ITC under the said clause " / I

+ ..\

5.

In view of the aforesaid development, learned counsel for respondents No.1 to 3 submits, on the basis of writl_en instructions, that petitioner would be eligible for reftrnd and therefore, the case of the petitioner for refund would be processed.

6.

Having regard to the above, respondent No.l is directed to process the claim of refund of the petitioner in terms of Section 54 of the CGST Act. The said exercise sha-ll be completed within a period of eight weeks from the date ofreceipt ofa copy ofthis order. 7 This disposes of the writ petition. B. Miscellaneous applications pending, if any, shall stald closed. Howevlr, there shall be no order as to costs. //rRUE copy t t'"^ iSSByf,UfREe,lFRiI

1.

The Assistant Comr ,i;^i3#!ili*:lii?iP,3:i,(BILY,F,A;A:Bxtf,,?,Xffi";i;;:&''"'* ", i ff{f-fi$ffi H';iffi : r * rut?:xsr, GJPA\i I \

HIGH COURT DATED:20 t0712022 ORDER ! I I 1 1 ' ./! '7 I s W.P.No.26100 of 2022 q- ar:a c\, t\ ,ii 't,J DISPOSING OF THE WRIT PETITION WITHOUT COSTS / a--s

Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.