Tvl.Mallow International vs. The Commissioner Of Commercial Taxes
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The petitioner, Tvl. Mallow International, filed a writ petition challenging the refund rejection order No.ZB3309200729987 in Form GST RFD-06 dated 26.09.2020, passed by the Assistant Commissioner (ST), Karur. The petitioner sought to quash this order and direct the respondent to honor their refund claim in full. The petitioner argued that for subsequent periods, their refund claims on exports were allowed in light of Circular No.197/09/2023-GST dated 17.07.2023. They contended that remanding the case for re-examination based on this circular would allow them to succeed. The respondents argued that there was no merit in the petitioner's submission, drawing attention to Rule 89(4) of the CGST Rules and the inserted explanation via Notification No.14/2022.
Held
The Court held that the impugned order of refund rejection should be set aside and the case remitted back to the second respondent (Assistant Commissioner (ST), Karur) for fresh consideration. The Court reasoned that while elaborate submissions were made, the petitioner's counsel had suggested re-examining the issue in light of Circular No.197/09/2023-GST dated 17.07.2023. The Court found merit in this approach and decided to allow the writ petition on this basis. The second respondent was directed to pass orders afresh on merits and in accordance with law, considering the petitioner's submissions and paragraph 3 of the aforementioned circular. This exercise was to be completed within eight weeks from the date of receipt of the order. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the impugned refund sanction/rejection order No.ZB3309200729987 dated 26.09.2020, passed by the Assistant Commissioner (ST), Karur, is liable to be quashed? (Question of law) Petitioner's arguments: The petitioner contended that for subsequent periods, their refund claims on exports were allowed in light of Circular No.197/09/2023-GST dated 17.07.2023, specifically paragraph 3, which clarifies the calculation of "adjusted total turnover" under sub-rule (4) of Rule 89 of CGST Rules. They argued that if the case were remanded back to the respondents to re-examine the issue afresh in light of this circular, they might succeed in getting the refund. Respondents' arguments: The respondents argued that there was no merit in the petitioner's submission. They referred to Rule 89(4) of the Central Goods and Services Tax Rules, 2017, for the determination of turnover for refund purposes, and stated that an explanation had been inserted in these rules via Notification No.14/2022, implying the rejection was correct.
Sections Cited
Rule 89(4), Notification No.14/2022-CT
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Cause title — parties, addresses and appearances
ORDER The petitioner has filed this writ petition for a Certiorarified Mandamus to call for records pertaining to the impugned refund sanction/rejection order No.ZB3309200729987 in Form GST RFD-06 dated 26.09.2020, to quash the same and to direct the second respondent to honor the claim of refund in full as claimed. 2.The learned counsel for the petitioner would submit that for the subsequent period, the respondents have allowed the re-fund on the exports made by the petitioner, in the light of the clarification issued by the Principal Commissioner (GST) dated 17.07.2023 in Circular No.197/09/2023-GST. The 2/7 https://www.mhc.tn.gov.in/judis learned counsel for the petitioner would refer to para No.3 of the aforesaid clarification, which reads as under:- “3.Manner of calculation of Adjusted Total Turnover under sub-rule (4) of Rule 89 of CGST Rules consequent to Explanation inserted in sub-rule (4) of Rule 89 vide Notification No.14/2022- CT, dated 05.07.2022.
Doubts have been raised as regarding calculation of "adjusted total turnover" under sub-rule (4) of rule 89 of CGST Rules, in view of insertion of Explanation in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022-Central Tax dated 05.07.0222. Clarification is being sought as to whether value of goods exported out of India has to be considered as per Explanation under sub-rule (4) of rule 89 of CGST Rules for the purpose of calculation of "adjusted total turnover" in the formula under the said sub-rule.
In this regard, it is mentioned that consequent to amendment in definition of the "Turnover of zero-rated supply of goods" vide Notification No. 16/2020-Central Tax dated 23.03.2020, Circular 147/03/2021-GST dated 12.03.2021 was issued which inter alia clarified that the same value of zero-rated/ export supply of goods, as calculated as per amended definition of "Turnover of zero- rated supply of goods", needs to be taken into consideration while calculating "turnover in a state or a union territory", and 3/7 https://www.mhc.tn.gov.in/judis accordingly, in "adjusted total turnover" for the purpose of sub-rule (4) of Rule 89.
On similar lines, it is clarified that consequent to Explanation having been inserted in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022-CT dated 05.07.2022, the value of goods exported out of India to be included while calculating "adjusted total turnover" will be same as being determined as per the Explanation inserted in the said sub-rule.” 3.It is submitted that if the case is remanded back to the respondents to re- examine the issue afresh in the light of the above paragraph, the petitioner may succeed in getting the re-fund as has been allowed for the subsequent period. 4.The learned Government Advocate for the respondents on the other hand would submit that there is no merit in the submission. The learned Government Advocate has drawn the attention to Rule 89(4) of the Central Goods and Services Tax Rules, 2017 for determination of the turn over for the purpose of re- fund. He would further submit that as per Notification No.14/2022, Central Tax, an explanation has been inserted in the Central Goods and Services Tax Rules, 2017 and therefore, there is no merits in the challenge. 4/7 https://www.mhc.tn.gov.in/judis
Al though elaborate submissions have been made, considering the submissions made by the learned counsel for the petitioner that the issue can be re-examined in the light of the circular No 197/09/2023-GST, dated 17.07.2023, content of which has been extracted above, I am inclined to set aside the impugned order and remit the case back to the second respondent to pass orders afresh on merits and in accordance with law, in the light of the submissions made by the learned counsel for the petitioner and in the light of the paragraph 3 of the above circular. This exercise may be carried out by the second respondent within a period of 8 weeks from the date of receipt of a copy of this order. 6.Accordingly, this Writ Petition stands allowed. No costs. Index : Yes / No 02.04.2024 Internet : Yes / No mm 5/7 https://www.mhc.tn.gov.in/judis To 1.The Commissioner of Commercial Taxes, O/o. the Principal and Special Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai 600 005. 2.The Assistant Commissioner (ST), Karur – 2, Assessment Circle, Commercial Taxes Building, North Pradakshnam Road, Karur 639 001. 6/7 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
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Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.