Schlumberger Asia Services Limited vs. The Union Of INDIA Thr The Secretary (Revenu) And Ors

Held

The Court held that since the annual returns had been filed and it was unclear whether Respondent No. 4 had an opportunity to consider them, the matter needed to be remanded to Respondent No. 4 for de novo consideration. The Court accepted the petitioner's statement that copies of the annual returns would be supplied to Respondent No. 4 within two weeks. Consequently, the 11 impugned orders dated August 25, 2021, were quashed and set aside, and the matter was remanded for fresh consideration. Respondent No. 4 was directed to dispose of the appeal within four weeks of receiving the copy of the annual returns. The Court also stipulated that if any order was going to be adverse to the petitioner's interest, a personal hearing must be granted at least seven working days in advance, and the final order must be reasoned. The Court expressly stated that no observations were made on the merits of the matter.

Facts

The petitioner, Schlumberger Asia Services Limited, a company incorporated in Hong Kong and registered as a branch office in India, is challenging 11 identical orders dated August 25, 2021, which rejected its appeals. The petitioner had filed claims for refund of unutilized input tax credit for the period April 2018 to March 2019 (excluding May 2018) under Section 16(3) of the IGST Act read with Section 54 of the CGST Act and MGST Act. The appeals were rejected by Respondent No. 4 on the grounds that the returns did not reflect zero-rated turnover. The petitioner contended this was a clerical error, and the zero-rated turnover was reflected in the annual returns filed on March 24, 2021. The appeal memo, filed on March 14, 2021, indicated that the annual return was yet to be filed and would report the zero-rated supplies. Copies of the annual returns were tendered during a personal hearing on July 30, 2021, but were not reflected in the impugned orders.

Key Issues

1. Whether the rejection of the petitioner's appeals by Respondent No. 4, based on the non-reflection of zero-rated turnover in monthly returns, was justified, considering the petitioner's contention of a clerical error and subsequent filing of annual returns reflecting the same. Petitioner's Arguments: The petitioner argued that the non-reflection of zero-rated turnover in the monthly returns was a clerical error. They submitted that the zero-rated supplies were subsequently reported in the annual returns filed on March 24, 2021. The petitioner also stated that copies of these annual returns were provided during the personal hearing granted on July 30, 2021, and that for a subsequent period, a similar situation was permitted to be rectified by accepting subsequent returns. They relied on the principle that clerical errors should not prejudice a taxpayer's legitimate claims. Revenue's Arguments: The revenue contended that the petition did not provide any indication that the annual returns were submitted. They argued that if the annual returns had been submitted as claimed by the petitioner, this fact would have been reflected in the impugned orders.