Tata Steel LTD Formerly Tata Steel Long Products LTD Thro Its Chief Legal Council vs. State Of Jharkhand Through The Secretary Ceommercial Taxes Department

Held

The Court allowed the writ petition, quashing and setting aside the refund rejection order and the appellate order. Regarding the first ground (non-furnishing of receipt of payment within 180 days), the Court held it was invalid as proof of payment is required for export of services, not goods, as per Rule 89(2)(b) and (c) of CGST Rules. It also cited Paragraph 48 of the 2019 Circular stating that insistence on proof of realization of export proceeds for goods is not envisaged in law. For the second ground (non-furnishing of proof of export within 90 days), the Court found that the reconciliation statement showed export within 90 days. It also noted that Rule 96A-3 provides a specific recourse under Section 79, and Paragraphs 45 of the 2019 Circular and 4.6 of the 2023 Circular allow for refunds even if export is beyond prescribed timeframes. The third ground (non-furnishing of declaration of non-prosecution) was held invalid as no such requirement is prescribed, and Paragraph 46 of the 2019 Circular states it's not warranted for exports under LUT. The fourth ground (non-furnishing of undertaking under proviso to Section 11(2) of the Cess Act) was deemed unsustainable as the proviso applies only when zero-rated supplies are made on payment of Integrated Tax, which was not the case here, and Paragraph 42 of the Impugned Circular clarifies this. The fifth ground (non-furnishing of statement as per Para 43(C) of the 2019 Circular) was found inapplicable as it pertains to reversal of credit, which was absent, and the petitioner had submitted a CA certificate stating the Cess was not passed on. The Court directed the respondents to refund Rs. 1,23,22,617/- along with stipulated interest under Section 56 of the CGST Act within 12 weeks.

Facts

The petitioner, TATA Steel Ltd., filed a writ application challenging the rejection of its refund application for Rs. 1,23,22,617/- for the Financial Year 2021-2022. The petitioner manufactures steel and sponge iron, purchases coal on which it pays Compensation Cess, and avails Input Tax Credit (ITC) of this Cess. The petitioner exports goods under a Letter of Undertaking (LUT) without payment of tax, leading to an accumulation of ITC of Cess. The refund application was filed on 30.01.2023. A show cause notice was issued on 24.04.2023, and subsequently, the refund was rejected on 16.05.2023, citing non-furnishing of documents. An appeal against this rejection was also dismissed on 25.10.2023. The petitioner argues that the rejection was based on extraneous grounds beyond the CGST Act, Rules, and binding circulars. The respondents contended that the order was appealable, but the petitioner noted the GST Tribunal was not functional.

Key Issues

1. Whether the rejection of the refund application on the ground of non-furnishing of receipt of payment within 180 days of export is valid, considering Rule 89(2)(b) and (c) of the CGST Rules and Paragraph 48 of the 2019 Circular? 2. Whether the rejection of the refund application for non-furnishing of proof of export within 90 days of the invoice is valid, considering Rule 96A-3 of the CGST Rules and Paragraphs 45 of the 2019 Circular and 4.6 of the 2023 Circular? 3. Whether the rejection of the refund application for non-furnishing of a declaration of non-prosecution is valid, considering Paragraph 46 of the 2019 Circular? 4. Whether the rejection of the refund application for non-furnishing of an undertaking under the proviso to Section 11(2) of the Cess Act is valid, considering Paragraph 42 of the Impugned Circular? 5. Whether the rejection of the refund application for non-furnishing of a statement as per Para 43(C) of the 2019 Circular is valid? Petitioner's arguments: The petitioner contended that the grounds for rejection were extraneous and contrary to the CGST Act, Rules, and binding circulars. They relied on specific rules and circulars to demonstrate that the requirements cited by the revenue were either not applicable to exports of goods, had alternative provisions, or were superseded by later circulars. They also highlighted that the GST Tribunal was not functional, making the writ petition maintainable. Revenue's arguments: The respondents reiterated the grounds taken in the impugned order, stating that the petitioner failed to provide the required documents, including proof of receipt of payment within 180 days, proof of export within 90 days, a declaration of non-prosecution, an undertaking under Section 11(2) of the Cess Act, and a statement as per Para 43(C) of the 2019 Circular.