Ms Ctc INDIA Private Limited Through Its Authorized Representative Shri Pawan Kumar Choudhary vs. Commissioner Appeals Central Goods And Services Tax And Central Excise

Held

The Court held that the petitioner failed to produce any documentary evidence to substantiate its claim for refund, either before the adjudicating authority or the appellate authority, despite being afforded personal hearings. The Appellate Authority had categorically found that an application for refund of unutilized ITC on account of zero-rated supplies must be accompanied by documentary evidence. The petitioner could not provide any corroborative evidence in the form of documents to substantiate its claim of zero-rated supply, which is essential for validating such claims. The Court noted that merely claiming a refund based on averments is insufficient without documentary corroboration. The Court also found that the claim of violation of the principle of natural justice was unsustainable, as a personal hearing was duly afforded to the petitioner on 31.01.2019, and the petitioner was represented. Consequently, the Court found no reason to interfere with the impugned orders, dismissing the writ application. The ratio decidendi is that refund claims, especially for unutilized ITC on account of zero-rated supplies, must be supported by documentary evidence, and failure to provide such evidence, even after opportunities for personal hearing, justifies rejection.

Facts

M/s CTC (India) Private Limited, a 100% export-oriented unit, filed a writ petition challenging orders rejecting its refund claim of accumulated CGST, SGST, and IGST credit for January 2018, amounting to Rs. 9,89,191. The petitioner had inadvertently shown zero rated supplies as 'zero' in its GSTR-3B return for January 2018, while correctly reflecting Rs. 3,79,82,605 in its GSTR-1 return. The Assistant Commissioner rejected the refund claim via an order dated 07.02.2019. The petitioner appealed this order, but the Joint Commissioner (Appeals) also rejected the claim. The petitioner contended that the authorities failed to consider documents and the definition of adjusted total revenue. The respondents argued that the refund was correctly rejected as the GSTR-3B showed zero rated supplies and the petitioner failed to provide corroborating documentary evidence, despite being granted a personal hearing.

Key Issues

1. Whether the impugned orders rejecting the refund claim are bad in law for non-consideration of facts and documents provided by the petitioner, and for failure to provide an opportunity of personal hearing? 2. Whether the rejection of the refund claim on the ground that zero-rated supply in GSTR-3B was shown as zero, despite being correctly reflected in GSTR-1, is legally sustainable? Petitioner's Arguments: The petitioner argued that the respondents failed to consider all facts and documents submitted and wrongly rejected the refund claim. They contended that the definition of adjusted total revenue under Rule 89(4) of the CGST Rules, 2017, excludes exempted supplies, and their claim falls under exempt supplies as per Section 2(47) of the CGST Act, 2017. They also argued that the rejection based on GSTR-3B showing zero rated supply as zero was erroneous, as GSTR-1 correctly reflected the export value. The petitioner relied on the principle of natural justice, claiming no adequate opportunity for personal hearing was given. Respondents' Arguments: The respondents contended that the refund claim was correctly rejected because the refund amount is calculated based on a formula, and since the value of zero-rated supply in GSTR-3B for January 2018 was zero, the refund amount appeared to be zero. They asserted that a personal hearing was granted on 31.01.2019, which the petitioner attended. They further argued that invoices at certain points were considered, but refund of credit was not admissible under Section 17(5) of the CGST Act, 2017. The respondents maintained that the GSTR-3B is a self-assessment/declaration and the petitioner failed to corroborate their claim with corresponding invoices.