M/S Pearl Drinks Limited Sidco Industrial Complex Bari Brahmana Jammu vs. Union Of Iundia Th The Assistant Commissioner Central Goods And Service Tax Jammu And Another

Held

The High Court held that the issuance of the clarification by the Finance Department necessitated a revisiting of the petitioner's claim by the Adjudicating Authority. The Court quashed the impugned orders passed by the respondents. The matters were remanded to the respondents to reconsider the entire issue in light of the clarification issued by the Department of Finance, UT of Jammu and Kashmir, bearing No. FD-ST/29/2022-03 dated 26.04.2022, and to pass appropriate orders on merits. The Court did not decide the merits of the budgetary support claim itself but directed a fresh consideration based on the departmental clarification. The ratio decidendi is that where a departmental clarification is issued that impacts the interpretation of a scheme under which claims were rejected, such claims should be reconsidered by the original authority.

Facts

The petitioner, M/s Pearls Drinks Ltd., filed a writ petition challenging orders dated 14.02.2020 and 09.10.2020 passed by the State and Central Tax Authorities. These orders rejected the petitioner's claim for reimbursement under the Budgetary Support Scheme, notified by various government notifications. The rejection was based on the ground that eligible units must first utilize input tax credit of State Tax and integrated tax before claiming cash tax payments. The petitioner's appeal against the rejection was dismissed by the Appellate Authority, which held there was no provision for appeal in such cases. Subsequently, a clarification was issued by the Financial Commissioner of the Finance Department, UT of Jammu and Kashmir, on 26.04.2022, regarding the determination of reimbursement amounts under the scheme.

Key Issues

1. Whether the rejection of the petitioner's claim for budgetary support, by mandating the utilization of input tax credit of State Tax and integrated tax before allowing reimbursement on cash tax paid, is contrary to the Budgetary Support Scheme as envisaged by the Government of India? Petitioner's Arguments: The petitioner argued that the budgetary support should be calculated on the quantum of cash tax paid through the cash ledger account on a monthly basis, not on a quarterly basis as adopted by the Adjudicating Authority. They contended that the rejection of their claim was illegal and arbitrary and ran contrary to the scheme. They also highlighted that a subsequent clarification issued by the Financial Commissioner addressed the doubts regarding the formula for determining reimbursement, suggesting the need for reconsideration. Revenue's Arguments: The learned Advocate General, on behalf of the respondents (Union of India and another), fairly submitted that the matters need to be remanded and reconsidered afresh by the Adjudicating Authority in light of the clarification issued by the Department of Finance.