M/S. Sterlite Power Transmission LTD vs. The Additional Commissioner (Appeals) CGST And Ors

Held

The Court held that the petitioner was not entitled to a refund of Rs. 78,20,202/- paid through the electronic cash ledger. The Court reasoned that the petitioner had duly discharged its output tax liability for March 2021 by making the payment through the electronic cash ledger. The blocking and subsequent unblocking of ITC by the SGST authorities, while not ideal, did not result in a duplication of tax payment for that period. The accumulated ITC in the electronic credit ledger, even if unutilized due to the petitioner not undertaking business, could be utilized for future tax liabilities. The Court found that the conditions stipulated under Section 54(3) of the CGST Act, 2017, for claiming a refund of unutilized ITC were not met, as the petitioner's situation did not fall under zero-rated supplies or a scenario where input tax rates exceeded output tax rates. The Court concluded that the petitioner had sought a refund under a misconception of law, as there was no duplication of tax payment. Therefore, the impugned order rejecting the refund claim was not found to be illegal.

Facts

The petitioner, M/s Sterlite Power Transmission Ltd., had its electronic credit ledger blocked by SGST authorities on March 20, 2021, for the tax period March 2021. To meet its output tax liability, the petitioner paid Rs. 78,20,202/- through its electronic cash ledger. The credit was unblocked on July 7, 2021. The petitioner then filed a refund claim for the amount paid via the cash ledger, arguing it was an excess payment due to the blocked ITC. The Assistant Commissioner, CGST, rejected the refund claim, stating there was no provision for refunding tax paid against liability when ITC was available. The Additional Commissioner (Appeals), CGST, upheld this rejection. The petitioner challenged these orders before the High Court, seeking a refund of Rs. 78,20,202/- with interest.

Key Issues

1. Whether the petitioner is entitled to a refund of Rs. 78,20,202/- paid through the electronic cash ledger, when the input tax credit (ITC) in its electronic credit ledger was blocked and subsequently unblocked, under Section 54 of the CGST Act, 2017? Petitioner's Argument: The petitioner contended that the unauthorized blocking of ITC led to an excess payment of Rs. 78,20,202/- through the electronic cash ledger for the March 2021 liability. They argued this refund is permissible under the "any other" category or "refund of excess payment of tax" as per Circular dated 18.11.2019, and that the accumulated ITC should be refunded as they are not undertaking business and have no future output tax liability. Revenue's Argument: The respondents (CGST and State) argued that Section 54(3) of the CGST Act, 2017, does not permit refund of unutilized ITC in cases other than zero-rated supplies or where input tax rate is higher than output tax rate. They asserted that the petitioner did not discharge tax in excess of self-declared liabilities and that the ITC was available for utilization in later periods. They also noted that the blocking of ITC by SGST authorities was not a subject of litigation and that the petitioner consciously chose to pay via cash ledger.