M/S Aggarwal Pipes Through Its Proprrietor Vinod Ramkumar Goyal vs. The Union Of INDIA Through The Secretary And Others

Held

The Court held that the Writ Petition deserved to be allowed. It was undisputed that the petitioner's application for refund of the excess amount was allowed by Respondent No. 3. However, instead of refunding the amount in cash, it was credited to the petitioner's Electronic Credit Ledger. Taking into consideration the peculiar facts and circumstances of the case and specifically Clause 4.4 of Circular No. 135/05/2020-GST, the Court found that the petitioner was entitled to the benefit of the said Circular. Therefore, the Court directed the respondents to take appropriate steps to refund the amount in cash. The operative direction was that the Writ Petition is allowed in terms of prayer clause-B, and the respondents shall take appropriate steps within twelve (12) weeks from the date of receipt of a copy of the order.

Facts

The petitioner, Aggarwal Pipes, a registered taxpayer, filed its GSTR-3B for April 2018 on 19.05.2018. Due to technical glitches, this return was automatically reset on 26.09.2018, which reduced its Electronic Credit Ledger balance by Rs. 40,98,933/-. Subsequently, the GST portal generated a PMT-6 Challan for Rs. 54,88,610/- towards liability for February 2020, compelling the petitioner to pay in cash despite having sufficient Input Tax Credit (ITC). This issue was highlighted when filing annual returns for 2018-19 and 2019-20, with a remark indicating the April 2018 return was not filed. The petitioner contends that the respondents recovered an excess amount of Rs. 40,98,933/- in cash due to these technical issues. An application for refund of this excess amount was allowed, but the respondents credited it to the Electronic Credit Ledger instead of refunding it in cash.

Key Issues

1. Whether the respondent authorities ought to have refunded the excess amount of Rs. 40,98,933/- in cash to the petitioner, instead of crediting it to the Electronic Credit Ledger, in light of Circular No. 135/05/2020-GST dated 31.03.2020? Petitioner's Contention: The petitioner argued that the respondents should have refunded the excess amount in cash as per Clause 4.4 of Circular No. 135/05/2020-GST. This clause stipulates that where tax has been paid by debiting both electronic cash and credit ledgers for supplies other than zero-rated supplies, the refund should be proportionately paid in cash and credit. The petitioner asserted that the excess amount recovered in cash should have been refunded in cash. Respondents' Contention: The respondents contended that the Writ Petition was misconceived and deserved to be dismissed.