Form GST APL-01

[See rule 108(1)]

  Appeal to Appellate Authority

1.		GSTIN
2.		Legal name of the appellant –
3.		Trade name, if any –
4.		Address –
5.		Order no. –			Order date –  08.01.2020
6.		Designation and address of the officer passing the order appealed against –			Assistant  Commissioner,
7.		Date of communication of the order appealed against –			08.01.2020
8.		Name of the authorized representative and address for communication  –
9.		Details of the case under dispute –			GST paid on Notice pay and bond amount during 2017-18(September), claimed as refund as no GST is payable on the same as per FAQ issued by CBIC. GST paid on taxable supplies received from unregistered suppliers during 201718(September) claimed as refund as no GST is payable on the same as per notification issued by CBIC. The refund application was filed for the above, after uploading of Form GSTR-9 and 9C as Form GSTR-9 is the authentic document for claiming refund as per CBIC circular / press release.
(i)		Brief issue of the case under dispute –			Refund claim rejected on account of time bar, no discussion or decision in the order on merits of the case submitted to Adjudicating Authority. Full details of the case submitted under Statement of Facts.
(ii)		Description and classification of  goods / services in dispute –			Not  Applicable
(iii)		Period of dispute			September  2017
(iv)		Amount  under dispute			Refund  of  Rs.1,30,115 as stated below
		Description	Central tax		State/UT tax	Integrated tax	Cess
		(a) Tax/Cess	65057.51		65057.51		0
		(b) Interest	N A		N A	N A	N A
		(c) Penalty	N A		N A	N A	N A
		(d) Fees	N A		N A	N A	N A
		(e) Other charges	N A		N A	N A	N A
(v)		Market value of seized goods			Not Applicable
	10	Whether the appellant wishes to be heard in person –			Yes / No
	11	Statement of facts :-			Separately  Stated
	12	Grounds  of appeal :-			Separately  Stated
	13	Prayer :-			Separately  Stated
	14	Amount of demand created, admitted and disputed			Not applicable, being appeal against refund rejection order.

Amount of demand created, Admitted and disputed – Not applicable

Particulars of demand/refund	Particulars		Central tax	State/UT tax	Integrated tax	Cess	Total amount
	Amount of demand created (A)	(a) Tax/Cess	N A	N A	N A	N A	N A	N A
		(b) Interest					N A
		(c) Penalty					N A
		(d) Fees					N A
		(e) Other charges					N A
	Amount of demand admitted (B)	(a) Tax/Cess	N A	N A	N A	N A	N A	N A
		(b) Interest					N A
		(c) Penalty					N A
		(d) Fees					N A
		(e) Other charges					N A
	Amount of demand disputed (C)	(a) Tax/Cess	N A	N A	N A	N A	N A	N A
		(b) Interest					N A
		(c) Penalty					N A
		(d) Fees					N A
		(e) Other charges					N A

15. Details of payment of admitted amount and pre-deposit:-   Not applicable, being appeal against refund rejection order.
(a)		Details of payment required – Not applicable
	Particulars				Central tax	State/UT tax	Integrated tax	Cess	Total amount
			(a) Admitted amount	Tax/Cess	N A         NA	N A         NA	N A         NA	N A         NA	N A		N A
				Interest					N A
				Penalty					N A
				Fees					N A
				Other charges					N A
			(b) Pre-deposit (10% of disputed tax/cess but not exceeding Rs. 25 crore each in respect of CGST, SGST or cess, or not exceeding Rs. 50 crore in respect of IGST and Rs. 25 crore in respect of cess)	Tax/Cess					NA

(b)	Details of payment of admitted amount and pre-deposit (pre-deposit 10% of the disputed tax and cess but not exceeding Rs. 25 crore each in respect of CGST, SGST or cess, or not exceeding Rs. 50 crore in respect of IGST and Rs. 25 crore in respect of cess)  :    Not Applicable

Sr. No.	Description	Tax payable	Paid through Cash/Credit Ledger	Debit entry no.	Amount of tax paid
					Central tax	State/UT tax	Integrated tax	CESS
1	2	3	4	5	6	7	8	9
1.	Integrated tax	N.A.	Cash Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
		N.A.	Credit Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
2.	Central tax	N.A.	Cash Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
		N.A.	Credit Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
3.	State/UT tax	N.A.	Cash Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
		N.A.	Credit Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
4.	CESS	N.A.	Cash Ledger	N.A.	N.A.	N.A.	N.A.	N.A.
		N.A.	Credit Ledger	N.A.	N.A.	N.A.	N.A.	N.A.

(c)

Interest, penalty, late fee and any other amount payable and paid :  N.A.

Sr. No.	Description	Amount payable				Debit entry no.	Amount paid
		Integrated tax	Central tax	State/UT tax	CESS		Integrated tax	Central tax	State/ UT tax	CESS
1	2	3	4	5	6	7	8	9	10	11
1.	Interest	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.
2.	Penalty	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.
3.	Late fee	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.
4.	Others (specify)	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.	N.A.

16.	Whether appeal is being filed after the prescribed period – Yes /No  But within the time as per Notification 35/2020 dated 03-04-2020
17.	If ‘Yes’ in item 17 –
	(a)		Period of delay –
	(b)		Reasons for delay – Covid -19 Lockdown , Notification 35/2020 dated 03-04-2020 and Supreme Court decision reported  in 2020-TIOL-77-SC-MISC-LB
18.		Place of supply wise details of the integrated tax paid (admitted amount only) mentioned in the Table in sub-clause (a) of clause 15 (item (a)), if any:  N.A.
Place of Supply (Name of State/UT)				Demand	Tax	Interest	Penalty	Other	Total
1				2	3	4	5	6	7
				Admitted amount [in the Table in sub-clause (a) of clause 15 (item (a))]	N.A	N.A	N.A	N.A	N.A

 

STATEMENT OF FACTS 

1. The present appeal is against the impugned order passed by the respondent rejecting refund claims of GST paid on Notice Pay receipt and RCM under section 9(4) of the CGST Act 2017. The appellant is a banking company having registered office at ———————- and branches/offices located in 30 States / Union Territories in India. The principal place of business registered in GST for the  State of  Kerala  ……………….    While filing Form GSTR-9,   it was noticed that excess GST was paid.    Therefore, refund application (Form –GST-RFD-01 dated 20.11.2019) was filed online.  A   Show Cause Notice (hereinafter referred to as Notice)  was issued  online proposing to reject the refund claim  on the sole ground that claim was filed beyond the relevant date stipulated under Section 54 of the CGST Act 2017.  No other reason was stated in the Notice for rejection of application for refund.  The said Notice was replied  by the appellant vide HO-CFM (GST) / E /38 / 2019-20  dated 18.12.2019, a copy of which is enclosed herewith as Exhibit- A.   Personal hearing was granted on 18.12.2019 and order in Form GST RFD 06 dated 08.01.2020 was issued on line.  Copy of the order is attached as Exhibit – B.  The GSTN portal generated order does not state any grounds for rejection of the refund application other than a remark “It appears the claim has been filed beyond the relevant date stipulated under Section 54 of GST Act 2017.”   In the reply to the Notice, the appellant had stated how the refund claim arose. Therefore, the transaction details that lead to the payment of GST and the subsequent claim for refund are briefly explained below.

1.1 The refund claims are composed of two amounts viz., (i) excess GST paid on inclusive basis for “Notice pay cum bond amount” recovered  from employees, and (ii) GST paid on reverse charge basis for the purchase  from unregistered suppliers as per “Section 9(4) of CGST Act 2017”.

2. As per the terms of employment, an employee will have to give three months’ notice in the event of resignation, failing which he will have to deposit an amount equivalent to three months’ salary or proportionate salary for the unexpired period of service. Further, as per the terms of employment, an employee will have to execute a bond for a stipulated period of service. For violation of the bond conditions he will have to deposit a stipulated amount. On the amounts thus received, the appellant used to discharge GST liability on inclusive basis under protest in order to take advantage of any legal decisions or Government clarifications declaring that notice pay cum bond amount was not liable for GST, as the matter was under litigation in the erstwhile service tax regime.

2.1. Similarly, in order to take advantage of any subsequent legal decisions or Government clarifications declaring that there is no GST liability under Section 9(4) of CGST Act 2017, the appellant used to discharge GST liability for taxable supplies received from unregistered suppliers on reverse charge basis under protest, and take fifty percent input tax credit on the GST thus paid. Subsequently, Government discontinued the reverse charge mechanism under Section 9(4) of CGST Act 2017 due to practical difficulties faced by the tax payers in computing the same.  For the purpose Notification No. 8/2017- Central Tax (Rate) dated 28-6-2017 was amended, vide Notification No. 38/2017- Central Tax (Rate) dated 13-10-2017. The appellant was of the view that the amendment was retrospective. While filing GSTR-9 necessary adjustments were made. Therefore, the reverse charge liability discharged for the period up to 12.10.2017 was claimed as refund.   Under the above premise, refund application was filed online which was rejected after the due process of adjudication by the jurisdictional Assistant Commissioner, ……………………….   The appeal is filed manually as the same cannot be filed electronically. The same is also within the time limit as per Notification 35/2020 –Cental Tax – dated 03-04-2020  and Supreme Cout’s decision reported in 2020-TIOL-77-SC-MISC-LB  , though 90 days’ time  expired from date of receipt of  Order –in –Original.

GROUNDS OF APPEAL

3. The appellant had submitted in the reply  to the Notice, the issue on merit and on limitation. The Adjudicating authority has not discussed the issue on merit or on limitation in the order.  The refund was rejected for the sole reason that the claim was time barred.  There being no discussion on the submissions made by the appellant   it is a non-speaking order liable for dismissal by the appellate authority. CBIC vide circular No.1053 /02/2017 – CEX dated 10.03.2017 have reiterated the need for a reasoned and speaking order on adjudication.  Relevant part of the circular is reproduced below.

 “14.5 Adjudication order: The adjudication order must be a speaking order. A speaking order is an order that speaks for itself. A good adjudication order is expected to stand the test of legality, fairness and reason at higher appellate forums. Such order should contain all the details of the issue, clear findings and a reasoned order.

14.6 Analysis of issues: The Adjudicating authority is expected to examine all evidences, issues and material on record, analyse those in the context of alleged charges in the show cause notice. He is also expected to examine each of the points raised in the reply to the SCN and accept or reject them with cogent reasoning. After due analysis of facts and law, adjudicating authority is expected to record his observations and findings in the adjudication order.

14.7 Body of the order: The adjudication order should generally contain brief facts of the case, written and oral submissions by the party, observation of the adjudicating authority on the evidences on record and facts of omission and commission during personal hearing and finally the operating order. At any cost, the findings and discussions should not go beyond the scope and grounds of the show cause notice.”

3.1 As the reasons for rejection of claim on merit are not stated in the order, the appellants are submitting hereunder the grounds for the eligibility for refund on merit as well as on limitation.   GST was paid on Notice pay cum bond amount under protest and GST was also paid on the reverse charge liability under Section 9(4) of the CGST Act 2017.  The GST liability on Notice pay cum bond amount and reverse charge liability under Section 9(4) are separately discussed below.

 GST liability on Notice Pay cum bond amount receipts and ground for refund of GST paid on Notice pay cum bond amount.

4. As per the terms of contract an employee leaving the service without completing the notice period, will have to make payment to the appellant as per the terms of employment. Due to lack of clarity on the GST liability on Notice pay cum bond amount, the appellant paid GST under protest on inclusive method. The payment of GST was made to avoid the interest liability on the demand, if GST was liable to be paid on the Notice pay cum bond amount receipt.  During service tax regime, demand notices were issued for demand of service tax and the matter is getting settled now with the Tribunal decision in the case of (i) HCL Learning Limited v.  CCE cited in 2019 Taxo.online 19 and (ii) the Madras High Court decision in the case of GE T&D India Limited v Dy. Commissioner of Central Excise LTU Chennai cited in 2019 Taxo.online 939. Both the decisions were rendered in the month of November 2019 i.e. before GSTR-9 was filed. The appellants are submitting hereunder the grounds to establish that Notice pay cum bond amount is not liable for GST. 

• The amount received from the employee leaving service is in compliance of employment contract and is covered by Entry 1 under Schedule III of CGST Act 2017. The amount is remitted by the employee/recovered from the employee before the last date of his service, and is quantified based on the salary drawn.
• As the amount paid was to comply with the terms of employment the same is not falling within the meaning of service as defined in the CGST Act, 2017.
• Clarification by way of FAQ by the Ministry of Finance is that GST was not liable on the amount collected from the employee as Notice pay – copy enclosed as Exhibit – C.
• On the amount thus received the appellant used to discharge GST liability under inclusive method under protest to take advantage of any legal decisions or Government clarifications declaring that Notice pay cum bond amount is not liable for GST. Therefore, the amount of GST paid becomes refundable and this is disclosed in GSTR-9 which is the authentic document for claiming refund. As the amount is recovered while the employee is in employment, it is part of the employment contract and this has been clarified by the Government (Department of Financial Services) that the notice pay is not liable for GST. Copy of the employment contract and bond are attached herewith as Exhibit – D.
• The calculations are supported with a Chartered Accountants Certificate. The CA certificate and copy of GSTR-9 are attached herewith as Exhibit – E.
• One of the fundamental conditions for attracting GST is that there should be supply of service. The definition of supply excludes activities or transactions specified in Schedule III. Services by an employee to employer in the course of or in relation to employment is covered by Schedule III. According to the terms of employment the amount paid to the appellant as notice pay cum bond amount is a ‘compensation’ payable by the employee for not serving the notice and bond period. Compensation cannot be a consideration for rendering a service. Compensation arises when there is a loss to compensate. In compensation there is no service rendered by the service provider to service the receiver. 
• To attract GST, first of all there should be rendering of service by one person to other. In the case of employee leaving the service, when compensation is paid for the unexpired period of service, there is no service rendered from the employer’s side. Reference may be made to paragraph 2.3 of the Taxation of Services-An Education Guide wherein it has been stated that the “consideration pre-supposes certain level of reciprocity”. That the grant of pocket money, a gift or reward (which has not been given in terms of reciprocity), amount paid as alimony for divorce would be examples in this category. Therefore, when there is no reciprocity between the appellant and the employee the amount recovered cannot be construed as consideration for any activity provided by the appellant.
• It has been held by Hon’ble Tribunal in HCL Learning Limited v. CCE 2019 VIL 739 CESTAT ALH-ST and Madras High Court in GE T&D India Limited v Dy. Commissioner of Central Excise LTU Chennai 2020 VIL 39 MAD-ST that service tax liability is not attracted   on the Notice pay receipt. 
• As there is no GST liability, the amount of GST paid by the appellant on Notice pay cum bond amount which has been grouped under non – taxable category in GSTR-9 Part II (5)(F) is liable to be refunded. Details of the amount of GST on Notice pay cum bond amount is separately attached (Exhibit-F) verified by a Chartered Accountant. 

GST- Reverse charge liability (RCM) under section 9(4) of the CGST Act 2017and ground for refund of GST paid under Section 9(4) of the CGST Act 2017

5. The appellant had discharged reverse charge liability under section 9(4) of the CGST Act 2017 till 12^th October 2017. Subsequently reverse charge liability was not paid in view of the amendment introduced vide notification No. 38/2017 Central Tax (Rate) dated 13th October, 2017. As the amendment was to remove the difficulty the appellants are of the view that the amendment is retrospective and therefore the GST paid under Section 9(4) of the CGST Act 2017 is liable to be refunded. The amount of GST paid under RCM is included in GSTR-9 Part II, 4(G) which is explained separately with the details of the calculations attached herewith as Exhibit – G. The appellant’s submission in this regard is stated below.

Grounds for refund of GST paid under Section 9(4)

5.1 Section 9(4) of the CGST Act , as existed prior to amendment, provided that if a registered person is a recipient of taxable supply of goods or services or both and the supplier of such goods is unregistered, then the GST liability shall be on the recipient under reverse charge. The said provision read as follows:

“(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both”

5.2 The Government, after considering various representations made by the industry firstly prescribed an exemption from levy of GST under RCM in cases where the value of procurements did not exceed ₹.5,000/- per day, which was implemented right from the date of introduction of GST, i.e. 01.07.2017, prescribed vide Notification. 08/2017-Central Tax dated 28.06.2017. Subsequently, the Government vide Notification No. 38/2017 – Central Tax (Rate) dated 13th October, 2017 amended the earlier Notification by removing the condition, providing for complete exemption from payment of tax under Section 9(4) up to 31.03.2018. 

5.3 The said Notification No.38/2017 was however silent about the date from which the notification shall be effective. The Parliament by enacting Central Goods and Services Tax (Amendment) Act, 2018 amended Section 9(4) by way of substitution and the same reads as follows-

“(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”.

5.4 The aforesaid Section was implemented from 01.02.2019 vide Notification No. 2/2019 – Central Tax dated 29.01.2019  and on the same day, the Central Government has issued another Notification No.1/2019-Central Tax (Rate), whereby the Notification No.8/2017-Central Tax (Rate), supra was rescinded, as the Section itself had got amended. The relevant portion of the Notification reads as follows-

“………. hereby rescinds the notification …. No. 8/2017 – Central Tax (Rate), dated the 28^th June, 2017,……, except as respects things done or omitted to de done before such rescission.

This notification shall come into force with effect from the 1^st day of February, 2019.”

Effect of substitution

6. The next aspect to be examined is whether the substitution of Section 9(4) vide Central Goods and Service Tax (Amendment) Act, 2018 provides an exemption to the appellant from discharging GST on procurements made from unregistered vendor. In this regard, reference may be made to the decision in the case of Commissioner of Income Tax vs. Vatika Township Private Limited reported at (2015) 1 SCC 1, wherein the Apex Court while determining the validity of a retrospective amendment has laid down the following ratio-

“30. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of ‘Interpretation of Statutes'. Vis-à-vis ordinary prose, a legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof.

31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre (1870) LR 6 QB 1, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law.

32. The obvious basis of the principle against retrospectivity is the principle of ‘fairness', which must be the basis of every legal rule as was observed in the decision reported in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. (1994) 1 AC 486. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties.

In any case, we shall refer to few judgments containing this dicta, a little later.

33. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective.

In Government of India and Ors. v. Indian Tobacco Association cited in 2005 Taxo.online 2

The doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra and Ors. cited in 2006 Taxo.online 4

It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here.

34. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectively. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the Assessee. On the contrary, it is a provision which is onerous to the Assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation.”

[Emphasis Supplied]

6.1 Further reference is made to the decision of the Supreme Court in the case of Government of India v. Indian Tobacco Association reported at 2005 Taxo.online 2, wherein it was held as follows-

“27. There is another aspect of the matter which may not be lost sight of. Where a statute is passed for the purpose of supplying an obvious omission in a former statute, the subsequent statute relates back to the time when the prior Act was passed [See Attorney General v. Pougette (1816) 2 Price 381: 146 ER 130].

28. The doctrine of fairness also is now considered to be a relevant factor for construing a statute. In a case of this nature where the effect of a beneficent statute was sought to be extended keeping in view the fact that the benefit was already availed of by the agriculturalists of tobacco in Guntur, it would be highly unfair if the benefit granted to them is taken away, although the same was meant to be extended to them also. For such purposes the statute need not be given retrospective effect by express words but the intent and object of the legislature in relation thereto can be culled out from the background facts.”

[Emphasis Supplied]

6.2 On a perusal of the above discussion it can be observed that the fundamental rule of law is that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. The Principal of fairness is however a recognized test which must be applied before determining the nature of operation.

6.3 In this regard, it can be observed from the Minutes of Meeting of GST Council, that the intention of the Council was always to amend the provision, as it caused a great deal of hardship to both the unregistered supplier and registered recipient. This was also the main reason for the Law Committee to reconsider the provision and make recommendations for amending Section 9(4). Therefore, on application of ‘Test of Fairness’ and after considering the fact that Section 9(4) was amended by substitution, the same shall be applicable retrospectively, i.e. from 01.07.2017 and accordingly RCM liability is not attracted .  

Rejection of refund claim on account of time bar – not justified            

7. The sole ground for rejection of the refund claims by the Adjudicating Authority is that the refund claims were “filed beyond the relevant date as stipulated under Section 54 of CGST Act 2017”. As per Section 54 of CGST Act 2017, refund claim has to be filed within two years from the “relevant date”, and “relevant date” has been defined in Explanation (2) to Section 54 of CGST Act 2017, which means the date of payment of tax. In this connection, it is submitted that the appellants have made the payment of GST under protest in both the cases as the issue of service tax liability on Notice pay cum bond amount was litigated in the erstwhile service tax regime, and the GST liability under Section 9(4) of CGST Act 2017 was disputed all over the country. In GST regime, there is no explicit procedure as were in Central Excise Rule 233B or Service Tax regime to make payment of tax under protest. In service tax regime, the challan contained a field for providing remarks, where an assessee could intimate that the payment is made under protest, which is not available in GST regime.

7.1 It may also be noted that an assessee was given an option to correct the value of supply in Form GSTR-9, if the value of supply as per Form GSTR-1 or Form GSTR-3B was incorrect. Further, the Government had extended the due date for filing Form GSTR-9 for the period from July 2017 to March 2018,  from time to time and the extended due date for filing the same was  31-1-2020. Therefore, any tax paid as part of the monthly returns has to be considered as provisional tax payment, as the final tax liability was determined based on the annual return.

7.2 As per Form GSTR-9 filed by the appellant for the period from July 2017 to March 2018, there was an excess payment of tax aggregating to Rs. 61,89,033.74, which was liable to be refunded, as the payment was made under protest and also on a provisional basis.  

In Maftlal Industries v Union of India 1997 (89) E.L.T. 247 (S.C.) Hon’ble Supreme Court observed in para 83 that:

“…….second proviso to Section 11B (as amended in 1991) expressly provides that “the limitation of six months shall not apply where any duty has been paid under protest”. Now, where a person proposes to contest his liability by way of appeal, revision or in the higher courts, he would naturally pay the duty, whenever he does, under protest. It is difficult to imagine that a manufacturer would pay the duty without protest even when he contests the levy of duty, its rate, classification or any other aspect.”

It has been consistently held by the Hon’ble Tribunal that if the tax payment is disputed by the assessee, then that by itself shows that the payment was made under protest. Reliance is placed on the following decisions.

• Hutchisom Max Telecom Pvt. Ltd. v. CCE, Mumbai – cited in 2004 Taxo.online 2
• Steel worth Ltd. v. CC, Calcutta cited in 2002 Taxo.online 3
• Bayshore Glass Trading Pvt. Ltd. v. CC – cited in 2002 Taxo.online 4

7.3As there is no built in provision for payment of tax under protest in GST law, the payment made must be considered as payment under protest, if the payment is subsequently disputed by the tax payer. Further, it is submitted that due to the practical difficulties involved in statutory compliance, the Government had issued a clarification by way of Press Release dated 3-7-2019, wherein it has been clarified, inter alia—

“b) Primary data source for declaration in annual return: Time and again taxpayers have been requesting as to what should be the primary source of data for filing of the annual return and the reconciliation statement. There has been some confusion over using FORM GSTR-1, FORM GSTR-3B or books of accounts as the primary source of information. It is important to note that both FORM GSTR-1 and FORM GSTR-3B serve different purposes. While, FORM GSTR-1 is an account of details of outward supplies, FORM GSTR-3B is where the summaries of all transactions are declared and payments are made. Ideally, information in FORM GSTR-1, FORM GSTR-3B and books of accounts should be synchronous and the values should match across different forms and the books of accounts. If the same does not match, there can be broadly two scenarios, either tax was not paid to the Government or tax was paid in excess. In the first case, the same shall be declared in the annual return and tax should be paid and in the latter all information may be declared in the annual return and refund (if eligible) may be applied through FORM GST RFD-01A. Further, no input tax credit can be reversed or availed through the annual return. If taxpayers find themselves liable for reversing any input tax credit, they may do the same through FORM GST DRC-03 separately.”

[Emphasis supplied]                      

7.4 As the appellant have paid GST which was legally not liable to be paid , all information has been declared in Form GSTR-9 filed,  and GSTR-9 being the authentic document  for claiming refund, claim filed on the basis of GSTR-9 is valid and within the time . The rejection of refund on the basis of limitation is not justified, especially in view of circular dated 3-7-2019

PRAYER

1. For setting aside the impugned order No ———————————

2. For attending personal 

3. Prayer for leave , in respect of the submissions aforementioned ,for adding thereto or deleting therefrom, any matter or for making any clarifications or for adducing further evidences , inrespect thereof and for presenting further douments, in connection therewith  if  so require.

4. For any other consequential reliefs arising in terms of (a) above.

5. For such other order / orders as may be deemed fit and proper in the facts and circumstance of the case.

 Verification

I, ………………………………………….  hereby solemnly affirm and declare that the information given herein above is true and correct to the best of my knowledge and belief and nothing has been concealed therefrom.

Place                                                                                    Name of the Applicant