The Hon’ble High Court of Madras vide its order dated 15.12.2022 in the matter of Easwaran Brothers India Private Limited Represented by its Director Mr. U. Sundaramaharajan Vs. The Assistant Commissioner (ST) (FAC) Perur Circle Coimbatore in W.P.No.33593 of 2022 And W.M.P.No.33048 of 2022 in W.P.No.33593 of 2022, held that the dealer/assessee cannot compelled for carrying forward the balance of accumulated Input Tax Credit to GST regime, for which it has already opted for refund at the time of introduction of GST in July, 2017.

The Petitioner filed the Writ petition before the Hon’ble High Court challenging the notice dated 25.11.2022 bearing reference No.33291026289/2022/A4 issued by the respondent.

Facts: –

• The petitioner company was a registered dealer in the erstwhile ‘Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu Act No. 32 of 2006). That on introduction of GST in July, 2017, the erstwhile TNVAT Act got subsumed in the GST Act.
• The Dealers who had unutilized balance of ITC (Input Tax Credit), had the option of either seeking refund or to carry forward the ITC to GST regime.
• The writ petitioner opted for refund, however, due to technical glitch in the such option, the matter travelled to Hon'ble Supreme Court vide Filco Trade case [Union of India and another Vs. Filco Trade Centre Pvt. Ltd., and another {MANU /SCOR /64133 /2022}] and Hon'ble Supreme Court in and by an order dated 22.07.2022 made in Special Leave to Appeal C.Nos.32709/2018 & 32710 of 2018 directed the Department to open a common portal for availing transitional credit through TRAN-1 and TRAN-2 for two months i.e., with effect from 01.09.2022 to 31.10.2022, which was later on extended up to 2024.
• Thereafter, the petitioner’s request for refund was processed and an order (provisional refund order) dated 06.10.2022 was passed bearing reference TIN No.33291026289/2017-18. That through the said provisional refund order, it was made clear that the writ petitioner is entitled to refund of Rs.13,36,741/- of accumulated ITC for the assessment year 2017-18.
• That while the refund claim of the petitioner was pending, the petitioner was issued with the impugned notice requesting it to opt for the latter option of ‘carrying forward the ITC to GST regime.’

It was submitted on the behalf of the petitioner that there are two options to avail the benefit of balance of ITC i.e., carry forward and refund, and when the petitioner has opted for refund, the impugned notice/order ought not to have been issued particularly when a provisional refund order has been issued after processing the refund application.

Replying to the above, it was submitted on the behalf of the respondent that dealer had mistakenly reversed ITC in June 2017, which has led to issuance of impugned notice.

Held: –

• The Hon’ble Court after considering the submissions made and the facts of the case, found that it is clear that the dealer in the instant case has two options i.e., refund or carrying forward the ITC to GST regime. However, the dealer opted for the former not latter, and now both the options are active till 2024.  Hence, the dealer cannot be compelled to opt for one of the two i.e., refund or carrying forward the ITC to GST regime.  It is after all an option given to the dealer.
• That in the instant case, the case of the writ petitioner is supported by the provisional refund order passed by the same respondent, which clearly quantified the entitlement of the writ petitioner at Rs. 13,36,741/-. Therefore, it was held by the Hon’ble Court that the impugned notice has been erroneously issued and the same deserves to be set aside.

The Hon’ble Court with the above findings, set aside the impugned notice as the refund has already been opted by the petitioner, which has been processed by the Revenue and also the refund order has been passed.  It was directed to the respondent to ensure that the refund as quantified in 06.10.2022 [bearing reference TIN No.33291026289/2017-18] provisional refund order by provisional refund order is made available to the petitioner as early as possible, or maximum within three weeks from today.