The Madras High Court in the case of M/S. SRI KRISHNA TEXTILE MILLS, REPRESENTED BY M. KANAGARAJ VERSUS THE ASSISTANT COMMISSIONER, ERODE vide  W. P. No. 10141 of 2024 And W. M. P. No. 11190 of 2024 dated 18.04.2024, set aside the impugned order passed by the department, rejecting refund claim on account of unutilised input tax credit merely on the ground that the inverted turnover does not match the GSTR returns. Further, the departed have erred to process the refund application  in accordance with Circular No.135/05/2020 – GST dated 31.03.2020. The Court directed the department to consider the relevant documents, including invoices raised by the supplier and invoices issued by the petitioner in respect of outward supplies which were already submitted by the petitioner. 

Facts of the Case:- In this case, the petitioner engaged in the business of manufacturing and supplying cotton yarn out of combed cotton and synthetic stable fibre. The Petitioner filed refund application on account of the fact that the inputs purchased by the petitioner are taxed at higher rates than the output (i.e. inverted duty structure) . However, the application was rejected on the ground that the inverted turnover does not match the GSTR returns.

The petitioner has challenged the order rejecting the refund application of unutilised input tax credit, contending that they had submitted invoices issued by the supplier and invoices raised by the petitioner in relation to outward supply. Further, the department while processing the refund application, has not followed the CBIC Circular No. 135/05/2020 – GST dated 31.03.2020. 

Held:- The High Court observed that all relevant documents, including invoices raised by the supplier and invoices issued by the petitioner in respect of outward supplies were submitted. The Department should have examined the application in accordance with Section 54 of applicable GST enactments, the rules framed thereunder and the aforesaid Circular. 

The Court set aside the impugned order and directed the respondents to consider the refund application of the petitioner following the mandate of circular Circular No.135/05/2020 dated 31.03.2020. 

The relevant portion of the aforesaid Circular states as under,

“5. Guidelines for refunds of Input Tax Credit under Section 54(3)

5.1 In terms of para 36 of circular No. 125/44/2019-GST dated 18.11.2019, the refund of ITC availed in respect of invoices not reflected in FORM GSTR-2A was also admissible and copies of such invoices were required to be uploaded. However, in wake of insertion of sub-rule (4) to rule 36 of the CGST Rules, 2017 vide notification No. 49/2019-GST dated 09.10.2019, various references have been received from the field formations regarding admissibility of refund of the ITC availed on the invoices which are not reflecting in the FORM GSTR-2A of the applicant.

5.2 The matter has been examined and it has been decided that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. Accordingly, para 36 of the circular No. 125/44/2019-GST, dated 18.11.2019 stands modified to that extent. “

To read the complete judgment 2024 Taxo.online 772