Dantara Jewellers Vs. State of Kerala and Ors. – Kerala High Court

📋 Copy Citation

🧠 HeadNote & Summary

(2021) taxcode.in 34 HC

IN THE HIGH COURT OF KERALA

Dantara Jewellers
v.
State of Kerala and Ors.

WP(C) No. 19271 of 2021
Decided on 22-Oct-21

Mr. Justice Bechu Kurian Thomas

Add. Info:

For Appellant(s): Advs. Sri. Harikumar G. Nair, Sri. Akhil Suresh

For Respondent(s): Dr. Thushara James

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Judgment/Order:

JUDGMENT

Petitioner’s claim for refund of tax paid under Central Goods and Services Tax Act, 2017 (for short the Act) have been refused alleging absence of evidence to prove payment of tax by the petitioner. The denial of refund of tax is challenged in this writ petition.

2. A vehicle carrying gold was intercepted under section 129 of the Act. Petitioner paid the amounts as contemplated under section 129(3) of the Act and obtained release of the goods. Petitioner had remitted an amount of Rs.12,26,064/- with the 2^nd respondent through demand drafts in the name of the Proper Officer. Petitioner alleges that the Proper Officer himself created a temporary GST account to make the online payment, and after receiving the demand draft issued on behalf of the petitioner, the detained goods were released. In the meantime, the appeal filed against the order under section 129(3) of the Act, was allowed on 26-02-2021. It was held that there was no evasion of tax or violation of the provisions of law.

3. By virtue of the order in appeal, petitioner became entitled to a refund of the amount deposited under section 129(3) of the Act. Consequently, petitioner applied for a refund of the tax under section 54 of the Act. Curiously, instead of allowing the application for refund as petitioner hoped it would, the Proper Officer issued a show-cause notice to the petitioner seeking his explanation for not rejecting the claim for refund, on the purported reason of absence of details for remittance of tax, as claimed by the petitioner. Petitioner explained that in the early stages, all proceedings were initiated manually and not through electronic system generation and hence the remittance was made by demand drafts. It was also mentioned in the reply that, the amount paid as demand draft was thereafter remitted online and the absence of such remittance, if not available in the online portal, was not the taxpayers responsibility. The reply was not satisfactory to the Proper Officer, and hence, the impugned communication was issued by the 3^rd respondent, rejecting the claim for refund.

4. The communication/order of rejection states that “The claimant had paid CGST and SGST and penalty in a different GSTIN i.e.321900001740TMO dtd 5-10-2019. Whereas this refund application is filed in GSTIN 32AACFD5904GIZX. On further examination it is revealed that no such payment was made in the GSTIN from which this refund application is filed. As such the claimant was held to be not eligible for refund, in the absence of evidence to prove the payment and hence the claim for refund is rejected. It appears refund claims of the tax payer may lie and be preferred against GSTIN 321900001740TMP. Accordingly claim for refund amount of Rs.1226064/- is hereby rejected.”

5. Adv. Akhil Suresh, the learned counsel for the petitioner, submitted that rejection of the claim for refund is contrary to the scheme of the statute and is in fact done in bad taste too. The Proper Officer had created the temporary account for making the online payment pursuant to the deposit offered by the petitioner, and the skewed approach of the Tax Officer was startling and even odious.

6. Learned Senior Government Pleader, Dr. Thushara James, pursuant to instructions, submitted that the reason for rejection, as evident from the order impugned, was that the amount of tax paid at the first instance was through a temporary account which was no longer available and hence the refund could not be granted through that temporary account.

7. On finding the impugned order quite challenging to justify, the learned Government Pleader submitted that the technical glitches during the statute’s transition phase were the reason behind the rejection of refund. However, it was fairly conceded that the petitioner is entitled to refund of the amount claimed and that the respondents will take earnest steps to refund the amount without fail and in a time-bound manner.

8. In view of the aforesaid submissions, though this Court cannot appreciate the nature of impugned communication/order, especially since the third respondent conveys ignorance of the deposit made by the petitioner at the time of obtaining release of the goods, still, taking into consideration the transition phase of the new statute and the temporary glitches that were occurring, as well as the fair submission made by the learned Government Pleader that, the amount shall be refunded to the petitioner, no further discussion need be made on the nature of the order impugned. Suffice to state, respondents 2 and 3 shall refund the amount of Rs.12,26,064/-, due to the petitioner within a period of 30 days from the date of receipt of a copy of this judgment. Needless to mention, interest in accordance with law will also have to follow the refund.

9. Before parting with this case, it is apposite to mention that the Tax Officers under the Act may do well to remember that one of the objectives while heralding in the GST regime was to create a hassle-free refund process. Refund of tax had always been a matter of concern for both the taxpayer as well as the tax administration. The Act intended to change such perspectives and make it efficient and trouble-free. However, an effective and productive system of tax governance must of necessity have, a smooth and non-complicated refund process also. The experience of tax refund must be pleasant and not driven by complications or technical rigmaroles. In fact, the Report of the ‘Joint Committee on Business Processes for GST on Refund Process’ had, as early as August 2015, suggested that tax administration must be made more accountable for early action of refunds.

10. The Act intends to achieve the aforementioned laudable objective through section 54 of the Act, which deals with tax refund. The aforementioned provision specifies that any person claiming refund of any tax, must make an application, before the expiry of two years from the relevant date in the manner and form prescribed. The form is prescribed by Rule 89 of the Rules. Furthermore, section 54(14)(2)(d) of the Act explains that ‘relevant date’ in cases where the tax becomes refundable as a consequence of orders of appellate authorities shall be the date of communication of such order. Thus as per the provisions of the Act, even a person entitled to refund of tax as a consequence of a judgment, decree, order or direction of a Court or the Appellate Authority or the Appellate Tribunal, must file an application for refund in Form GST RFD-01.

11. As per Section 54(5) of the Act, if the proper officer is satisfied that the refund is allowable, he is bound to pass an order and the amount so determined shall be credited to the Fund constituted under section 57 of the Act. However, an exception is carved out for payment of refund to certain categories of applicants. Those are illustrated in section 54(8) of the Act. Clause (c) of section 54(8) is relevant in this context. It provides for a refund to the applicant, if the claim relates to “refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued”. Petitioner in the instant case obviously falls in the afore category.

12. Once an applicant is held to fall in the category of cases for refund under Section 54(8) of the Act, then by application of Rule 92(4) of the CGST Rules, an order has to be issued in Form GST RFD-06, followed by payment advice in Form GST RFD-05. Thereafter, the amount of refund ought to be electronically credited to any of the applicant’s Bank accounts mentioned in the registration particulars and as specified in the application for refund.

13. Thus, if an applicant for refund of tax, is found eligible for the refund, the amount has to be credited to any of the bank accounts mentioned in the registration particulars and mentioned in the application for refund. The source from which or through which the tax amount was initially paid has no relevance while considering the refund application. The GST account through which the amount of tax was paid, has no significance since the ultimate objective is that the taxpayer must get the refund as ordered. Even otherwise, a perusal of the forms prescribed also indicates the irrelevance of the source from which payment was initially made. Both forms – GST RFD-06 and GST RFD-05 provide an option to mention the GSTIN as well as the temporary ID. Even the form for application for refund which is Form-GST-RFD-01 has the option to write the temporary ID. It is thus limpid that refund of tax deposited cannot be denied on the specious plea that payment was made through a different or a temporary account.

14. It is vital for the Proper Officers under the Act to bear in mind that, technical glitches that may occur, shall not stand in the way of ultimate relief of grant of refund to a taxpayer, once he is found eligible. Denying tax refund, even after an appellate forum decides in favour of the taxpayer, does not augur well for the Statute as a whole. Such denials will erode the sanctity of even the scheme of section 129 of the Act. The confidence of the assessees to furnish security or deposit amounts as contemplated under section 129 of the Act, will be affected if refunds are denied on some insignificant technicalities. Denial of refunds on hyper technicalities, as happened in the present case, will be a blot on the statutory intent. The Proper Officers may do well to avoid such recurrences.

15. In view of the above deliberations and to enable the refund of the tax as directed in this judgment, Ext.P9 is set aside. As observed earlier, the amount of Rs.12,26,066/- and interest due to the petitioner shall be refunded within a period of 30 days from the date of receipt of a copy of this judgment.

The writ petition is allowed as above.

BECHU KURIAN THOMAS
JUDGE

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Original judgment copy is available here.