the essay of 21 June 2023 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="663399">June 21, 2023</font></strong></font></p> <p align="center"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Mystery of the missing order</strong></font> </p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u><strong>By Vijay Kumar</strong></u></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><STRONG>IN</STRONG> a surprising twist, it turns out even the mighty taxmen can get tangled up in their own web! This week's tale revolves around the colossal Steel Authority of India, specifically its Bokaro Steel Plant, and their epic battle against the power of government servants.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> As in all good stories, the end was a happy one for the hapless taxpayer – at least as of now, as the SAIL got a justified relief from the Jharkhand High Court. Here is the story as decided by the High Court last week in - <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTc2NTYy" target="_blank"><strong>2023-TIOL-687-HC-JHARKHAND-GST</strong></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our protagonist, Steel Authority of India, Bokaro Steel Plant, known for their iron and steel prowess, filed for a refund of unutilized ITC for the year 2017-18, amounting to a whopping Rs. 2,90,86,294/-. Imagine their surprise when they discovered that the refund had been sanctioned! Well, not really, because the jurisdictional officer conveniently forgot to issue the payment advice. But don't worry, they assured our hero it was due to some "technical difficulties." Classic move, right?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Petitioner checked the status of its Refund Application online and in the online portal, it was clearly reflecting that refund of the Petitioner has been sanctioned for an amount of Rs. 2,90,86,294/- and payment advice in RFD- 05 was yet to be issued by the jurisdictional officer. Although Petitioner received such communication in its online portal as well as e-mail, payment advice in RFD- 05 was not issued by the jurisdictional officer and, hence, Petitioner's representative met Respondent No.3 (the concerned GST Officer) for issuance of payment advice, but it was informed that refund payment advice could not be issued due to some technical difficulties which Respondents are trying to resolve. Thereafter, Petitioner filed several representations and repeatedly followed up with Respondent-authorities for issuance of refund payment advice, but, in vain.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After a lapse of about two and half years, despite repeated follow-ups by the Petitioner, Respondent No.3, for the first time, vide its Letter No. 155 dated 9th April, 2022, communicated to the Petitioner that the erstwhile Deputy Commissioner of State Tax, Bokaro Circle, had passed an order on 22.10.2019 in Form RFD 01-B, wherein its application for refund has been rejected. Petitioner, immediately on receipt of the said information, applied for certified copy of the entire order-sheet including certified copy of RFD 01-B as well as the purported order passed pertaining to rejection of its claim for refund.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The Petitioner was supplied certified copy of Form RFD 01-B, wherein the order rejecting refund was described as 'Order No. 91 dated 18.10.2019', but Petitioner was not supplied the said order by Respondent-authorities. Since no order rejecting refund was supplied to the Petitioner, the Petitioner, thereafter, again filed representations before Respondent-authorities for processing its claim for refund and to issue consequential order of refund including interest, as, there was no order in the records rejecting refund application of the Petitioner.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, pursuant to said representations, the Petitioner was communicated a letter contained in Memo No. 208 dated 31st May, 2022 informing the Petitioner that refund application of the Petitioner has been rejected by the erstwhile Deputy Commissioner of State Tax, Bokaro Circle, Bokaro through RFD 01-B dated 22.10.2019 and ITC has been re-credited to the electronic credit ledger of the Petitioner and, hence, its request for processing of its refund application cannot be adhered to.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> It is in this background that Petitioner filed the instant writ application.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Pursuant to an order passed by the High Court, a Counter Affidavit has been filed on behalf of the Respondents which categorically admitted that Order No. 91 dated 18.10.2019, as mentioned in RFD 01-B dated 22.10.2019 is not available as per the official record. However, despite the fact that Respondents admitted that there is no order available in the official record of rejecting refund application of the Petitioner, still it was submitted that Petitioner has statutory remedy of preferring an Appeal under Section 107(1) of the Goods and Services Tax Act, and, since Appeal has not been preferred by the Petitioner, writ application is not maintainable. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF"> (please note, appeal against an order which is not available even with the department)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Subsequently, a supplementary counter affidavit was filed by Respondent-Department, wherein a volt face was taken and it was stated that Petitioner should approach the Department by filing a fresh refund application which will be processed by the Department in accordance with law.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In this backdrop, the question for adjudication before the Court was "Whether the petitioner is entitled to claim refund along with statutory interest on the basis of its original application for refund for an amount of Rs. 2,90,86,294/- for the period 2017-18 or it is required to apply afresh for refund of the said amount" ?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department submitted that:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 1. Petitioner has an alternative remedy of preferring Appeal against refund rejection order under Section 107(1) of the Act.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Since refund of the Petitioner has already been rejected and the amount has been re-credited in its electronic credit ledger, Petitioner should file fresh application for refund which shall be considered by the Department and appropriate order for refund shall be passed.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed that it would be evident that:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 1. Petitioner has filed refund application on 04.03.2019 and vide email dated 22.10.2019 and corresponding communication in GSTN Portal, Petitioner was informed that its refund application has been sanctioned which is awaiting issuance of payment advice under RFD-05 by the jurisdictional officer.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Consequent thereto, Petitioner repeatedly followed-up with the Respondent- Department for issuance of payment advice and after a lapse of about 30 months, in the month of April, 2022, Petitioner was communicated for the first time that its refund application has been rejected through RFD 01-B and the refund order is bearing order no. 91 dated 18.10.2019.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. However, copy of the said refund rejection order is not available in the record of the Department.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Admittedly, no opportunity of hearing has been granted to the Petitioner before passing of the purported order of rejection of refund.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court in order dated 30.01.2023, held that in absence of any order either sanctioning or rejecting refund application being available on record, no decision can be said, under law, to be taken on the refund application of the Petitioner and directed the respondent to take decision on the refund application.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> However, despite the order, which has not been challenged by the Respondents, the Respondents have not taken any decision on the refund application of the Petitioner, but instead, filed supplementary counter affidavit again stating that refund application of the petitioner has been rejected vide Order no. 91 dated 18.10.2019 despite the fact that said order is not available in the official record and has contended that petitioner should file refund application afresh.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court saw no reason to accept the said contention of the respondents primarily for three reasons,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Respondents have not produced before the Court Order no. 91 dated 18.10.2019 allegedly passed by Respondent No. 3 by which refund application of the Petitioner has been rejected;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Even if any order was passed rejecting application of the Petitioner, said order was passed in utter violation of the principles of natural justice and without complying with Rule 92(3) of the CGST Rules, which provides for grant of opportunity of hearing before rejection of refund application of an applicant; and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. If Petitioner is directed to apply for refund application afresh, the Petitioner would lose the benefit of statutory interest in terms of Section 56 of the CGST Act, which, otherwise, the Petitioner is entitled as its refund application has been purportedly illegally rejected contrary to the statutory provisions.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court referred to the judgment of Supreme Court in the case of Union of India vs. Tata Chemicals in which it has been held that obligation to refund money received and retained without right implies and carries with it the right of interest. Whenever money has been received by a party which </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#F3DBCF"><em>ex ae quo et bono</em> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ought to be refunded, the right to interest follows, as a matter of course.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> In view of the cumulative facts, the High Court took the view that:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 1. Alleged order bearing Order no. 91 dated 18.10.2019, by which refund application of the Petitioner has been purportedly rejected by the Respondent, is non-est in the eye of law being a non-existing order and the claim of refund of the Petitioner is required to be processed in terms of its original application dated 04.03.2019.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Petitioner is further entitled to interest in terms of the provisions of Section 56 of the CGST Act after expiry of 60 days from the date of receipt of the application for refund i.e., 04.03.2019 @ 6% per annum till the date of payment of refundable amount to the Petitioner.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court directed the Respondents to process the claim of refund along with interest within a period of three weeks.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happened to the refund rejection order? Did it vanish into thin air?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> And so, we bid farewell to the Mystery of the Missing Order, a truly absurd adventure through bureaucratic blunders and legal labyrinths. Positively not the end!</font></p> <p align="justify"> <font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Until Next week</strong></font></p> </body> </html>