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The respondents are directed to sanction and pay the refund of the balance of CGST and SGST which got artificially inflated as a result of the appropriation of IGST credit.

Section 49 of the CGST Act, 2017— Payment of Tax —–The applicant prayed for quashing Notification no. 26/2017 Custom dated 29.06.2017 to the extent amending Notification no.16/2015 Customs dated 01.04.2015; to quash Trade Notice 11/2018, dated 30.06.2017; to grant refund of Rs. 3,37,79,196/- and interest thereon. Both the counsels agreed that issue raised in this is covered by the judgment of this Court in the case of M/s. Prince Spintex Pvt. Ltd. Vs. UOI, decided on 03/02/2020, wherein it is held that that the petitioner is entitled to refund of the amount paid by it towards IGST with interest. Section 49 was amended w.e.f. 01/02/2019 and Rule 88A was inserted w.e.f.29/03/2019 vide Notification No.16/2019 CT, dated 29/03/2019. The ITC available on account of IGST has to be first utilized for the payment of CGST or SGST. This provision was amended w.e.f. 01/02/2019, but the GST portal started functioning as per the amended provisions w.e.f. 01/06/2019. Therefore, w.e.f. 01/06/2019, the accumulated ITC of IGST of Rs. 3,37,79,196/- started getting utilized automatically during the pendency of the petition. As on date on account of such amendment in operation, the applicants have Nil balance of IGST in its electronic credit ledger and the same is converted into CGST and SGST. Held that:- The Hon’ble High Court allowed the application and directed the respondents to sanction and pay the refund of Rs. 3,37,79,196/- after first reversing the entries of utilization of the subject credit and debiting the said amount from the credit ledger consequently available to the writ applicant, within four weeks.
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