Although the input supplies and the output supplies may attract different tax rates at different point of time, such differences in the tax rates are covered under Section 54(3)(ii) of the CGST Act of 2017. Accordingly the refund of the accumulated unutilized tax credit will be available.
Section 54 of the CGST Act, 2017 – Refund —- Appellate authority traversed beyond the SCN- The petitioner is dealing with IT system integrator and is a service provider for sales and service of information and technology products to Government Departments, PSU and to other Research and Educational Institutes. The petitioner filed a claim for a refund. In response, the department had issued a SCN dated 10.04.2020 that the assessee had misdeclared the amount of total turnover in the claim for the period October – December 2018. Thereafter, the respondent rejected the claim on the ground that the input and output supplies in the instant case being the same, though it may attract a different tax rate, would not be covered under the provisions of Section 54(3)(ii) of the Act, 2017. The petitioner preferred an appeal against the said order but the same rejected. The petitioner submitted that the authority rejected the refund claim on the basis of a ground which was not proposed in the impugned SCN in violation of principle of natural justice. The authority has travelled beyond the scope of the SCN. The court observed that in the instant case the input supplies and the output supplies made by the petitioner assessee are not governed either by a nil rate of tax nor it is governed by fully exempted rate of tax and, therefore, the refund provided under Section 54(3)(ii) would be applicable. The reasoning given by the appellate authority in the appellate order dated 29.10.2020 would also be not sustainable and only reasoning given by the authority is that the issue decided by the Assistant Commissioner was not included in the SCN and, therefore, there was a violation of the principles of natural justice.
Held that:- The Hon’ble High Court set aside both the orders dated 22.05.2020 of the Assistant Commissioner as well as the appellate order dated 29.10.2020.
Although the input supplies and the output supplies may attract different tax rates at different point of time, such differences in the tax rates are covered under Section 54(3)(ii) of the CGST Act of 2017. Accordingly the refund of the accumulated unutilized tax credit will be available.
Section 54 of the CGST Act, 2017 – Refund —- Appellate authority traversed beyond the SCN- The petitioner is dealing with IT system integrator and is a service provider for sales and service of information and technology products to Government Departments, PSU and to other Research and Educational Institutes. The petitioner filed a claim for a refund. In response, the department had issued a SCN dated 10.04.2020 that the assessee had misdeclared the amount of total turnover in the claim for the period October – December 2018. Thereafter, the respondent rejected the claim on the ground that the input and output supplies in the instant case being the same, though it may attract a different tax rate, would not be covered under the provisions of Section 54(3)(ii) of the Act, 2017. The petitioner preferred an appeal against the said order but the same rejected. The petitioner submitted that the authority rejected the refund claim on the basis of a ground which was not proposed in the impugned SCN in violation of principle of natural justice. The authority has travelled beyond the scope of the SCN. The court observed that in the instant case the input supplies and the output supplies made by the petitioner assessee are not governed either by a nil rate of tax nor it is governed by fully exempted rate of tax and, therefore, the refund provided under Section 54(3)(ii) would be applicable. The reasoning given by the appellate authority in the appellate order dated 29.10.2020 would also be not sustainable and only reasoning given by the authority is that the issue decided by the Assistant Commissioner was not included in the SCN and, therefore, there was a violation of the principles of natural justice.
Held that:- The Hon’ble High Court set aside both the orders dated 22.05.2020 of the Assistant Commissioner as well as the appellate order dated 29.10.2020.