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Case Title: Ohmi Industries Asia Private Limited Versus Assistant Commissioner

 Case No.: W.P.(C) 6856/2022

Date: 29.03.2023

CORAM: HON’BLE MR. JUSTICE VIBHU BAKHRU HON’BLE MR. JUSTICE AMIT MAHAJAN

Facts of the case

Rule 89(4) from the Central Goods and Service Tax Rules 2017 is not applicable to claims for the reimbursement of integrated tax paid on a zero-rated supply, as determined by the Delhi High Court.

Rule 89(4)’s first language makes it abundantly apparent that it only applies to situations of zero-rated provision of services or goods without receipt of tax with an agreement or letter of undertaking, as pointed out by the bench of Justices Vibhu Bakhru and Amit Mahajan.

Petitioner argued that it was not asking for a refund of accumulated ITC but of integrated tax as paid through him, and it was claimed that there was no question that the petitioner released his liability for paying the amount of integrated tax, so Rule 89(4) of the Rules did not apply. The combined tax on the shipment of services (zero-rated supply) for invoices issued in the month of October 2018 was Rs 3,99,187, and the petitioner/assesses have applied to have that money back. In November 2018, the applicant was given the Foreign Inward Remittance in payment of the bills.

A deficiency notice was issued by the deciding body requesting the Foreign Inward Remittance Certificate from the petitioner. The petitioner acted in accordance. A Show Cause Notice was issued by the Adjudicating Authority, which posed several questions about the discrepancy in tax payments. The Adjudicating Authority also had questions since the petitioner’s GSTR 2A did not match the Input Tax Credit (ITC) that was reported for four separate invoices.

The petitioner wrote a letter with the relevant details on July 21, 2020. A review of the order issued by the Adjudicating Authority shows that it denied the petitioner’s request for a refund of integrated tax. independent verification that the petitioner paid Rs. 12,02,165 in integrated tax on October 2018 bills GSTR 3B reflected the change as well.

Courts Analysis and Decision

While calculating the refund amount, the Adjudicating Authority used the methodology outlined in Sub-clause (D) of Rule 89(4) of the Central Goods and Services Tax Rules 2017, which led to the denial of the petitioner’s claim. Based on when those payments were made, the deciding body determined that the revenue reported for October 2018 should be included as November 2018 revenue. Following payment of integrated tax, the petitioner claimed a reimbursement for zero-rated supplies made under the Integrated Goods and Services Tax Act 2017.

The court took note of the appellate body’s automatic rejection of the petitioner’s the petitioner is wrongly assumed to be requesting a return of ITC that was previously accrued in an appeal. The court reversed the Adjudicating Authority’s decision to deny the assesses request for a refund on the basis that the supply was zero-rated.

Judgment- click here to review the judgment

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Written by- Anushka Satwani