Refund Or Carry Forward The ITC To GST Regime Is Dealer’s Choice: Madras High Court
The Madras High Court has held that the dealer has two options: refund or carry forward the ITC to the GST regime.The single bench of Justice M. Sundar has observed that the dealer cannot be compelled to opt for one of the two, i.e., refund or carry forward the ITC to the GST regime. It is, after all, an option given to the dealer. The provisional refund order issued by the department and...
The Madras High Court has held that the dealer has two options: refund or carry forward the ITC to the GST regime.
The single bench of Justice M. Sundar has observed that the dealer cannot be compelled to opt for one of the two, i.e., refund or carry forward the ITC to the GST regime. It is, after all, an option given to the dealer. The provisional refund order issued by the department and the issuance of what is known as "Form-P" clearly defined the entitlement of the dealer.
The petitioner company was a registered dealer under the erstwhile "Tamil Nadu Value Added Tax Act, 2006." The former TNVAT Act was absorbed when the GST regime went into effect on July 1, 2017. Those dealers who had the "Input Tax Credit" (ITC) had the option of either seeking a refund or carrying the ITC forward to the GST regime. The writ petitioner opted for the refund. There was a technical glitch in the option.
The matter travelled to the Supreme Court in the Filco Trade Case. The Supreme Court, by an order, directed the Department to open a common portal for availing transitional credit through TRAN-1 and TRAN-2 for two months, i.e., with effect from September 1, 2022, to October 31, 2022, which was extended up to 2024.
The petitioner's request for a refund was processed, and the respondent has made a provisional refund order. The department issued a FORM-P qua provisional refund order, stating unequivocally that the writ petitioner was due a refund qua ITC qua assessment year 2017-18. The writ petitioner was yet to receive the refund. The respondent has issued an order requesting the writ petitioner opt for carrying forward the ITC under the GST regime.
The petitioner contended that there are two options, i.e., carry forward or refund, and when the writ petitioner has opted for a refund, the order ought not to have been issued, particularly when a provisional refund order has been issued after processing the refund application.
The department submitted that the dealer has taken the position that it had mistakenly reversed ITC in June 2017 and that this has led to the issue of a notice.
The court has quashed the notice as a refund has already been opted for by the petitioner, it has been processed by the department, and a provisional refund order has also been passed beside the FORM-P, which is a procedural aspect of a refund.
Case Title: Easwaran Brothers India Private Limited Versus The Assistant Commissioner (ST) (FAC)
Citation: 2023 LiveLaw (Mad) 4
Case No: W.P.No.33593 of 2022 and W.M.P.No.33048 of 2022 in W.P.No.33593 of 2022
Date: 15.12.2022
Counsel For Petitioner: Advocate Adithya Reddy
Counsel For Respondent: Government Advocate (Taxes) Amirta Dinakaran