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2024 DIGILAW 2037 (GUJ)

Hilti Manufacturing India Private Limited v. Union Of India

2024-11-20

BHARGAV D.KARIA, D.N.RAY

body2024
JUDGMENT : (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned Senior Advocate Mr.Mihir Joshi with learned advocate Mr.Dhaval Shah for the petitioner and learned advocate Mr.Ankit Shah for the respondents. 2. Issue Rule, returnable forthwith. Learned advocate Mr.Ankit Shah waives service of notice of rule for and on behalf of the respondents. 3. With regard to the controversy arising in this petition which is in narrow compass, the same is taken up for hearing with the consent of the learned advocates of the parties. 4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs : “A. Your Lordships be pleased to issue a Writ of Mandamus of a writ in alun the nature of Mandamus or any other writ, order or direction under Article 226 of the Constitution of India to declare that the ITC of Rs. 9,83,53,032 availed by the Petitioner in the month of July 2021 on Tax Invoice No. VI2124000047 dated 23.07.2021 and VI2124000052 dated 29.07.2021 as validly availed in terms of the provisions of 9 Section 76 of the Act; B. Your Lordships be pleased to issue a Writ of Mandamus or a writ in the nature of Mandamus or any other writ, order or direction under Article 226 of the Constitution of India to declare that the amount of Rs. 9,83,53,032 deposited by the Petitioner vide DRC-03 on 13.01.2013 is not payable in law and is therefore collected without the authority of law, in violation of Article 265 of the Constitution of India and contrary to the provisions of Section 16 read with Section 41 and Section 73/74 of the CGST Act; C. Your Lordships be pleased to issue a writ of Mandamus, or a writ in the nature of Mandamus, or any other appropriate writ, order or direction, directing the Respondents, their servants, agents or representatives to forthwith restore the ITC of Rs. 9,83,53,032 in ECL of Petitioner as if the said ITC has never been reversed.” 5. At the outset, learned Senior Advocate Mr.Mihir Joshi for the petitioner submitted that in view of the subsequent development, prayer A is not pressed and only prayers B and C would survive. 6. The brief facts of the case are as under : 6.1. 9,83,53,032 in ECL of Petitioner as if the said ITC has never been reversed.” 5. At the outset, learned Senior Advocate Mr.Mihir Joshi for the petitioner submitted that in view of the subsequent development, prayer A is not pressed and only prayers B and C would survive. 6. The brief facts of the case are as under : 6.1. The petitioner is engaged in manufacturing and exporting of goods of its overseas parent Company i.e. Hilti Aktiengesellschaft and also undertakes research and development for the said Company. 6.2. The petitioner entered into transaction or purchase of the leasehold rights over land with the Sun Pharmaceutical Industries Limited in Month of March, 2021. The petitioner received the Tax Invoices dated 23rd July, 2021 and 29th July, 2021 in respect of the purchase of leasehold rights along with GST aggregating to Rs.9,83,53,032/-. 6.3. The petitioner exported the goods to its overseas parent Company in Month of July, 2021 and also filed Form GSTR-3B on 20th August, 2021 for the month of July, 2021 and availed the Input Tax Credit (for short ‘the ITC’) of Rs.9,83,53,032/- which was reflected in its Form GSTR-2A for the said month. 6.4. On 03.01.2023, the petitioner filed refund claim of Rs.9,73,40,675/- along with the letter dated 08.12.2022 of accumulated Input Tax Credit on account of exports under Section 54(3) of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) read with Section 16(3)(a) of the Integrated Goods and Services Tax Act, 2017 (for short ‘the IGST Act’) through Form RFD- 01. 6.5. It is the case of the petitioner that the respondent No.4-Senior Intelligence Officer, Directorate General of GST Intelligence, Vadodara Unit visited the premise of the petitioner on 12.01.2023 and made inquiries about the ITC availed by the petitioner on the aforesaid Tax Invoices and asserted that such ITC was wrongly claimed and insisted that the petitioner must reverse the same. The respondent No.4 also issued summons to the petitioner to appear in person before him on 13th January, 2023 and petitioner had to agree to reverse the ITC and submit the letter to that effect on same day i.e. on 12.01.2023 that the petitioner would reverse the ITC on the next day as petitioner was not able to generate Form DRC-03 due to technical issue. 6.6. 6.6. It appears that on 13th January, 2023, the authorised person of the petitioner visited the Office of the DGGI and was again questioned about the refund claim filed by the petitioner and ITC availed by the petitioner on the said Tax Invoices pertaining to transfer of leasehold rights. 6.7. It is the case of the petitioner that the respondent No.4 insisted that the petitioner had wrongly availed the ITC on transfer of leasehold rights and the petitioner was not eligible in terms of provisions of Section 17(5) of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act’) and threatened the authorised person of the petitioner with dire consequences in case the ITC was not reversed. 6.8. It is also the case of the petitioner that due to aggressive posture adopted by the respondent No.4, the petitioner reluctantly agreed and from the premises of DGGI, in the midst of ongoing summons proceedings, reversed the refund claim on the GST portal by reversing the ITC in Form DRC-03. The petitioner also received a notice dated 09.02.2023 from respondent No.3-Superintendent of CGST and Central Excise, Range II, Division VII, Navsari for payment of interest on the ITC reversed by the petitioner on 13.01.2023. The petitioner filed reply dated 14.03.2023 on 15.03.2023 explaining the circumstances in which the ITC was reversed. 6.9. It is the case of the petitioner that subsequently, the authorised person of the petitioner made follow up visit on 30th March, 2023 to the Office of the respondent No.2- Assistant/Deputy Commissioner of CGST and Central Excise, Range II, Division VII, Navsari with a request of restore the ITC which was reversed under compulsion by the petitioner. 6.10. It is also the case of the petitioner that as the petitioner did not receive any response to the communication made by it on subject of restoration of ITC and as the normal limitation period for claiming refund for the month of July, 2021 was expiring in the month of June, 2023, the petitioner filed fresh refund application on 30th June, 2023. However, as per the provisions of Rule 89 of the Central Goods and Service Tax Rules, 2017 (for short ‘the Rules’), as the petitioner has filed the refund application claiming the refund of the ITC, the Electronic Credit Ledger was again debited with the amount of the refund. However, as per the provisions of Rule 89 of the Central Goods and Service Tax Rules, 2017 (for short ‘the Rules’), as the petitioner has filed the refund application claiming the refund of the ITC, the Electronic Credit Ledger was again debited with the amount of the refund. It is therefore the case of the petitioner that there is double deduction, once the reversal of ITC by the petitioner on 13.01.2023 and second time when the petitioner filed the refund claim on 30th June, 2023. 6.11. The respondent No.2 issued a notice in Form RFD-08 on 16th August, 2023 calling upon the petitioner to show cause as to why the refund claim of the petitioner should not be rejected to the extent of ITC availed on transfer of leasehold rights as per the aforesaid two invoices. The petitioner thereafter filed this petition with the aforesaid prayers. 6.12. During the pendency of this petition, final order rejecting the refund claim was passed on 28th August, 2023 in Form RFD-06. Being aggrieved, the petitioner filed an Appeal in Form APL-01 on 07.10.2023 which is pending for adjudication. 7.1. Learned Senior Advocate Mr.Mihir Joshi for the petitioner submitted that the petitioner is willing to pursue the pending Appeal before the Appellate Authority with regard to claim of the refund made by the petitioner on 30th June, 2023. It was submitted that the petitioner, however, is aggrieved by the action of the respondent Nos.3 and 4 compelling the petitioner to reverse the ITC without there being any adjudication order by filing Form DRC-03 which has resulted into debit of Electronic Credit Ledger of the petitioner two times, once when the petitioner was compelled to reverse the ITC and the second time when the petitioner filed the refund claim on 30th June, 2023. 7.2. It was submitted that even if the Appeal filed by the petitioner is allowed, the petitioner would get the refund of only Rs.9,83,53,032/- whereas, the amount already reversed by the petitioner on 13th January, 2023 under compulsion of the respondent No.4 would never be restored. It was therefore submitted that the respondent No.4 should be directed to restore the ITC which was reversed by the petitioner on 13th January, 2023. 7.3. It was therefore submitted that the respondent No.4 should be directed to restore the ITC which was reversed by the petitioner on 13th January, 2023. 7.3. It was further submitted that whether the petitioner is entitled to the refund claimed or whether the petitioner was justified in claiming the ITC on transfer of leasehold rights, the respondents have never initiated any proceedings either under the provisions of Section 73 or Section 74 of the CGST Act. 7.4. It was therefore submitted that the petitioner could not have been compelled to reverse the ITC without there being any adjudication as to whether the ITC claimed by the petitioner in the Electronic Credit Ledger was justified for transfer of the leasehold rights under the provisions of the Act. 7.5. Learned Senior Advocate Mr.Mihir Joshi invited the attention of the Court to the detailed communication dated 08.12.2022 wherein, the petitioner has justified the claim of the ITC and the refund of the same in view of the export of the goods undertaken by the petitioner and the eligibility of the petitioner to claim the refund of the ITC under Section 54(3) of the CGST Act read with Section 16(3)(a) of the IGST Act. It was therefore submitted that the petitioner is entitled to the refund of the ITC already credited or not is subject matter of the Appeal, however, the petitioner could not have been compelled to reverse the ITC at the time of issuance of summons by the respondent No.4. It was therefore submitted that without going into the merits as to whether the petitioner was eligible to claim the ITC or whether the petitioner is entitled to the refund of such ITC which was claimed by the petitioner, the ITC which was reversed by the petitioner on 13.01.2023 should be restored. 8.1. On the other hand, learned advocate Mr.Ankit Shah for the respondent-authorities submits that the petitioner voluntarily reversed the ITC when it was informed that the petitioner has wrongly availed the same on the transfer of the leasehold rights. 8.2. In support of his submissions, reliance was placed on the following averments made in the affidavit-in-reply filed on behalf of the respondents : “Para 9-It is submitted that the averments made by the Petitioner are only correct to the effect that in compliance of the summons dated 12.01.2023, Mr. 8.2. In support of his submissions, reliance was placed on the following averments made in the affidavit-in-reply filed on behalf of the respondents : “Para 9-It is submitted that the averments made by the Petitioner are only correct to the effect that in compliance of the summons dated 12.01.2023, Mr. Dhaval Badheka, Head of Finance &Tax of Petitioner along with two other employees and the Petitioner's tax consultant Mr Nirav Shah, from EY LLP had visited the office of DGGI, Vadodara Regional unit on 13.01.2023. Statement of Shri Dhaval Badheka, Head of Finance & Tax of Petitioner was recorded on 13.01.2023 under Section 70 of the CGST Act, 2017 by the Respondent No. 4., wherein the petitioner was asked in question no. 9 "The said credit amounting to Rs.9.85 crores availed by you on the basis of the invoices raised by M/s. Sun Pharmaceutical Industries Ltd is inadmissible. Further, the term Plant and Machinery has been used in section 17(5)(c) of the CGST Act, 2017. In Section 17(5) of the CGST Act, 2017, the expression, 'plant and machinery' excludes land. With this, expression of Plant and Machinery excluding land, explicitly incorporated in the Blocked Credit section 17(5) of the CGST Act, 2017, which appears to be intended that ITC shall not be available in respect of services pertaining to land. Further, as per section 17(5) of the CGST Act, 2017, ITC shall not be available in respect of goods or services or both received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course of furtherance of business," and in reply of question no. 9, the Petitioner has stated that “As I had put earlier during the course of inspection and our discussion that as per our interpretation of the act, that the said ITC should be eligible, however, as per the discussion with the officers on the inspection of DGGI, Vadodara regional office on 13.01.2023, in response to summons dated 12.01.2023, we hereby submit that we have reversed the ITC availed on the basis of invoices raised by M/s. Sun Pharmaceuticals Industries Ltd amounting to Rs. 9.85 cr vide DRC 03 dated 13.01.2023 as gesture to show bonafide and cooperative measures to the opinion of the officers, that the said ITC should not be eligible and should be reversed. We hereby submit the copy of DRC 03 dated 13.01.2023." The averments made by the Petitioner that the authorized person of the Petitioner was again questioned about refund claim filed by the Petitioner is not correct as no question about refund claim filed by the Petitioner was asked by the Respondent No. 4 in statement recorded on 13.01.2023 under Section 70 of the CGST Act, 2017. Further, from the answer of question No. 9, of the Petitioner, it transpires that Respondent No. 4 has not threatened the authorized person of the petitioner with dire consequences in case the ITC was not reversed. On the contrary, the petitioner himself stated that "we have reversed the ITC availed based on invoices raised by M/s. Sun Pharmaceuticals Industries Ltd amounting to Rs. 9.85 cr vide DRC 03 dated 13.01.2023 as gesture to show bonafide and cooperative measures to the opinion of the officers." Thus, the reversal of the ITC vide DRC-03 was made by the petitioner on 13.01.2023 was to show gesture and co-operation as stated by the petitioner himself on statement dated 13.01.2023 also vide letter dated 14.03.2023, addressed to the Additional Director General of DGGI, SZU, Further, the Petitioner, in his letter dated 14.03.2023 has submitted that they had reversed the ITC raised by M/s. Sun Pharmaceuticals Industries Itd, amounting to 9,83,53,032/ purely as a gesture of goodwill and to show their co-operation with the ongoing investigation. Further, the petitioner in para 9 of the writ petition himself admitted that the refund claim had to be withdrawn, since at the time of filing of refund claim, the ITC corresponding to the refund claim, gets automatically debited from the Electronic Credit Ledger (ECL) of the Petitioner. The withdrawal of the refund claim would automatically re-credit this amount in the Petitioner's ECL and then only the reversal of ITC would be possible. Else, the Petitioner would have had to suffer dual debit of the very same ITC. In view of above facts, the Petitioner himself withdrew the refund claim and reversed the ITC vide DRC-03. The withdrawal of the refund claim would automatically re-credit this amount in the Petitioner's ECL and then only the reversal of ITC would be possible. Else, the Petitioner would have had to suffer dual debit of the very same ITC. In view of above facts, the Petitioner himself withdrew the refund claim and reversed the ITC vide DRC-03. Therefore, the averments of the petitioner that the Respondent No. 4 threatened the authorized person of the Petitioner with dire consequences in case the ITC was not reversed are not correct and appears to be after thought. Further, the Petitioner in statement dated 13.01.2023, requested to provide some time to them to consult their consultant so that they can decide their further course of action. Para 11-It is submitted that vide letter dated 14.03.2023, the Petitioner submitted that "At that time, I had indicated that we have reversed the Input tax credit availed on the basis of invoices raised by M/s Sun Pharmaceuticals Industries Limited amounting to Rs. 9,83,53,032/- vide DRC-03 dated 13 January 2023 purely as a gesture of goodwill and to show our cooperation with the ongoing investigations. Further, I had requested your good office to provide us some time to consult with out tax consultants so that we can decide out future course of action. Our action of reversing aforesaid ITC through DRC-03 was only as a gesture to show our bonafide and co-operation in the investigations being carried out, same was ought not to be considered in the form of agreement to the view of ineligibility of ITC as expressed by the officers. Further, upon returning to office and discussing the issue with our tax consultants/ lawyers and reexamining the provisions of the law, I believe that HMIPL is entitled for claim of ITC of the GST charged to it towards transfer of leasehold rights by SPIL".” 8.3. Referring to the above averments, it was submitted that the petitioner is not entitled to any relief prayed in this petition. 9. Referring to the above averments, it was submitted that the petitioner is not entitled to any relief prayed in this petition. 9. Having considered the submissions made by both the learned advocates as well as the material available on record, it appears that the petitioner claimed the ITC for the month of July, 2021 in the return filed in the Form GSTR-3B on the basis of the ITC reflected in Form GSTR-2A pertaining to the transfer of leasehold rights and accordingly, filed the refund claim on 03.01.2023 as the petitioner was engaged in the business of exports and petitioner was therefore entitled to the refund of the ITC available in the Electronic Credit Ledger as per the provisions of Section 54(3)(b) of the CGST Act read with Section 16(3)(a) of the IGST Act. 10. It appears from the material on record as well as the pleadings of the petitioner that the petitioner was compelled to reverse the ITC by the respondent No.4 during the course of the summons proceedings on 12.01.2023 and 13.01.2023 and accordingly, the petitioner reversed the ITC of Rs.9,83,53,032/-. 11. The petitioner thereafter filed the refund claim on 30th June, 2023 after failing to convince the respondents to restore the ITC which the petitioner was compelled to reverse on 13.01.2023. The refund claim filed by the petitioner was also rejected and the Appeal is pending before the Appellate Authority. This Court therefore is not going into the merits as to whether the petitioner is entitled to refund of the ITC under the provisions of the CGST and IGST Acts as the matter is sub-judice before the Appellate Authority. However, in the facts of the case, it is apparent that as per Rule 89 of the Rules when the petitioner filed the refund application, the Electronic Credit Ledger was again debited by the amount of the ITC which was claimed in the refund application. Thus, there are two debits in the Electronic Credit Ledger of the same amount once on 13.01.2023, when the petitioner was compelled to reverse the ITC during the summons proceedings by the respondent No.4 and second time, by virtue of the operation of the provisions of the Rules at the time of filing of the refund application on 30th June, 2023. Therefore, we are of the opinion that the same ITC cannot be debited twice in the Electronic Credit Ledger, once even though the same is reversed voluntarily by the petitioner. Therefore, in the facts of the case, the ITC which was reversed by the petitioner on 13.01.2023 during the summons proceedings without there being any adjudication process, is required to be restored. The petition therefore succeeds to that extent only. However, it is clarified that this Court has not gone into the merits with respect to the eligibility of the petitioner to get the refund or to claim the ITC in Electronic Credit Ledger on the transaction of transfer of leasehold rights which may be subject to the adjudication process in accordance with law. 12. The petition therefore succeeds in part. The respondents are directed to restore the ITC of Rs.9,83,53,032/- in the Electronic Credit Ledger of the petitioner within a period of four weeks from the date of receipt of copy of this order. Rule is made absolute to the aforesaid extent only. No orders as to cost.