Introduction

The recent judgment in the case of MO Industries v. Union of India & Ors, where the Rajasthan High Court set aside an appellate order that had quashed a refund claim based on Circular No. 135/15/2020-GST.

Brief Overview of the Case

The petitioner, a manufacturer of mustard oil, palm oil, and mustard de-oiled cake, had claimed a refund of Rs. 19,62,616/- of input tax credit (ITC) accumulated due to the inverted tax structure. The refund was allowed by the tax authorities but was subsequently quashed by the appellate authority relying on Circular No. 135/15/2020-GST.

The Contention of the Petitioner

The petitioner argued that the Circular was held to be repugnant and in conflict with Section 54(3)(ii) of the Central Goods and Services Tax Act, 2017 (CGST Act) by the Rajasthan High Court in a previous case, Baker Hughes Asia Pacific Limited v. Union of India & Ors. The petitioner contended that the appellate authority had only reproduced part of the concluding para of the Baker Hughes judgment and accepted the appeal of the Department without considering the full import of the decision.

The Respondent's Defense

The respondents defended the impugned order, arguing that the petitioner was not entitled to a refund even if the Circular were not applied.

The Court's Analysis

The court reproduced the concluding part of the Baker Hughes judgment, which held that Circular No. 135/15/2020-GST was repugnant and conflicting to Section 54(3)(ii) of the CGST Act and could not be applied to oust the legitimate claim for accumulated ITC refund. The court also noted that the petitioner's claim for refund was for a period prior to the issuance of the Circular.

The Court's Decision

The court held that the additional reason given by the appellate authority for denying the refund did not nullify the fact that the Circular had not stood judicial scrutiny. The appellate authority had allowed the appeal solely relying upon the Circular, which was now held to be invalid. Consequently, the court set aside the impugned order and remitted the matter back to the appellate authority to decide the appeal afresh in accordance with law.

GST Case Law MO Industries versu Union of India

Citation-2024 TAXONATION 2361 (RAJASTHAN)

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