SGST High Court Cases

GST- Section 54 of the CGST Act, 2017 - Withholding of refund on inconsistent and irrational grounds - Export of IT services – Refund claim on Zero-rated supply - Refund of unutilised input tax credit of GST paid on various inputs and input services – While the show cause notices issued for rejection of refund on the ground that the specific goods are not consumed in the process of provision of output service, the impugned orders proceeded on a completely different ground and have held that the expenses incurred on specific goods were required to be capitalised in the books of accounts as per AS 10 – Validity of passing of adjudication order beyond the scope of the show cause notices – HELD - It is evident that refund claims arising from precisely similar facts and circumstances for previous and subsequent assessment periods were duly sanctioned. However, in a stark deviation from this precedent, the refund claims for the periods of July-September 2019 and October-December, 2019, have been inexplicably withheld by the Department. This sudden change in the Department’s stand is not only inconsistent but also irrational – While the principle of res judicata does not apply to taxation matters, it is incumbent upon authorities to take a consistent approach when dealing with similar factual and legal circumstances. Taxpayers have a legitimate expectation that similar factual and legal circumstances will be met with uniform treatment, and any deviations from this principle undermine the credibility and legitimacy of the actions taken by tax authorities - When facts and circumstances in a subsequent assessment year are the same, no authority, whether quasi-judicial or judicial can generally be allowed to take a contrary view. The arbitrary withholding of refund claims for specific periods, despite past precedents and the absence of any material change in circumstances, is contrary to the principles of fairness and equity - Capital goods, are intended for long-term use and are typically subject to capitalization. However, inputs, are goods used in the day-to-day operations of the business and are not subject to capitalization – further, the Department cannot be allowed to traverse beyond the confines of the Show Cause Notice. Any attempt by the issuing authority to expand the scope of inquiry or introduce new allegations beyond those articulated in the show cause notice would constitute a violation of the principles of natural justice. Such actions would not only undermine the recipient’s right to a fair hearing but also erode trust in the integrity and impartiality of the adjudicatory process. Any action taken beyond the confines of the Show Cause Notice, is void ab initio and cannot be sustained - the impugned orders are palpably erroneous, and cannot be sustained, hence, set aside – the writ petitions are allowed

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