2026-VIL-172-GSTAT-KLK
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SGST Tribunal

GST - Refund of accumulated ITC on zero-rated supplies - Credit notes under Section 34 in computation of adjusted total turnover under Rule 89(4) of CGST Rules, 2017 - Respondent, a supplier of tea exporting without payment of tax, claimed refund of accumulated ITC under Section 54(3)(i) of the CGST Act, 2017 - Revenue appeal on the ground that the first Appellate Authority wrongly excluded the credit notes issued during the refund period from the adjusted total turnover - Whether credit notes issued under Section 34 are to be excluded from the adjusted total turnover for computing refund under Rule 89(4) and whether credit notes issued beyond the time limit in Section 34(2) can be so excluded - HELD - On a plain reading of Section 34(1), a credit note is issued where the taxable value is found to exceed the amount payable, or where the goods supplied are returned or found deficient, and when a credit note is issued the taxable turnover needs to be adjusted since the returned goods are no more part of the supply. Such credit notes are therefore deducted from the turnover for the purpose of refund calculation under Rule 89(4) - The Chartered Accountant's certificate and the GSTR-1 voucher register matched the credit notes declared in the returns for the refund period, and the major credit notes related to invoices raised during the refund period, so the contention of the Revenue that the credit notes could not be related to the period does not inspire confidence - However, three credit notes issued in a later month relating to invoices of an earlier financial year were beyond the time limit prescribed in Section 34(2), and the statute does not permit issuance of credit notes beyond the permissible time limit, so such credit notes are not liable to be excluded and form part of the adjusted total turnover - On recomputing the maximum refund under the formula in Rule 89(4) with the modified adjusted total turnover, the refund amount claimed by the Respondent remains below the maximum permissible refund - The refund already allowed by the FAA is proper and as per law, and the appeal of the Revenue is dismissed
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