2026-VIL-243-GSTAT-LCK
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  2. 2026-VIL-243-GSTAT-LCK

SGST Tribunal

GST - Refund - Provisional reversal of Input Tax Credit disclosed in Table 4(B)(2) of GSTR-3B whether amounts to discharge of self-assessed liability - Respondent, a manufacturer of edible oils, reversed Input Tax Credit in its return for the month of August 2018 following a reported stock shortage in a search by the Income Tax Department, and by a contemporaneous letter described the reversal as provisional while reserving the right to seek restoration - Refund claim was rejected on the ground that the reversal was voluntary and formed part of self-assessment - Rejection was set aside by the FAA - Department preferred appeal contending that reversal in a statutory return acknowledges liability under Section 59 - Whether the reversal constituted discharge of a self-assessed GST liability disentitling the Respondent from refund - HELD - Under Section 39 read with the prescribed return format, particulars of outward supplies and tax liability are distinct from particulars of Input Tax Credit availed and reversed. The amount was disclosed in Table 4(B)(2) with no liability on account of stock shortage declared in Table 3.1 - Section 59 provides for self-assessment, but the mere furnishing of a return does not mean that every amount disclosed in every table constitutes an admitted tax liability. Where an amount is expressly disclosed as a provisional reversal, the legal character must be determined from the nature of the entry, the statutory provisions and the contemporaneous documents - The letter issued at the time of reversal is consistent with the stand that the reversal was not intended to acknowledge a finally determined liability, and no contrary material showed an unequivocal admission - The Department did not establish that a demand under Section 73 or Section 74 had been determined at that time or that a quantified liability was admitted - The original rejection order did not establish that the amount was reversed towards a self-assessed GST liability. The Department's appeal on this ground is rejected - Refund - Effect of subsequent adjudication order and grounds beyond the scope of SCN on refund proceedings - Show cause notice for rejection of refund proposed rejection on the grounds that the reversal was voluntary and formed part of self-assessment, whereas the Department in appeal relied on a later Order-in-Original confirming demand on the alleged stock shortage, passed after the impugned Order-in-Appeal and under challenge in separate appellate proceedings - Whether the Department can rely on the subsequent Order-in-Original and fresh grounds to sustain rejection of refund and whether the earlier reversal can be treated as payment towards the subsequently confirmed demand - HELD - The SCN is the foundation of the Department's case, the allegations must enable the noticee to understand and answer the case. The legality of the impugned order must ordinarily be examined on the material existing when it was passed, and a subsequent order cannot cure a defect in the original reasoning - The demand confirmed later is the subject matter of separate proceedings whose merits cannot be conclusively determined in the refund appeal. The separate dispute on Input Tax Credit from a particular supplier arises from different transactions and does not determine entitlement to this refund - Reliance on the subsequent Order-in-Original is not accepted to restore the rejection - Retention of amount reversed during investigation on the basis of alleged stock shortage reported by another department, Article 265 of the Constitution and Section 54 of the CGST Act, 2017 - Department contended that the refund was premature as investigation was pending, that the book stock and physical stock difference established clandestine removal under Section 74, and that refund would cause loss to revenue - Respondent contended that an allegation by another department cannot by itself justify retention of tax without determination of liability - Whether refund can be rejected merely because the reversal was voluntary and an investigation or adjudication on the alleged stock shortage was pending - HELD - Article 265 requires that retention of an amount as tax be supported by statutory provisions and legally established liability, though it does not dispense with the requirements for refund claims. Information from another department may be an investigative lead, but a difference in stock valuation does not without further examination establish clandestine removal - Department must establish the taxable event, tax period, taxable value and rate of tax. Pendency of an investigation is not equivalent to determination of tax liability, cannot convert a provisional reversal into an established liability, and does not authorise indefinite retention. Initiation of proceedings under Section 74 does not by itself establish the alleged liability, and a later confirmation of demand does not show that the liability was admitted in the earlier return. - Rejection solely on the basis that the reversal was voluntary or the investigation was pending is not sustainable, the order of the First Appellate Authority is upheld subject to verification that the claim satisfies the requirements of Section 54 - The Department's appeal is dismissed - Pre-deposit for appeal before the Appellate Tribunal where the dispute pertains only to a refund claim - Appellant, being the Department, challenged an order of the First Appellate Authority which set aside rejection of a refund claim for provisionally reversed Input Tax Credit - Whether pre-deposit under Section 107(6) of the CGST Act, 2017 is required for the present appeal - HELD - Since the matter pertains to a refund claim and no amount of tax or duty is involved in the appeal, there is no need of pre-deposit under Section 107(6) of the CGST Act, 2017 - The appeal was entertained without pre-deposit.
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