Gujarat High Court
M/S Kuldeep Kumar Contractors vs Union Of India on 28 March, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/17464/2024 ORDER DATED: 28/03/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17464 of 2024
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M/S KULDEEP KUMAR CONTRACTORS
Versus
UNION OF INDIA & ORS.
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Appearance:
MR DHRUVIN N DOSSANI(10528) for the Petitioner(s) No. 1
Ms SHRUNJAL SHAH, AGP for the Respondent(s) No. 3
MS HETAL G PATEL(11032) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 28/03/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Learned advocate Mr. Akriti Gupta for learned advocate Mr. Dhurvin Dossani for the petitioner prays for leave to Join Deputy Commissioner of State Tax as party respondent No.4.
2. Permission as prayed for is granted.
3. Heard learned advocate Ms. Akriti Gupta for learned advocate Mr. Dhruvin Dossani Page 1 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined for the petitioner and learned Assistant Government Pleader Ms. Shrunjal Shah for respondent No.3.
4. Issue Notice to the newly joined respondent No.4. Learned Assistant Government Pleader Ms. Shrunjal Shah waives service of notice for the newly joined respondent No.4.
5. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs:
"A. Be pleased to issue a writ in the nature of mandamus directing Respondent No.3 or Respondent No.1 to refund the amount deposited by the petitioner vide DRC-03 dated 18.8.2022 for the reason that the Page 2 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined said amount have been retained by the department in violation of Article 265 of the Constitution of India for the reason that neither a show cause notice has been issued nor acknowledgement in FORM DRC-04 has been issued by the department and also for the reason that the said deposit was made by mistake for the F.Y. 2017-18 and any proceedings under section 73 or 74 has become time barred (Annexure P-3);
B. Be pleased to issue a writ in the nature of certiorari quashing the deficiency memo issued in RFD-03 dated 30.09.2024 for the reason that the admissibility of refund cannot be determined by way of a deficiency memo and has to be determined by issuing of show cause notice and following the procedure established by law(Annexure P6);
C. Pending Admission, Hearing and Final disposal of this petition, be Page 3 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined pleased to direct respondent No.3 or respondent no.1 to refund the amount deposited by the petitioner vide DRC-03 dated 18.08.2022 (Annexure P3);
D. Pending Admission, Hearing and final disposal of this petition, be pleased to stay the implementation and effect of the deficiency memo issue in RFD-03 dated 30.09.2024 (Annexure P6);
E. Costs of this petition be awarded;
F. Such further and other relief, order or direction which may be just, fit, proper and equitable in the facts and circumstances of the petition."
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6. Brief facts of the case are as under:
6.1 The petitioner is a registered dealer under the provisions of the Central/State Goods and Service Tax Act, 2017 [for short 'the GST Act']. A search proceeding was conducted at the premises of the petitioner on 15.06.2021 and summons was issued calling upon the petitioner for requisite documents and to record the statements. Against the said summons, the authorized person of the petitioner appeared on 23.06.2021 and his statement was recorded. Thereafter, summons dated 09.07.2021, 07.01.2022 and 04.07.2022 were issued regarding certain suppliers of the petitioner who were alleged to be non-existent.Page 5 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025
NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined 6.2 It is the case of the petitioner that the petitioner deposited Rs. 7,01,154/- for the Financial Year 2017-18 vide FORM GST DRC-03 dated 18.08.2022 relating to a firm by the name M/s. R.K.Traders. It is the case of the petitioner that the payment was made by mistake due to confusion between the names of the said firm and M/s. R.K.International. According to the petitioner, the said payment was made under section 73(5) of the GST Act without payment of any interest.
6.3 The petitioner thereafter received a show cause notice dated 24.07.2024 issued by respondent No.2-Deputy Commissioner, Central GST and Central Excise, Vadodara-01, wherein, for Page 6 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined Financial Year 2017-18, a demand was made for certain suppliers of the petitioner which were alleged to be non-existent.
6.4 It is the case of the petitioner that the payment dated 18.08.2022 regarding M/s. R.K.Traders was mistakenly made as there was no liability qua M/s. R.K.Traders to be paid by the petitioner. The petitioner therefore, filed refund application dated 02.09.2024 which was rejected by deficiency memo dated 30.09.2024 on the ground that "refund not allowed in case of payment made voluntary by DRC-03". Rejection of the refund application was communicated to the petitioner by the deficiency memo in FORM GST RFD-03.
Page 7 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined Being aggrieved, the petitioner preferred this petition.
7. Learned advocate Ms. Gupta for the petitioner submitted that the respondent authorities could not have rejected the refund application while issuing deficiency memo in FORM GST RFD-03 as such deficiency memo can be issued in Rule 90(3) of the Central/State Goods and Service Tax Rules, 2017 (for short 'the GST Rules').
7.1 It was submitted that by impugned deficiency memo dated 30.09.2024, refund application of the petitioner has been rejected by stating that "Refund not allowed in cases payment voluntary by DRC-
03".
Page 8 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined 7.2 It was submitted that as per Sub-
rule (3) of Rule 90 of the GST Rules, the respondent No.4 was required to issue deficiency memo depicting the deficiency in the refund application and could not have rejected the refund on any reason.
8. The aforesaid submissions of the learned advocate for the petitioner could not be controverted by the learned AGP Ms. Shah after referring to Rules 89 and 90 of the GST Rules. The affidavit filed on behalf of respondent No.2 is in fact of respondent No.4-Deputy Commissioner of State Tax and the same is accordingly treated as the same is filed by respondent No.4.
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9. On perusal of the affidavit-in-reply, it appears that the respondent No.4 has referred to the facts of the case without considering the issue raised in the petition for rejection of the refund claim of the petitioner by issuing deficiency memo in FORM GST RFD-03.
10. Rule 90 of the GST Rules prescribes acknowledgement where the application relates to a claim of refund either from the electronic cash ledger or electronic credit ledger filed by the assessee as per Rule 89(1) of the Rules. Rule 90 of the Rules prescribes the procedure while accepting or pointing out the deficiency in the application filed by the assessee in FORM GST RFD-01. Therefore, it would be Page 10 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined germane refer to Rules 89(1) and 90 of the GST Rules which read as under:
"Rule 89. Application for refund of tax, interest, penalty, fees or any other amount.-
(1) Any person, except the persons covered under notification issued under section 55 claiming refund of 13 [any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 or] any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 or 10 [subject to the provisions of rule 10B,] an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Page 11 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined Facilitation Centre notified by the Commissioner:
[****] [Provided that] in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the -
(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone;
(b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone:
[Provided further that] in respect of supplies regarded as deemed exports, the application may be filed by, -Page 12 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025
NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined
(a) the recipient of deemed export supplies; or
(b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund] Provided also that refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him.
[Explanation.--For the purposes of this sub-rule, ― "specified officer" means a "specified officer" or an "authorised officer" as defined under rule 2 of the Special Economic Zone Rules, 2006.] Page 13 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined [(1A) Any person, claiming refund under section 77 of the Act of any tax paid by him, in respect of a transaction considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, may, before the expiry of a period of two years from the date of payment of the tax on the inter-State supply, file an application electronically in FORM GST RFD- 01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that the said application may, as regard to any payment of tax on inter-State supply before coming into force of this sub-rule, be filed before the expiry of a period of two years from the date on which this sub- rule comes into force.] Page 14 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined "Rule 90. Acknowledgement.-
(1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing.
(2) The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within a period of fifteen days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of sub-rule (2), (3) and (4)of rule 89, an acknowledgement in FORM GST RFD-02 Page 15 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing.
(3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies.
[Provided that the time period, from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORMGST RFD-03 by the proper officer, shall be excluded from the period of two years as specified under subsection (1) of Page 16 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined Section 54, in respect of any such fresh refund claim filed by the applicant after rectification of the deficiencies.]"
11. On perusal of the above Rules, it is clear that both the rules are the procedural rules with regard to filing of refund application and acknowledgement of such refund application so as to cure the deficiency in the refund application filed by the assesee. Therefore, at the stage of acknowledgement of the refund application filed by the assessee in FORM GST RFD-01, the same could not have been rejected by respondent No.4 by stating "Refund not allowed in cases payment made voluntary by DRC-03". Rule 92 of the Rules provides for orders sanctioning refund and after deficiency in the refund application is cured by the assessee, a separate Page 17 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined procedure is prescribed to pass an order either accepting or rejecting the refund application in FORM GST RFD-06 sanctioning the amount of refund or to grant an opportunity of hearing by issuing notice in FROM GST RFD-08.
12. Rule 92 of the Rules reads as under:
"Rule 92. Order sanctioning refund.-
(1) Where, upon examination of the application, the proper officer is satisfied that a refund under sub-
section (5) of section 54 is due and payable to the applicant, he shall make an order in FORM GST RFD-06 sanctioning the amount of refund to which the applicant is entitled, mentioning therein the amount, if any, refunded to him on a provisional basis under sub-section (6) of section 54 , amount adjusted against any outstanding demand under the Act or Page 18 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined under any existing law and the balance amount refundable:
[****] [(1A)Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub- section (5) of section 54 of the Act is due and payable to the applicant, he shall make an order in FORM GST RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit Page 19 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined ledger for making payment of such tax, the proper officer shall issue FORM GST PMT-03 recrediting the said amount as Input Tax Credit in electronic credit ledger.] (2) Where the proper officer or the Commissioner is of the opinion that the amount of refund is liable to be withheld under the provisions of sub-
section (10) or, as the case may be, sub-section (11) of section 54 , he shall pass an order in 3 [Part A] of FORM GST RFD-07 informing him the reasons for withholding of such refund.
[ Provided that where the proper officer or the Commissioner is satisfied that the refund is no longer liable to be withheld, he may pass an order for release of withheld refund in Part B of FORM GST RFD- 07 .] (3) Where the proper officer is satisfied, for reasons to be recorded Page 20 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within a period of fifteen days of the receipt of such notice and after considering the reply, make an order in FORM GST RFD- 06 sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provisions of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed:
Provided that no application for refund shall be rejected without giving the applicant an opportunity of being heard."Page 21 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025
NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined
13. Therefore, it is clear that the respondent No.4 has, inspite of pointing out the deficiency in the application filed by the petitioner in FORM GST RFD-01, rejected the same by issuing deficiency memo in GST RFD-03 stating that declaration is not in accordance with the procedure prescribed by the GST Rules. Respondent No.4 therefore, ought to have pointed out the deficiency and could not have observed so in the deficiency memo for not allowing the refund as the petitioner has made payment in DRC-03. Such declaration or order is not contemplated in Rule 90(3)of the GST Rules.
14. In view of the above foregoing reasons, the impugned deficiency memo dated 30.09.2024 is hereby quashed and set aside Page 22 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025 NEUTRAL CITATION C/SCA/17464/2024 ORDER DATED: 28/03/2025 undefined and the matter is remanded back to the respondent No.4 to consider the refund application filed by the petitioner in FORM GST RFD-01 in accordance with the Rules and take appropriate decision as to whether there is deficiency in the application or not.
15. With the aforesaid directions, the petition is disposed of. Notice is discharged.
(BHARGAV D. KARIA, J) (D.N.RAY,J) JYOTI V. JANI Page 23 of 23 Uploaded by JYOTI V. JANI(HC00213) on Wed Apr 09 2025 Downloaded on : Fri Apr 11 23:57:37 IST 2025