Karnataka High Court
M/S Philips India Limited vs The Principal Commissioner Of Central ... on 24 March, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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WP No. 4587 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF MARCH, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 4587 OF 2023 (T-RES)
BETWEEN:
M/S. PHILIPS INDIA LIMITED
( A PUBLIC LIMITED COMPANY,
REGISTERED UNDER THE PROVISION OF
CTST/SGST ACT 2017,)
PHILIPS INNOVATIVE CAMPUS,
MANYATA EMBASSY BUSINESS PARK,
OUTER RING ROAD, NAGAWARA,
BENGALURU -560045
REPRESENTED BY ITS AUTHORIZED SIGNATORY,
SHRI. HARISH CHAWLA S/O. AMAR CHAND CHAWLA,
DIRECTOR - GROUP TAX INDIA,
(AGED ABOUT 53 YEARS)
...PETITIONER
Digitally
signed by (BY SRI. CHIDANANDA URS B. G ., ADVOCATE)
NARASIMHA
MURTHY
VANAMALA AND:
Location:
HIGH
COURT OF 1. THE PRINCIPAL COMMISSIONER OF CENTRAL TAX,
KARNATAKA
BENGALURU GST NORTH COMMISSIONERATE,
NO.1, QUEENS ROAD, VASANTH NAGAR,
BENGALURU -560001.
2. JOINT COMMISSIONER (CENTRAL TAX)
BENGALURU NORTH COMMISSIONERATE,
HMT BHAVAN, GANGA NAGAR,
BENGALURU-560032.
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WP No. 4587 of 2023
3. ASSISTANT COMMISSIONER (CENTRAL TAX)
NORTH DIVISION-7,
OFFICE OF DEPUTY/ASSISTANT COMMISSIONER
OF CENTRAL TAX, NORTH GST DIVISION,
4TH FLOOR, S.P. COMPLEX,
LALBAGH ROAD, BENGALURU -560027.
4. THE DIRECTORATE GENERAL OF FOREIGN TRADE
UDYOG BHAVAN, H-WING,
GATE NO.02, MAULANA AZAD ROAD,
NEW DELHI-110 011.
...RESPONDENTS
(BY SRI. JEEVAN J. NEERALGI, ADVOCATE FOR R1 TO
R3,
NOTICE TO R4 IS NOT ORDERED)
THIS WRIT PETITON IS FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA
PRAYING TO QUASH THE SHOW CAUSE NOTICE IN
FORM GST DRC 01 (DIN : 20220957YW0000422043)
DATED 14.9.2022 ISSUED BY RESPONDENT NO.2 AT
ANNEXURE-C; QUASH THE REFUND SANCTION ORDER
IN NO.64-CT/2022 DATED 15.11.2022 IN FORM GST-
RFD-06 PASSED BY RESPONDENT NO.3 AT ANNEXURE-
G.
THIS PETITION, COMING ON FOR PRELIMINARY
HERAING BEFORE SINGLE JUDGE, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The petitioner is aggrieved by the Show Cause Notice dated 14.09.2022 issued under Section 74 of the Central Goods and Services Tax Act, 2017 [for short, 'CGST Act'] and the Sanction Order dated -3- WP No. 4587 of 2023 15.11.2022 as per Annexure-G and in fact, the third respondent by the aforesaid order dated 15.11.2022 has rejected the petitioner's claim for refund for the period between April 2021 to June 2021. Sri.Chidananda Urs B.G., the learned counsel for the petitioner, and Sri Jeevan J. Neeralgi, the learned standing counsel for the respondents, are heard for final disposal of this petition.
2. It is undisputed that the petitioner's applications for refund for the period between [i] January 2020 and March 2020 and [ii] April 2020 and June 2020 are allowed, and the petitioner has also received refund. However, the impugned Show Cause Notice dated 14.09.2022 under Section 74 of the CGST Act is issued recording the following reasons:
"Above said order was reviewed, and reviewing authority mentioned that the refund has been sanctioned on the basis of e- BRCs/FIRCs furnished by the claimant, -4- WP No. 4587 of 2023 addressed to their corporate office in Kolkata. It is not understandable as to how the same have been correlated with exports from Bangalore unit of the exporter-claimant. There is every possibility of the same FIRCs being used to claim refund across other ports in the country. And directed that the issue may be re-examined and FIRCs correlated with the exports for which refund has been sanctioned and order to take action under Section 73/74 of the CGST Act, 2017 may be taken against the claimant, if required."
The third respondent, who had to consider the petitioner's application for refund for the period between April 2021 and June 2021, has rejected such application by the impugned the Sanction Order dated 15.11.2022 because of issuance of the impugned Show Cause Notice. The third respondent has rejected the petitioner's request for refund after notice in the prescribed form on 20.10.2022 and in the light of the petitioner's reply thereto [Annexure- F2].
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3. Sri Chidananda Urs B.G. submits that when the refund for the period between January 2020 and March 2020 and April 2020 and July 2020 was considered, the third respondent examined the e- Bank Realization Certificates [e-BRCs] relied upon by the petitioner in the light of the petitioner's response that the petitioner operates from its registered office at Kolkata and as such e-BRCs are addressed to its Kolkata office but it relates to its Bengaluru unit. Notwithstanding the aforesaid, the impugned Show Cause Notice is issued alleging that e-BRCs could possibly be misused to claim refund "across other ports" in the country.
4. Sri Chidananda Urs B.G. argues that this would be incongruous given the fact that e-BRCs are issued for specific invoices on submission of declaration as contemplated under the Foreign Exchange Management [Export of Goods and Services] Regulations 2015, and given the elaborate -6- WP No. 4587 of 2023 and defined procedure, e-BRCs are specific to certain transactions and they cannot be used for multiple refunds.
5. Sri Chidanand Urs B.G. next emphasizes that the petitioner is engaged in the business of software services and exports would therefore not be "across other ports" of the country as alleged in the show cause notice, and these circumstances affect the very jurisdiction to issue the impugned show cause notice. As regards Annexure - E, the order of rejecting refund for the subsequent period, Sri.Chidananda Urs B.G. submits that if on two occasions similar issues have been considered and refund granted, those orders would operate as res judicata, and the third respondent could not have taken a contrary view.
6. Sri Jeevan J. Neeralgi, responding to the first segment of the petitioner's case, submits that the petitioner is aggrieved by the impugned Show -7- WP No. 4587 of 2023 Cause Notice, but every ground urged in this petition could also be urged before the second respondent who will consider the same in the backdrop of the circumstances relied upon. He emphasizes that the petitioner, who has received refund for the earlier two periods [between January 2020 and March 2020 and April 2020 and June 2020], can always avail statutory remedy against rejection of the refund for the subsequent period [between April 2021 and June 2021].
7. In rejoinder, Sri Chidananda Urs B.G. submits that the petitioner is constrained to approach this Court impugning the Show Cause Notice and the order rejecting refund [Annexure-G] because there is no jurisdiction to issue Show Cause Notice and until there is adjudication on this question, the petitioner's request for refund for the subsequent period would be in jeopardy creating financial constraints for the petitioner. -8- WP No. 4587 of 2023
8. At the outset, this Court must observe that the order rejecting refund [Annexure-G] cannot be sustained as it is premised only on the ground that show cause notice is issued for the earlier two periods, and the petitioner cannot be relegated to avail statutory remedy when it is undisputed that on examination of the critical issue viz., whether the e- BRCs relied upon by the petitioner relates to the Bengaluru unit, the petitioner is permitted refund. The impugned order dated 15.11.2022 rejecting refund must yield, and the proceedings restored to the second respondent to consider the same subject to the outcome of the proceedings that are commenced with issuance of the impugned Show Cause Notice dated 14.09.2022.
9. The second respondent, in the peculiarities of this case, and the grounds urged, must be called upon to decide on the continuation of the proceedings in the light of the petitioner's specific -9- WP No. 4587 of 2023 defense that the assumption that these e-BRCs could be used for refund "across the other ports" in the country would be incongruous as the petitioner exports software and e-BRCs are issued under the aforesaid regulations specific to invoices based on declaration and with necessary uploading with the Joint Director of Foreign Trade. The second respondent must not only be directed to consider continuation of the proceedings in the light of these submissions but also to decide within a certain time frame lest the petitioner is forced into a loop of litigation. Further the petitioner must have liberty to file a detailed response with necessary documents with the second respondent to show cause against continuation of the proceedings. In the light of the afore, the following:
ORDER
(i) The petition is allowed in part, and the third respondent's Order [Refusal order] dated 15.11.2022 [Annexure-G] is quashed restoring the
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same for reconsideration subject to the outcome of the proceedings commenced with the Show Cause Notice dated 14.09.2022, but within four weeks therefrom.
(ii) The petitioner within two [2] weeks from today shall be at liberty to file a detailed response to the Show Cause Notice dated 14.09.2022 with additional documents without waiting for a certified copy of this order, and the second respondent, within four [4] weeks from the date thereof, shall decide on the continuation of the proceedings pursuant to the impugned Show Cause Notice in the light of this Court's observation as aforesaid.
Sd/-
JUDGE SA ct:sr