The Madras High Court has directed the GST assistant commissioner to refund Rs.74.61 crores to Dell in cash subject to debit equal amount from electronic credit ledger.
The bench of Justice C.Saravanan has observed that the petitioner, Dell cannot be burdened with accumulation of ITC as the petitioner is unable to liquidate the same as it is under inverted duty structure. If the system was enabled then and there, the petitioner would have discharged part of its tax liability also from the input that ought to have been allowed to be transitioned in the system.
The petitioner/assessee had reportedly accumulated Input Tax Credit (ITC) for a sum of Rs.82,91,19,712. The petitioner had managed to transition the ITC of Rs.74,61,65,427 out of Rs.82,91,19,712, after collating all the necessary information under the previous regime for the purpose of Section 140 of the CGST Act, 2017. The Form Tran-I itself was electronically enabled by the Central Board of Indirect Taxes sometime during the last week of September 2017 on 25.08.2017 to facilitate the transition of ITC that was earned by the registration under the previous regime.
Although the portal was enabled on 25.08.2017,the petitioner was not able to transition the credit legitimately that was lying unutilized on the cut off date viz., 30.06.2017 i.e. one day before the implementation of the respective GST enactments. It is submitted that during the month of July 2017 the tax liability of the petitioner was Rs.1,13,15,86,524. It was partly discharged out of the ITC availed during the month of July 2017 and the balance of Rs.57,78,89,597 in cash as the aforesaid input tax credit of Rs.Rs.74,61,65,427 could not be transitioned.
The petitioner contended that if the GST portal was enabled w.e.f. 01.07.2017, the petitioner could have legitimately discharged the entire tax liability from and out of the transitional credit of Rs.74,61,65,427 out of Rs.82,91,19,712. Under Rule 86B of the CGST Act, Rule 17 where an assessee discharges the entire tax liability from and out of the ITC, 1% of tax has to be paid in cash. However, the provision was inserted only w.e.f. 01.01.2021 vide Notification No.94/2020 – Central Tax dated 22.12.2020.
The court noted that the petitioner could transition ITC of only Rs.74,61,65,427/- out of Rs.82,91,19,712/- that was availed prior to 01.07.2017 during December 2017. Meanwhile, a sum of Rs.86,96,78,402/- was paid in cash and the balance tax liability of Rs.2,19,58,03,162/- out of ITC availed during the aforesaid period for the total tax liability of Rs.3,06,54,81,564/-.
The court has held that the order is set aside and the writ petition is allowed with a direction to the department to allow the petitioner to amend the returns filed by the petitioner in GSTR-3B during the period in dispute and also, with a consequential direction to the department to refund a sum of Rs.74,61,65,427 to the petitioner in cash subject to debit equal amount from the petitioner’s electronic credit ledger.
Case Details
Case Title: Dell International Services India Private Limited Versus Union of India
Case No.: W.P.No.1924 of 2021
Date: 02.01.2025
Counsel For Petitioner: Raghavan Ramabadran
Counsel For Respondent: A.P.Srinivas
