BCAJ Article by Jatin Harjai, Advocate
BCAJ Article by Jatin Harjai, Advocate
BCAJ Article by Jatin Harjai, Advocate
:- MAHENG/2009/27250
EMIGRATING ERRONEOUS
RESIDENTS AND REFUND OF ITC
RETURNING NRIs
SUSTAINABILITY
REPORTING
TRANSFER PRICING
ISSUES FOR CORPORATE END OF NON-DOM
GUARANTEES AND LC ERA IN ThE UK
BCAS @ 75 56 (2024) 266 BCaJ
26 THE BomBay CHarTErEd aCCounTanT Journal IssuE 3 | EnGLIsH - monTHLy | mumBaI JunE 2024
56 (2024) 267 BCaJ BCAS @ 75
section 11B not only regulates the manner and form, been short paid, not paid, erroneously refunded, or
in which, an application for refund is to be made but when ITC has been wrongly availed or utilised. The
also prescribes a period of limitation, and method of same can be summarised in the following table for easy
adjudication as well as the manner, in which, such refund understanding:
is to be made. In simple terms, section 11B is a complete
code in itself. In respect of Tax In respect of ITC
1) Tax has not been paid; 4) ITC has been wrongly availed;
31. Therefore, it is clear that what is required of an 2) Tax has paid short-paid; 5) ITC has been wrongly utilised.
assistant Commissioner or deputy Commissioner under 3) Tax has been erroneously
refunded;
sub-section (2) of section 11B is to adjudicate upon the
claim for refund. The expression ‘adjudicating authority’
is also defined in Section 2(a) to mean any authority a bare perusal of statutory Provision reveals that section
competent to pass any order or decision under this act, 74, with respect to tax demand, can be invoked if tax has
but does not include the Central Board, Commissioner not been paid, short paid, or erroneously refunded. on
of Excise (appeals) or the appellate Tribunal. Hence, the other hand, the invocation of section 74 with respect
the power exercised under Section 11B is that of an to Input Tax Credit can be there for wrongful availment or
adjudicating authority and the order passed is certainly utilisation.
one of adjudication.
statutory Provisions does not authorise invocation of
By the above discussion, one may conclude that granting section 73 / 74 whereby the allegation is of erroneous
a refund under the GST law, more specifically ‘Refund refund of Input Tax Credit. accordingly, in the humble
of ITC’, is not mechanical computation only; rather it opinion of the author, section 73 / 74 doesn’t confer
involves the application of mind by the proper officer, and jurisdiction to any officer to initiate proceedings under
is granted or rejected by the proper adjudication of refund section 73 / 74 for recovery of the alleged erroneous
application. refund of input tax credit.
(1) Where it appears to the proper officer that any tax has once any adjudication order is passed, the statute
not been paid or short paid or erroneously refunded provides the following remedial measures against an
or where input tax credit has been wrongly availed or order, depending upon the facts and circumstances of the
utilised by reason of fraud, or any wilful-misstatement or case:
suppression of facts to evade tax, he shall serve notice
on the person chargeable with tax which has not been i. Section 107: Appeal to First Appellate Authority:
so paid or which has been so short paid or to whom the When the department is of the opinion that the order or
refund has erroneously been made, or who has wrongly decision of refund is legibly not correct or inappropriate,
availed or utilised input tax credit, requiring him to show an appeal under section 107(2) may be filed against such
cause as to why he should not pay the amount specified decision.
in the notice along with interest payable thereon under
section 50 and a penalty equivalent to the tax specified ii. Section 108: Revision:
in the notice.” When revisional authority is of the opinion that the order or
decision of refund is erroneous in so far as it is prejudicial
From the perusal of section 74(1), one can identify to the interest of revenue and is illegal or improper or has
that section 74 can be issued to recover demand in not taken into account certain material facts, the revision
respect of five subject matters, i.e., when tax has under section 108 can be initiated.
THE BomBay CHarTErEd aCCounTanT Journal IssuE 3 | EnGLIsH - monTHLy | mumBaI JunE 2024 27
BCAS @ 75 56 (2024) 268 BCaJ
iii. Section 161: Rectification the proper officer, after application of mind, reaches a
When the proper officer (one who sanctioned the refund) conclusion of granting of refund. Either of the aggrieved
finds that there is any error which is apparent on the face parties (i.e., taxpayer or the department) have remedies
of records, the officer may take recourse to section 161 provided within law. In the humble opinion of the
and rectify the order on its own. author, just because departmental authorities could not
take appropriate statutory recourse timely, the fresh
Hon’ble allahabad High Court examined the identical proceeding under section 73 / 74 cannot be initiated
issue in the case of Honda Siel Power Products vs. to recover the grant of alleged wrongful or erroneous
Union of India [2020 (372) ELT 30 (All)], whereby the refund of Input Tax Credit.
Hon’ble High Court held that once the adjudication has
taken place under section 11B, the department cannot
proceed to recover on the basis of “erroneous refund”
under section 11a so as to enable the refund order to
be revoked, as the remedy lied under section 35E for
applying to the appellate Tribunal for determination and
"Success is no accident. It is hard
not invoking section 11a. work, perseverance, learning,
studying, sacrifice and most of
Recently, this issue under GST law has been
raised before the Hon’ble rajasthan High Court in the
all, love of what you are doing or
case of Saars Construction vs. Chief Commissioner learning to do."
of State Tax, Jaipur & Others [dB CWP no. — Pel
4398/2024, dt. 18th April, 2024], whereby Hon’ble
High Court appreciated and was pleased to stay
proceedings initiated through a show cause notice under
section 73 for recovery of refund of ITC and observed
as under: