GST INDIA Biz — Refund of wrongly adjusted interest on transitional credit under GST regime (Sections 49(5), 50(3), 140, 142(3) – Central Goods and Services Tax Act, 2017; Section 11B

Infac India Pvt. Ltd. v. Deputy Commissioner of GST & Central Excise

Date of Order: September 14, 2023

Case Law No: GIB-MHC-2023-05

Subject: Refund of wrongly adjusted interest on transitional credit under GST regime (Sections 49(5), 50(3), 140, 142(3) – Central Goods and Services Tax Act, 2017; Section 11B – Central Excise Act, 1944)

Description:

Facts :

Petitioner wrongly transitioned balance from Personal Ledger Account as input tax credit under Section 140 of CGST Act.
Refund was sanctioned, but ₹9,25,366 was adjusted towards interest on such utilization.
Petitioner contended that sufficient Input Tax Credit was available and there was no loss to revenue.
Dispute arose on legality of interest adjustment while granting refund.

Court Decision:

Petitioner ought to have claimed refund under Section 11B of Central Excise Act read with Section 142(3) of CGST Act.
Wrong transition of credit was acknowledged, but tax liability was subsequently squared up using available Input Tax Credit.
There was no loss to revenue, as sufficient credit existed.

Directions:

Deduction of ₹9,25,366 towards interest held unsustainable.
Impugned order modified to that extent.
Respondent directed to refund ₹9,25,366 to petitioner.
Refund to be made within 8 weeks.

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