Facts of the Case

The Petitioner, M/s Mohan Footcare Pvt. Ltd., filed a writ petition seeking a writ of mandamus directing the Respondent, Deputy Commissioner of CGST, to issue Form PMT‑03 and re‑credit Input Tax Credit (ITC) amounting to Rs. 23,32,278/- to the Petitioner’s Electronic Credit Ledger.
In March 2018, the Petitioner had filed a refund claim for ITC arising from the inverted duty structure. A Refund Sanction Order in FORM GST RFD‑06 dated 27.09.2018 was passed sanctioning Rs. 32,20,842/- but an amount of Rs. 23,32,278/- was adjusted on account of alleged erroneous refunds relating to July 2017 to February 2018, leaving only Rs. 8,88,564/- released to the Petitioner.
The Petitioner repeatedly asked for issuance of PMT‑03 for the deducted amount. The Respondent instead issued a letter dated 08.03.2024, stating that PMT‑03 could not be issued for amounts adjusted due to erroneous refunds or recoveries as the option for re‑credit did not appear on the GST Portal.

Issues Involved

  1. Whether the Petitioner is entitled to have the wrongly deducted ITC of Rs. 23,32,278/- re‑credited to its Electronic Credit Ledger?
  2. Whether the failure to issue Form PMT‑03 due to a technical limitation in the GST Portal can be a ground to withhold the refund of the ITC?

Petitioner’s Arguments

  • The Petitioner contended that it was legally entitled to have the ITC re‑credited and the Respondent’s failure to issue PMT‑03 was unjustified.
  • Correspondences demonstrated repeated requests for issuance of PMT‑03.
  • The amount was legitimately sanctioned but wrongfully adjusted, hence the Petitioner’s right to refund and re‑credit arises from statute and settled GST jurisprudence.

Respondent’s Arguments

  • The Respondent admitted non‑issuance of PMT‑03 but attributed this to a technical limitation of the GST Portal due to which the functionality to re‑credit the amount did not appear.
  • It was contended that the Department did not deny the entitlement, but the portal constraint prevented the re‑crediting process.

Court Order / Findings

The Court observed that:

  • The Respondent did not dispute the Petitioner’s entitlement to have the ITC re‑credited.
  • The failure to re‑credit was solely due to a technical limitation on the GST electronic portal.
  • The impediment in the system could not justify withholding of a legitimate refund/re‑credit.

Decision: The Writ Petition was allowed. The Court directed that the amount of Rs. 23,32,278/- be re‑credited to the Petitioner’s Electronic Credit Ledger within four weeks, including via manual intervention if necessary. The petition was disposed of accordingly.

Important Clarification

  • The inability of the GST Portal to generate PMT‑03 due to system limitations cannot be permitted to prejudice the statutory rights of a taxpayer to re‑credit due refunds/ITC.
  • Court approved manual intervention where necessary to correct entries due to software limitation.

Sections / Legal Provisions Involved

  • GST (Goods and Services Tax) Laws and Rules applicable to refund of ITC on account of inverted duty structure.
  • Reliance on statutory entitlement for refund and re‑credit under GST provisions.
    (Exact Section numbers were not cited in extract; if needed, upload full judgment pages with statutory references for precise section numbering.)

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/75418092025CW68042024_192507.pdf 

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