Facts of the Case

The petitioner, Svera Agro Limited, filed a writ petition seeking directions to the respondent authority to:

  • Sanction refund of unutilized Input Tax Credit (ITC) for the period August 2020 to March 2021, and
  • Withdraw deficiency memos issued for refund claims pertaining to May 2019 to July 2019.

The refund applications were repeatedly objected to by the department through deficiency memos, requiring submission of a Chartered Accountant (CA) certificate under Rule 89(2)(l) and 89(2)(m) of the CGST Rules, 2017. 

Issues Involved

  1. Whether furnishing a CA certificate under Rule 89(2)(m) is mandatory for refund of unutilized ITC covered under Section 54(8)(b) of the CGST Act.
  2. Whether deficiency memos issued for non-submission of such certificate are legally sustainable.
  3. Whether the petitioner is entitled to interest on delayed refund.

Petitioner’s Arguments

  • The petitioner contended that its case falls under Section 54(8)(b) of the CGST Act, which pertains to refund of unutilized ITC.
  • Under the proviso to Rule 89(2)(l) and (m), no declaration or CA certificate is required in such cases.
  • The repeated issuance of deficiency memos demanding CA certification was contrary to statutory provisions.
  • The petitioner further claimed entitlement to interest on delayed refund under Section 56 of the CGST Act. 

Respondent’s Arguments

  • The respondent relied on Circular No. 125/44/2019-GST dated 18.11.2019, asserting that:
    • For refund claims below ₹2 lakh → self-declaration required.
    • For claims above ₹2 lakh → CA certificate mandatory.
  • It was argued that the petitioner failed to comply with documentary requirements under Rule 89(2). 

Court’s Findings / Order

The Delhi High Court held:

  • The statutory scheme under Section 54 of the CGST Act clearly governs refund provisions.
  • As per Section 54(8)(b), refund of unutilized ITC is payable directly to the applicant.
  • The proviso to Rule 89(2)(l) and (m) explicitly exempts such cases from requirement of:
    • Self-declaration, and
    • CA certificate.

Important Clarification

  • In cases covered under Section 54(8) (including refund of unutilized ITC):
    • No CA certificate or self-declaration is required under Rule 89(2)(l) and (m).
  • Administrative circulars cannot impose additional conditions beyond statutory rules.
  • Tax authorities must adhere strictly to the statutory exemptions provided in GST law. 

Sections / Rules Involved

  • Section 54, CGST Act, 2017 – Refund of tax
  • Section 54(3) – Refund of unutilized ITC
  • Section 54(8)(b) – Refund payable to applicant
  • Section 56 – Interest on delayed refunds
  • Rule 89(2)(l) & (m), CGST Rules, 2017 – Documentation requirements for refund
  • Circular No. 125/44/2019-GST dated 18.11.2019

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS29022024CW119262023_132705.pdf

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