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• Category GST, Refund, Inverted Tax Structure
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Recently Hon’ble High Court of Gujarat has passed an Order dated 24.07.2020 in case of VKC Footsteps India Pvt Ltd Vs UoI wherein it has allowed input services GST refund to taxpayers which accumulated due to inverted tax structure.

However, on similar issue, Hon’ble High Court of Madras has passed an Order dated 21.09.2020 in case of Tvl Transtonnelstroy Afcons Joint Venture & Five Others Vs UoI wherein it has disallowed input services GST refund to taxpayers which accumulated due to inverted tax structure.

On comparing above both decisions, it implies that both the above decisions are conflicting decisions on same issue and therefore a question arises in the mind of taxpayers as to which decision is applicable to which state? 

In this regard, it is pertinent to mention that there are so many decisions of various courts (Apex Court / High Courts / Tribunals) holding that if there are conflicting decisions of different high courts on same issue then such decisions are applicable to the taxpayers of respective jurisdictional high court.  Some of important decisions related to indirect taxes are as follows :-

•            1. Astik Dyestuff Pvt Ltd Vs Commissioner of Central Excise & Customs [2014 (34) S.T.R. 814 (Guj.)]
•            2. J.K. Tyre & Industries Ltd Vs Assistant Commissioner of Central Excise, Mysore [reported at 2016 (340)
•                E.L.T. 193 (Tri. - LB)]

By applying the above decisions to impugned Order dated 21.09.2020 passed by Hon’ble High Court of Madras, one can say that this decision, which is against the GST Taxpayers, is applicable to only the GST taxpayers of Tamil Nadu and thus, the impugned Order dated 24.07.2020 passed by Hon’ble High Court of Gujarat is applicable to all the rest of Indian States/UTs (Gujarat, Rajasthan, Maharashtra, Delhi, Karnataka, Kerala etc.) being delivered in favour of the GST Taxpayers since the favourable decision is applicable to the taxpayers when there are conflicting decisions of different high courts on same issue; as per Hon’ble Supreme Court’s decision in case of CIT Vs Vegetable Products Ltd [1973 SCC (1) 442] wherein Hon’ble Supreme Court discussed conflicting decisions of Mysore High Court and Delhi High Court and hold that “if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted.” 

In view of the above facts, it is beyond doubt that the Order dated 24.07.2020 passed by Hon’ble High Court of Gujarat is applicable to all the GST taxpayers of Indian States except those from Tamil Nadu till the Order is stayed by Hon’ble Supreme Court.

P.S.: Most importantly, had the advocates for the petitioners in impugned Order of Hon’ble High Court of Madras contended the settled position of Rule 5 of erstwhile Cenvat Credit Rules, 2004, then it might be possible that Hon’ble High Court of Madras would have delivered Order in favour of petitioners since Rule 5 of Cenvat Credit Rules, 2004 has allowed refund of both inputs & input services in case of accumulated Cenvat credit in excise regime.