POPULAR INDUSTRIES vs Commissioner Central Tax & Central Excise, K.C. Jayakumar
- Court
- GST Appellate Tribunal
GOODS AND SERVICES TAX APPELLATE TRIBUNAL
ERNAKULAM BENCH
5TH FLOOR, CR BUILDING, CGST HEADQUARTERS, I S PRESS ROAD,
ERNAKULAM - 682018
APPEAL NO: APL/42/ERN/2026
[arising out of the OIA No. CHN-GST-000-APP-68-2021-JC dated 14-9-2021 issued on 15-
9-2021 by the Joint Commissioner (Appeals), CGST, Kochi]
POPULAR INDUSTRIES
............. Appellant
Versus
THE COMMISSIONER OF CGST,
KOCHI
......... Respondent
For Appellant For Respondent
Lal Kurian, Cost Accountant Baiju Daniel, AR
CORAM: Hon’ble Shri Subramanya Rayaprol, Vice-President
Hon’ble Shri Ramamoorthi Sriram, Member (Technical)
………………………………………………………………………………………………….
FINAL ORDER NO: 26/EKM/KERALAM/2026
Date of Hearing: 28-9-2026
Date of Order: 13-11-2026
Order Per: Hon’ble Shri Subramanya Rayaprol, Vice-President
1.0 Mr Lal Kurian, Ld Cost Accountant appeared for the appellant and Mr Baiju
Daniel, Ld Assistant Commissioner, appeared as AR for the respondent.
2.0 Ld Cost Accountant appearing for the appellant submits that the brief issue in
the present case is that they had filed a refund claim of Rs. 6,24,536/- for the period
Feb-2018 and Mar-2018, being the unutilised credit due to exports under LUT under
Page 1 of 9
Section 54(3) of the CGST Act, 2017. The Assistant Commissioner sanctioned the
refund of Rs. 6,16,479/- after deducting the ineligible credit of Rs. 8,057/-. The
Commissioner of CGST, reviewed the said refund order dated 24-1-2019 and held
that the appellant-taxpayer was eligible only for Rs. 5,48,486/- and there was an
excess refund of Rs. 67,993/-. Hence, the Assistant Commissioner filed an appeal
before the JC (Appeals) for erroneous refund of said amount. The JC (Appeals)
allowed the appeals filed by the Revenue (Centre) modified the OIO. He further
submits that the JC (Appeals) has wrongly reduced the NET ITC by Rs. 1,58,760/-
while calculating the Refund claim under Rule 89(4) of the CGST/KGST Rules,
Aggrieved by such modification, the appellant has filed this appeals.
3.0 The Ld AR reiterates the findings of the JC (Appeals), and also filed a written
submission on 5-10-2026. He submits that the appellant is engaged in the
manufacture, supply and export of candles. The appellant had filed refund application
claiming a refund of 6,24,536/- for the tax period from 02/2018 to 03/2018 under the
category “unutilized ITC on account of exports without payment of tax under LUT” in
terms of Rule 89(4) read with Section 54 of the CGST /KGST Act, 2017. The Proper
Officer, after due verification of the claim, sanctioned a refund of Rs. 6,16,479/- under
Section 54(5) of the CGST Act, 2017, and rejected the claim for refund of Rs. 8,057/-
as ineligible, vide Refund Final Sanction Order No. RFD-80/FINAL/2018 KKD dated
24.01.2019. The Department preferred an appeal before the Joint Commissioner
(Appeals), Kochi, against Refund Final Sanction Order No. RFD-80/FINAL/2018 KKD
dated 24.01.2019, on the ground that the Net ITC adopted for determining the eligible
refund was incorrect, resulting in an excess refund of Rs. 67,993/- being sanctioned
to the Appellant. He further submits that the JC (Appeals) held that the ITC of Rs.
Page 2 of 9
1,58,760/- reversed by the appellant in their Electronic Credit Ledger through GSTR-
3B for February 2018, along with the ITC of Rs. 8,057/-, was not eligible for inclusion
in the Net ITC for the purpose of determining the eligible quantum of refund.
Consequently, the Appellate Authority allowed the appeal filed by the CGST
Department for demanding excess refund of Rs. 67,993/- sanctioned to the Appellant
as per the working at para 3 of the OIA cited above and set aside Refund Final
Sanction Order No. RFD-80/FINAL/2018 KKD dated 24.01.2019, vide O-in-A No.
CHN-GST-000-APP-68-2021-JC dated 15.09.2021 to that extent. Aggrieved by the
said Order, the Appellant has filed the present appeal before this Tribunal against O-
in-A No. CHN-GST-000-APP-68-2021-JC dated 15.09.2021, contending that the
Proper Officer had already considered and deducted the ITC of Rs. 1,58,760/- from
the Net ITC adopted for determining the refund for the tax period September 2017.
Therefore, according to the Appellant, the subsequent deduction of the same amount
from the Net ITC adopted for determining the refund for February 2018 amounts to
duplication. The Appellant further contends that no show cause notice under Section
73 of the CGST Act, 2017, was issued for recovery of the excess refund of Rs. 67,993/-
sanctioned by the Department. It is also contended that the entire appellate
proceedings are vitiated on the ground that the hearing was conducted by the
Additional Commissioner (Appeals), whereas the Appellate Order was issued by the
Joint Commissioner (Appeals), and, therefore, the said order is not legally enforceable.
3.1 He also submits that the Rule 89(4)(B) of the CGST Rules, 2017, defines ‘Net
ITC’ as the input tax credit availed on inputs and input services during the relevant
period other than the input tax credit availed for which refund is claimed under sub-
rules (4A) or (4B) or both. As per the provisions of Section 54 of the CGST Act, 2017,
Page 3 of 9
read with Rule 89(4) of the CGST Rules, refund of ITC is allowed in case of zero-rated
supplies made without payment of tax under LUT. He submits that the Appellant had
reversed ITC amounting to Rs. 1,58,760/- in the GSTR-3B return filed for the tax period
February 2018. However, while filing the refund application, the Appellant included the
said amount, along with ineligible ITC of Rs. 8,057/-, in the Net ITC. The Appellate
Authority found that the Proper Officer had not taken these aspects into consideration
while passing the order sanctioning the refund to the Appellant at para 15 of the OIA,
which resulted in excess sanction of refund amounting to Rs. 67,993/-. The removal
of ineligible ITC from the Net ITC adopted for claiming refund under Section 54 of the
CGST Act, 2017, and the reversal of ITC from the Electronic Credit Ledger through
GSTR-3B are two distinct activities and cannot be treated as one and the same.
Hence, the contention of the Appellant that the Proper Officer had already considered
and deducted the ITC of Rs. 1,58,760/- from the Net ITC adopted for determining the
refund for the tax period September 2017 and, therefore, that the subsequent
deduction of the same amount from the Net ITC adopted for determining the refund
for February 2018 amounts to duplication, is not acceptable. He prays that the OIA be
upheld and the appeals be rejected.
4.0 Heard both sides.
4.1 We find that the only issue to be decided is whether the JC (Appeals) has
correctly calculated the Refund Amount as per the formula prescribed under Rule
89(4) of the CGST/KGST Rules.
Page 4 of 9
4.2 We find that the formula given for calculating the Refund amount is prescribed
in Rule 89(4) of the CGST / KGST Rules, as below.
Eligible Refund Amount = (Turnover of zero-rated supply of goods + Turnover
of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover.
4.3 We find that as per the dispute between the eligible refund amount as
calculated in the OIO dated 1-11-2018 by the Assistant Commissioner as mentioned
in Para 2 (I) and Para 3 of impugned OIA dated 14-9-2021 by the JC (Appeals) is only
regarding the NET ITC, whereas all other figures are not disputed. We therefore put
all the figures in a comparative manner for more clarity.
As per Sanctioning Authority
As Per JC (Appeals)
Para 2 (I) of OIA (Rs.)
Para 3 of OIA (Rs.)
Turnover of zero-rated
76,66,267 76,66,267
supply of goods (A)
Turnover of zero-rated
0 0
supply of services (B)
Net ITC (C) 13,69,941 12,11,181 – 8,057
= 12,03,124
Adjusted Total Turnover
1,68,16,223 1,68,16,223
(D)
Eligible Refund Amount
6,24,536 – 8,057
5,48,486
= [(A+B)C/D] *
= 6,16,479
4.4 We find that the appellant has also submitted the copies of the GSTR3B filed
for the months February-2018 and March-2018. As per the GSTR3B, in the Table at
4 (C) – Eligible ITC – NET ITC for both the months, the NET ITC declared by the
appellant is as below.
Page 5 of 9
February-2018 - GSTR3B TABLE 4 (C) – Eligible ITC – NET ITC Available
March-2018 - GSTR3B TABLE 4 (C) – Eligible ITC – NET ITC Available
4.5 Summarising both the figures, we find that the Total Net ITC for the period of
Refund claim i.e. from February-2018 to March-2018 is as below:
IGST CGST SGST Total Net ITC
Feb-18 769981.96 68045.50 68045.50 906072.96
Mar-18 64293.77 120407.49 120407.49 305108.75
834275.73 188452.99 188452.99 1211181.71
Therefore, the correct NET ITC available as per the GSTR3B Returns for the Refund
Period is Rs. 1211181/- which is taken for calculation by the JC (Appeals). Hence, the
figures which are visible on record, are not disputed by either side.
4.6 As regards, the claim of the appellant that they had made some reversal of ITC
in Feb-2018, pertaining to duplicate availment of ITC in the earlier period of Sept-2017,
Page 6 of 9
at the time of sanction of Refund claim of Sept-2017, we find that it is not relevant to
the present issue of calculation of actual refund claim amount for the period Feb-2018
to March-2018.
4.7 We find that the JC (Appeals) has correctly arrived at the refund figures, by
taking the NET ITC as per the GSTR3B Returns, without getting influenced by the
submissions made by the appellant regarding the reversals of ITC made by them in
Feb-2018, and strictly applying the formula prescribed in Rule 89(4) of CGST/KGST
Rules. We also find that the appellant has not submitted any proof as to any such
reversals etc made by them on record.
4.8 Therefore, having verified the figures from the GSTR3B Returns filed by the
appellant themselves, we agree with the finding of the JC (Appeals) that the correct
NET ITC available to the appellant was Rs. 12,11,181/- during the period Feb-2018 to
March-2018. The Eligible Refund amount as per the formula prescribed in Rule 89(4)
of the CGST / KGST Rules comes to Rs. 5,48,486/- after deducting the ineligible
undisputed credit of Rs. 8,057/-. But in the OIO, an amount of Rs. 6,16,479/- was
sanctioned, which was in excess of Rs. 67,993/- (6,16,479 minus 5,48,486).
4.9 We also find that in a similar issue, the Hon’ble Coordinate Bench of GSTAT,
Ranchi in the case of Shivam Iron & Steel Co Ltd cited in 2026 (9) TMI 1740 - GSTAT
RANCHI has held that,
“25. Considering the present facts and the law decided by the Hon’ble Supreme Court
and High Courts in the similar issues, we are of the opinion that the circular confined
to Paragraph 43(c)of Circular No. 125/44/2019-GST dated 8.11.2019 cannot run
contrary to the statutory rules 89(4) of the CGST Rule. However, we are of the view
that when the entitlement of refund is not disputed and both the authorities have
Page 7 of 9
confirmed the claim of the Respondent and the conditions of section 54(3) of the Act
and Rule 89(4) of the Rules are being complied with, in such facts and circumstances,
procedure/clarification in the circular would not prevail over the statutory prescription
under which the right of the Respondent to get refund is established.
Therefore, the refund of accumulated ITC (cess) in the present case has been calculated
under Section 53(3) of CGST Act and in accordance with rule 89 (4) of CGST Rule and
there is no defect found in the order passed by the 1st Appellate Authority. The
Paragraph 43(c) circular has not been issued in term of rule 89(4) of CGST Rule.
Hence, question framed is answered against the Appellant and in fever favour of the
Respondent.
We, therefore, find no infirmity in the order passed by the First Appellate Authority and
uphold the same. Consequently, the appeal filed by the Appellant-Revenue is
dismissed.”
4.10 In the present case, the Rule 89(4) and the formula prescribed, has been
correctly and strictly applied by the JC (Appeals) and arrived at the Eligible Refund,
and allowed the appeals of the Revenue with a finding that there has been an excess
sanction of refund to the extent of Rs. 67993/-.
4.11 We also find that the appellant has also not approached this Tribunal with clean
hands. The appellant has submitted the GSTR3B for the periods Feb-2018 and March-
2018, but has not correctly shown the NET ITC while applying for the Refund claim for
the same period. The figures submitted by the appellant in the refund claim and the
figures actually reflecting in the GSTR3B at Table 4 (C) are different. We find no force
in the argument made by the appellant that they had reversed some amount of earlier
period, but the appellant has not submitted any proof of such reversal by way of DRC-
03 or DRC-03A, or any other such document either before the JC (Appeals) nor before
this Tribunal. Just making oral and written statements of having made reversals
without providing any proof of such reversal, will not at all sustain for long. The
appellant has also tried to hide the information as regards the correct NET ITC
Page 8 of 9
available in February-2018 and March-2018, at the time of filing the actual Refund
Claims.
4.12 We find that the Ld AR has correctly pointed out that the reduction in refund
claim of Sept-2017, of the ineligible ITC amount, and actual debit from the E. Credit
Ledger in Feb-2018 are two different events, and there is no duplication of the reversal
of ITC amount.
5.0 We do not find any infirmity in the order of the JC (Appeals) and the same is
upheld. Accordingly we pass the following order.
ORDER
The impugned OIA dated 14-9-2021 is upheld and the appeals filed by the appellant
is hereby rejected.
(order pronounced in open court)
Rayaprol
Subramanya
Viswanatha
Digitally signed by
Rayaprol Subramanya
Viswanatha
Date: 2026.11.13
19:32:04 +05'30'
Subramanya Rayaprol
Vice-President
Ramamoorthi
Sriram
Digitally signed by
Ramamoorthi Sriram
Date: 2026.11.13 20:50:36
+05'30'
Ramamoorthi Sriram
Member (Technical)
Date: 13-11-2026
Page 9 of 9