Madras High Court: Revision Order under TNGST Act against Renault Nissan Quashed For Travelling Beyond the Scope of Revision Proceedings

Madras High Court: Revision Order under TNGST Act against Renault Nissan Quashed For Travelling Beyond the Scope of Revision Proceedings

Justice Senthilkumar Ramamoorthy of the Madras High Court Quashed Revision Order Under Tamil Nadu Goods and Service Tax Act (TNGST Act) against Renault Nissan for Exceeding Scope of Revision Proceedings Under Section 108

The court has nullified the revision order and sent the matter back for reassessment. The respondent department received instructions to afford the petitioner a fair opportunity, including a personal hearing, following which they are required to issue a detailed order. The entire process is mandated to conclude within a maximum period of two months.

The petitioner, operating in the manufacturing and supply sector of passenger cars, benefits from concessional rates provided by Notification No. 40/2017-Central Tax dated October 23, 2017. However, this has resulted in an accumulation of input tax credit (ITC) owing to the higher GST paid on input goods and services. Consequently, the petitioner lodged a refund application, which was partially approved. Subsequently, following an amendment to the Central Goods and Services Tax Rules, revision proceedings were initiated, culminating in the issuance of an order.

The petitioner assailed the order issued in revision proceedings on multiple grounds. The first ground of challenge was that the refund order did not warrant revision under the facts and circumstances. By contending that the law as it stood on the date of application permitted a refund claim in respect of unutilized ITC arising out of both inputs and input services, the petitioner submitted that the revision proceedings traveled beyond the scope of Section 108 of the TNGST Act.

The second contention was that the levy of interest under the impugned order was contrary to Section 50(3) of the TNGST Act. With reference to the impugned order, the petitioner submitted that the conclusions were not supported by reasons. Furthermore, the petitioner argued that the imposition of a penalty was erroneous since the refund claim was made bona fide under the applicable law. Additionally, it was pointed out that the impugned order did not contain any reasons in support of the levied penalty.

The department argued that the scope of Section 108 of the TNGST Act is broad enough to encompass revision proceedings in the circumstances of this case. They further contended that, due to the amended Rule 89(5), there is no justification for intervening with the challenged revision order.

The court observed that the petitioner has challenged the order on the grounds that it exceeds the scope of revision proceedings under Section 108 of the TNGST Act. The impugned order did not address this objection. Additionally, the petitioner argued against the levy of interest under Section 50(3) of the TNGST Act and contested the imposition of a penalty based on the facts and circumstances. Although these contentions were acknowledged in the impugned order, the respondent did not provide reasons for rejecting them. Due to this lack of engagement, the court held that the impugned order requires intervention.

Therefore, the court annulled the impugned order and remanded the matter for reconsideration. The respondent is instructed to afford the petitioner a fair opportunity, including a personal hearing, and then issue a reasoned order. This process must be completed within a maximum period of two months from the date of receiving a copy of this order, as determined by the court.