1 RRR, J & JS, J W.P.No.18941 of 2021 APHC010317922021 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3541] FRIDAY, THE TWENTY SECOND DAY OF AUGUST TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM WRIT PETITION No:18941 of 2021 Between: Tata Steel Ltd ...PETITIONER AND The Central Board Of Indirect Tax And Customs and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. LAKSHMI KUMARAN SRIDHARAN Counsel for the Respondent(S): 1. JOSYULA BHASKARA RAO (SR. SC FOR CBIC) 2. GP FOR COMMERCIAL TAX The Court made the following Order: (per Hon’ble Sri Justice R. Raghunandan Rao) Heard Sri Sridharan learned counsel representing M/s. Lakshmikumaran & Sridharan Attorneys, learned counsel for the petitioner and Sri Josyula Bhaskara Rao, learned counsel appearing for respondent Nos.1 and 4. 2 RRR, J & JS, J W.P.No.18941 of 2021 2. The petitioner herein, is a registered person, under the GST Regime, and is engaged in manufacture and production of Iron and Steel products. One of the inputs for production of these products is coal, which is sourced by the petitioner within India and outside India. The petitioner imports coal and stocks it in his stockyard in Gannavaram, in the State of Andhra Pradesh and subsequently transports the coal to manufacturing units situated in different states. 3. In the initial stages of introduction of the GST regime, the Goods and Services Tax (Compensation to States) Act, 2017 (for short the „Compensation Cess Act‟) had been enacted along with the CGST Act and IGST Act. This Act was brought in to ensure that the revenues of the states are not adversely affected on account of the introduction of the GST regime and that the compensation obtained under the GST Compensation Cess Act could be distributed to the States. 4. In view of the provisions of the GST Compensation Cess Act, certain compensation cess had to be paid at the time of import of goods into India. The compensation cess was also payable when the goods are moved across state borders. This was on account of the GST Compensation Cess Act creating a legal fiction, whereby movement of goods from one branch to another branch of the petitioner, across state borders, was also treated as taxable supply which attracts compensation cess. 3 RRR, J & JS, J W.P.No.18941 of 2021 5. The petitioner was also entitled to treat the compensation cess paid, during the import of coal, as input tax credit which can be utilized for clearing the liability that would arise due to the movement of coal, across the State borders. It may also be noted that the compensation cess was levied at the rate of Rs.400/- per metric ton. 6. During the period May 2018 and June 2018, the petitioner paid a total compensation cess of Rs.6.47 crores, during the course of import of the coal. The petitioner was entitled to treat this as input tax credit and utilize this to pay the compensation cess, which arises on account of the movement of coal across the State borders. However, the petitioner, instead of using this input tax credit, had paid cash of Rs.3,30,99,663/- in July 2018 and August 2018. The petitioner contends that this cash payment, for clearing the tax dues, was done by the petitioner out of inadvertence and that the non-usage of the available input tax credit was an inadvertent mistake committed by the petitioner. 7. The petitioner contends that on account of this inadvertence, the tax liability was cleared in cash and the same was reflected in the GSTR-3B Forms filed by the petitioner for the months of July, 2018 and August 2018. Thereafter, from the months of September 2018, the petitioner started availing the input tax credit available in his ledger, arising out of the payment of compensation cess, during the course of import, to clear the tax liability on account of the movement of coal across the State borders. However, the initial 4 RRR, J & JS, J W.P.No.18941 of 2021 input tax credit of Rs.3,30,99,663/- remained and the petitioner was unable to utilize this input tax credit. 8. The petitioner, to utilize the said input tax credit, filed two refund applications, on 26.05.2020, for the periods July 2018 and August 2018. These applications were filed on the ground of excess payment of tax in terms of Section 54 of the CGST Act. After correspondence between the petitioner and respondents, which need not detain us, the petitioner on 17.06.2020 sought to withdraw the refund applications made for July and August 2018 by e-mail. However, the 2nd respondent, passed orders, dated 26.10.2020, rejecting the refund claims, of the petitioner, on the ground that there was no excess payment of tax as claimed by the petitioner, in view of Circular No.26/26/2017-GST, dated 29.12.2017 9. The petitioner appears to have filed another refund application for the month of September, 2018, on 11.09.2020, claiming refund of input tax credit. After issuing show cause notice and considering the objections raised by the petitioner, the 2nd respondent again rejected the application for refund, by an order dated 08.01.2021. 10. After these orders of rejection, the petitioner moved a fresh representation on 09.04.2021 for rectification of FORM GSTR-3B filed for the tax periods of July 2018, August 2018 and September 2018, in order to utilize the legitimate input tax credit available to the petitioner against the liability of compensations for the respective months, which was wrongly paid in cash and 5 RRR, J & JS, J W.P.No.18941 of 2021 to avail consequential benefits. This request was also rejected by the 2nd respondent. 11. Aggrieved by these orders of rejection, the petitioner has approached this Court for a direction to the 2nd respondent to allow the rectification of FORM GSTR-3B for the months of July, 2018, August 2018 and September 2018 so as to avail compensation cess of input tax credit of Rs.3,30,99,663/- along with consequential refund, to modify conditions and rules mentioned in paragraph-4 of CBIC Circular No.26/26/2017-GST, dated 29.12.2017 and for setting aside the order of rejection of refund by the 2nd respondent, dated 26.10.2020. 12. The provisions of the CircularNo.26/26/2017-GST, dated 29.12.2017 was considered by the Hon‟ble High Court of Gujarat, which had set aside the said circular. Appeals had been filed against these judgments before the Hon‟ble Supreme Court in Union of India and Anr. vs. M/s. Mohit Minera1. The Hon‟ble Supreme Court upheld the said Circular No.26/26/2017- GST, dated 29.12.2017. Consequently, the applications for rectification of FORM GSTR-3B would have to be held to be rightly rejected. The prayer of the petitioner, to the extent of setting aside the order of rejection of rectification and the provisions of the Circular No.26/26/2017-GST, dated 29.12.2017 is rejected. 1 61 GSTL 257. 6 RRR, J & JS, J W.P.No.18941 of 2021 13. Sri Sridharan, learned counsel appearing on behalf of the petitioner, while fairly conceding that the judgment of the Hon‟ble Supreme Court in Union of India vs. Bharti Airtel Ltd., and Ors.,2 would preclude any relief being given on the question of rectification of FORM GSTR-3B or setting aside the Circular No.26/26/2017-GST, dated 29.12.2017, or any part thereof, would contend that it would still be open to the petitioner to seek refund of the tax paid in cash, under the provisions of Section 54 of the GST Act. 14. Sri Sridharan, learned counsel for the petitioner would contend that the Circular No.26/26/2017-GST, dated 29.12.2017 specifically provides for refund where adjustment is not feasible and that the petitioner would be entitled to refund of the tax paid in cash. 15. Section 54 (1) of the GST Act, reads as follows: Section 54. Refund of tax.- ** (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such FORM and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in 1[such FORM and] manner as may be prescribed. 2 2021(10) TAXREPLY 4999 7 RRR, J & JS, J W.P.No.18941 of 2021 16. Under this provision, a refund of tax can be sought when there is payment of excess tax. That is where a registered person pays GST over and above his liability, the excess tax paid, by the registered person can be recovered by way of a refund application. In the present case, there has been no excess payment of tax. The petitioner had paid the cess which was due only. An application, under section 54 could not have been maintained and was rightly rejected by the authorities. 17. The petitioner, now claims a refund, on the basis of Circular No.26/26/2017-GST, dated 29.12.2017. Clause 4 of this circular reads as follows: “4. It is clarified that as return in FORM GSTR-3B do not contain provisions for reporting of differential figures for past month(s), the said figures may be reported on net basis along with the values for current month itself in appropriate tables i.e. Table No.3.1, 3.2, 4 and 5, as the case may be. It may be noted that while making adjustment in the output tax liability or input tax credit, there can be no negative entries in the FORM GSTR-3B. The amount remaining for adjustment, if any, may be adjusted in the return(s) in FORM GSTR-3B of subsequent month(s) and, in cases where such adjustment is not feasible, refund may be claimed. Where adjustments have been made in FORM GSTR-3B of multiple months, corresponding adjustments in FORM GSTR-1 should also preferably be made in the corresponding months.” 8 RRR, J & JS, J W.P.No.18941 of 2021 17. This circular has been issued, by the Central Board of Excise and Customs, New Delhi, under section 168 of the GST Act, which binds all the authorities under the Act. The above clause provides for grant of refund, where adjustment is not feasible. The question of whether the claim of refund can be accepted, on the basis of this circular, and whether the conditions set out in the circular are complied for grant of such refund, if any, would also have to be ascertained. 18. For these reasons, this writ petition is disposed of by setting aside the order of the respondent No.2, dated 26.10.2020, with a further direction to the respondent No. 2, to consider the request of the petitioner, for grant of refund, of the compensation cess, only in terms of the Circular No.26/26/2017- GST, dated 29.12.2017, after giving the petitioner an opportunity of hearing. The said exercise is to be completed, within a period of 6 weeks from the date of receipt of this order. There shall be no order as to costs. As a sequel, pending miscellaneous applications, if any shall stand closed. _______________________________ R. RAGHUNANDAN RAO,J __________________________ SUMATHI JAGADAM,J Js. 9 RRR, J & JS, J W.P.No.18941 of 2021 THE HON’ABLE SRI JUSTICE R RAGHUNANDAN RAO AND THE HON’BLE SMT. JUSTICE SUMATHI JAGADAM WRIT PETITION No.18941 of 2021 (per Hon‟ble Sri Justice R Raghunandan Rao) 22nd August, 2025 Js