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Informist, Wednesday, Jul. 9, 2025

 

NEW DELHI - The Supreme Court on Wednesday rejected the central goods and services tax department's notice to Ford India Pvt. Ltd. seeking INR 533.45 million that was refunded to the company by the department as accumulated input tax credit. The apex court upheld a Gujarat High Court verdict that had quashed the tax department's order to recall the refund given to Ford India and subsequent demand notice for its payment.

 

Ford India is engaged in the business of manufacture and supply of passenger cars, parts, components and engines thereof. It also exports goods without payment of Integrated goods and services tax under the Letter of Undertaking in terms of Section 16 of the Integrated Goods and Services Tax Act, 2017, the petition said.

 

Prior to the implemention of the goods and service tax regime, the petitioner was registered under the provisions of the Central Excise Act, 1944 and was discharging appropriate central excise duty on clearance of final products from its factory premises. For use in the manufacture of final products, the petitioner Ford India was procuring various inputs and input services with respect to which it availed the central value added tax credit in terms of Central Value Added Tax Credit Rules, 2004.

 

After the Central Goods and Services Tax Act, 2017, came into force, the petitioner was entitled to carry forward the CENVAT credit into the GST regime. The petitioner had supplied passenger cars, parts, components and engines to customers located in India and abroad during the relevant period from July 2017 to September 2017 and received various inputs and input services by way of input tax credit. The petitioner had also filed requisite return in Form GSTR-3B during the relevant period. 

 

During the aforesaid period, the petitioner also opted to export the goods manufactured without payment of Integrated goods and services tax and therefore, the income tax credit for the said period was accumulated and consequently, the petitioner filed a refund claim of accumulated credit. 

 

Initially, the tax department sanctioned the refund by separate orders to Ford India. However, later, the department said that Ford India was not eligible to claim the refund for the respective months by utilising the transitional credit as on Jul. 2017. The tax department said the petitioner did not have any unutilised income tax credit and ignored the transitional credit in the electronic credit ledger of the petitioner, said Ford India. "....the respondent-authorities could not have adopted an hypertechnical approach by depriving the petitioner of the CENVAT credit which was available as on Jul. 1, 2017 on the ground that such credit was reflected in the Electronic Credit Ledger only in the month of August, 2017," said the high court in the appeal.  End

 

Reported by Surya Tripathi

Edited by Vandana Hingorani

 

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