SIMRAN CHANDWANI v. PRINCIPAL COMMISSIONER OF CGST, DELHI NORTH AND ORS.

Case snapshot

Sections / provisions: Provisions recorded in the judgment

Questions before the Court / Tribunal

• Issue and context: The petitioner has filed the present petition , inter alia, praying that the respondents be directed to refund an amount of ₹5,47,894/ - along with interest. The petitioner is , essentially, aggrieved by the denial of refund of the unutilized Input Tax Credit (hereafter ‘ITC’) on account of the inverted duty structure. Operative disposition: In view of the above, the impugned orders dated 05.04.2021 and 18.02.2022 are set aside. The matter is remanded to the Adjudicating Authority to consider the petitioner’s claim regarding availing ITC in excess of the limit as prescribed under Rule 36(4) of the CGST Rules, as noted above and pass a fresh
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

VIBHU BAKHRU, J. (ORAL) 1. The petitioner has filed the present petition , inter alia, praying that the respondents be directed to refund an amount of ₹5,47,894/ - along with interest. The petitioner is , essentially, aggrieved by the denial of refund of the unutilized Input Tax Credit (hereafter ‘ITC’) on account of the inverted duty structure. 2. The petitioner claims that she is engaged in the business of selling footwear which is chargeable to goods and services tax at the rate of 5% or 12%, depending on whether the price of the footwear is below

Thereafter, the respondent s issued the show cause notice dated 09.03.2021 in FORM GST RFD-08 calling upon the petitioner to show c ause as to why her refund claim should not be rejected. The Proper Officer had flagged four issues in the show cause notice dated 09.03.2021. The first issue related to the mismatch of figures relating to eligible ITC in RFD-01 and GSTR-3B, Annexure B and GSTR-2A. The petitioner was called upon to furnish an explanation regarding the same. The second issue related to two invoices appearing at serial no.55 and 56 of Annexure B involving the ITC of an amount of ₹16,272.18/ - which did not appear in GSTR-2A uploaded by the petitioner.

He reasoned that if the input was the same product as supplied by the petitioner, the goods supplied would not be chargeable to tax at a lower rate. 7. The petitioner replied to the show cause notice on 18.03.2021. The petitioner’s explanation in regard to issue no.1 and 2 were subsequently accepted by the Adjudicating Authority and are not relevant for the present appeal. The petitioner’s claim for refun d was rejected on account of issue no.3 and 4. That are the issues relating to excess ITC in violation of Rule 36(4) of the CGST Rules and on account of the input being the complete finished products but charged at a higher rate.

W.P.(C) No.8164/2022 Page 6 of 11 complete footwear. The petitioner also produced a certificate from the said supplier (M/s V. K. Polymers) certifying that there was an error in the classification of the goods in the invoices. 11. Notwithstanding the aforesaid explanation, the Adjudicating Authority rejected the petitioner’s claim for refund on both the issues, as mentioned above. The petitioner’s c ontention that the mismatch in the ITC appearing in GSTR-2A and her returns, was on account of the suppliers filing returns on a quarterly basis, was not accepted on the ground that the petitioner had not provided the relevant supporting documents along with her reply. 12. The petitioner’s explanation regarding one of the suppliers (M/s V. K. Polymers) erroneously classifying the supplies under HSN 6404 was also not accepted. The controversy is involved in the six invoices issued by M/s V. K. Polymers and that the Adjudicating Authority noted that the goods supplied had been classified under HSN 6404 (which covered complete footwear) in those invoice s. The Adjudicating Authority reasoned that the classification of goods was a vital ingredient in GST and played a very important role in collecting the tax from the tax payer. It did not accept the petitioner’s contention while observing that the petitioner had obtained the declaration from the suppliers “just to shelter their vicious thinking to gain cash refund”. 13. In view of the above, the petitioner’s claim for refund was rejected by an order dated 05.04.2021. 14. The petitioner filed an appeal , which was rejected by an order

The petitioner had also raised a grievance before the Appellate Authority that the tax involved in the six invoices in question amounted to ₹47,698/ - but the Adjudicating Authority had rejected the entire claim. H owever, this contention was not accepted as the Appellate Authority held that the petitioner had not provided segregate d details and the eligible ‘Net ITC’. The Appellate Authority was not persuaded by the petitioner’s contention that it was not engaged in the purchase of the finished goods but was a manufacturer of footwear. The Appellate Authority held that there was no bar or restriction for the petitioner to trade the items manufactured by it and proceeded on the basis that the petitioner had in fact purchase d the complete product from a certain supplier.

Appellant / petitioner / assessee submissions

W.P.(C) No.8164/2022 Page 9 of 11 factor to be consi dered by the Adjudicating Authority. We find no ground to doubt the petitioner’s explanation that the six invoices incorrectly mentions the classification of the goods and therefore, the petitioner ought not to be denied the benefit of the accumulated ITC. 18. We are also unable to accept the reasoning of the Appellate Authority to deny the entire claim on the basis of the six invoices issued by one supplier. According to the learned counsel for the respondents, the petitioner’s claim was denied solely for want of relevant documents. However, there is no dispute that the other suppliers had correctly classified the products supplied by them.

21. The learned counsel for the petitioner has referred to Rule 89 of

The petitioner contends that if there is any excess ITC availed in excess of the limits provided under Rule 36(4) of the CGST Rules, the petitioner may be liable to pay an interest, but the refund of the ITC cannot be denied if there is no excess claim for the “relevant period” as defined under Rule 89(4)(F) of the CGST Rules. The learned counsel also submitted that if Rule 36(4) of the CGST Rules is to be implemented sensu stricto , the petitioner’s claim for the months of December, 2020 would have been higher. 22. It is material to note that t he learned counsel appearing for the respondents does not dispute that if the petitioner is correct that the mismatch is only on account of the suppliers filing the quarterly returns, the petitioner would be entitled to the refund.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

W.P.(C) No.8164/2022 Page 3 of 11 invoices and debit notes which have not been uploaded by the supplier. It was alleged that the petitioner had violated the said condition as laid down in Rule 36(4) of the CGST Rules in respect of her claims for the month of October, 2020 and November, 2020 as she had availed excessive ITC amounting to ₹1,03,210.09/. 6. The fourth issue related to the returns filed by one of the suppliers in respect of the goods supplied to the petitioner. The said supplier had classified the goods supplied as HSN 6404, which was the code for the finished products (complete shoes). The supplier had charged GST at the rate of 18% and therefore, the concerned officer had questioned the petitioner’s claim for the inverted duty structure in respect of the said goods.

We find that th e aforesaid reasoning is based on mere suspicion and surmises and not on cogent material. There is no dispute that the petitioner is engaged in the manufacturing of footwear. As noted above, the controversy relate s to the six invoices issued by one of the suppliers (M/s V.K. Polymers). Undisputedly, the said supplier had charged the GST at the rate of 18% which is chargeable on PVC straps. There is no cavil that the tax chargeable on footwear (compete finished products) is 5% or 12% , depending on the value of the said product . The supplies made by M/s V. K. Polymers under the six invoices in question, were below the price of ₹1,000/-.

Thus, if the said supplier had supplied a complete product, it would have charged GST at the rate of 5%. According to the petitioner, the petitioner had produced a certificate from the said supplier acknowledging that it had incorrectly classified the goods under HSN 6404 instead of HSN 6406. The fact that the GST had been charged by the said supplier at the correct rate, in our view, is a material

Operative decision and relief

He, however, states that the petitioner did not submit the relevant documents to establish th is claim. 23. The learned counsel appearing for the parties state that in the aforesaid circumstances, the matter be remanded to the Adjudicating

W.P.(C) No.8164/2022 Page 11 of 11 Authority to consider the matter afresh, with liberty to the petitioner to produce all the documents as to substantiate its claims. 24. In view of the above, the impugned orders dated 05.04.2021 and 18.02.2022 are set aside. The matter is remanded to the Adjudicating Authority to consider the petitioner’s claim regarding availing ITC in excess of the limit as prescribed under Rule 36(4) of the CGST Rules, as noted above and pass a fresh order. 25. We request the adjudicating authority to pass a fresh order within a period of eight weeks from today. 26. The petition is disposed of in the aforesaid terms.

Ratio and legal principle

The narrow proposition associated with SIMRAN CHANDWANI v. PRINCIPAL COMMISSIONER OF CGST, DELHI NORTH AND ORS. concerns issue and context: the petitioner has filed the present petition , inter alia, praying that the respondents be directed to refund an amount of ₹5,47,894/ - along with interest. the petitioner is , essentially, aggrieved by the denial of refund of the unutilized input tax credit (hereafter ‘itc’) on account of the inverted duty structure. operative disposition: in view of the above, the impugned orders dated 05.04.2021 and 18.02.2022 are set aside. the matter is remanded to the adjudicating authority to consider the petitioner’s claim regarding availing itc in excess of the limit as prescribed under rule 36(4) of the cgst rules, as noted above and pass a fresh The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in W.P.(C) No.8164/2022.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Allowed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Issue and context: The petitioner has filed the present petition , inter alia, praying that the respondents be directed to refund an amount of ₹5,47,894/ - along with interest. The petitioner is , essentially, aggrieved by the denial of refund of the unutilized Input Tax Credit (hereafter ‘ITC’) on account of the inverted duty structure. Operative disposition: In view of the above, the impugned orders dated 05.04.2021 and 18.02.2022 are set aside. The matter is remanded to the Adjudicating Authority to consider the petitioner’s claim regarding availing ITC in excess of the limit as prescribed under Rule 36(4) of the CGST Rules, as noted above and pass a fresh Its practical value lies in the way the Delhi High Court connected the governing provisions—Provisions recorded in the judgment—to the procedural posture and evidence before it.

The authority level is High Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of Provisions recorded in the judgment and the decision date 2023-10-06; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

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Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is SIMRAN CHANDWANI v. PRINCIPAL COMMISSIONER OF CGST, DELHI NORTH AND ORS., the proceeding is W.P.(C) No.8164/2022, and the decision is dated 2023-10-06. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE AMIT MAHAJAN. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with Provisions recorded in the judgment. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Allowed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is REVIEW_APPEAL_SLP_SUBSEQUENT_TREATMENT_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• Provisions in judgment — apply the exact version considered in the judgment.

Case network

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• M/s Padam Kishore and Company through Proprietor Naveen Sachdeva v. Union of India and Others — Delhi High Court · Allowed / set aside
• T V Sundram Iyengar and Sons Private Limited v. Commissioner of GST (State) and Others — Delhi High Court · Allowed / set aside

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