ORDER

These two appeals have been filed under Section 107 of the Central Goods and Service Tax Act, 2017 by Sh. Deepanshu Agrawal, M/s ATCG India, IInd Floor, A-206, Spectrum Tower, BDI Sunshine City, Bhiwadi (hereinafter also referred to as “the appellant”) against the Order No. ZV0804200296271 dated 16.04.2020 (hereinafter called as “the impugned order”) passed by the Assistant Commissioner, Central Goods & Service Tax Division-C, Bhiwadi (hereinafter called as the “adjudicating authority”) as mentioned below. As common issue is involved in all these two appeals therefore, I take up the same for decision simultaneously:

S. No.	Appeal No	Order  in Original  No. & date (Impugned Order)  & date (lmpugned order)	Period of dispute	Order sanctioning /rejecting refund
1	2	3	4	5
	APPL/JPR/CGST/AL/29/VI/2020/	Order No. ZV0804200296271 dated 16.04.2020	Appellant has filed refund claim under Section 54(3) (ii) of the  CGST Act, 2017of ₹ 6,50,000/- for the period April to September 2019 on account  of inverted duty structure.	Refund rejected ₹ 6,50,000/- Total Rs.  ₹ 6,50,000/-
2	APPL/JPR/CGST/AL/30/VI/2020	Order No. ZV0804200296 271 dated 16.4.2020	Appellant has filed refund claim under Section 54(3) (ii)   of the  CGST Act, 2017 of ₹ 7,00,000/- for the period October to December 2019 on account  of inverted duty structure.	Refund rejected ₹ 7,00,000/- Total Rs.  ₹ 7,00,000/-

2.  BRIEF FACTS OF THE CASE:

2.1  The appellant having GSTIN No.08AJPA6514HIZY is engaged in activity of trading business i.e. Supply of Goods such as Scientific and Technical Instruments, Apparatus, Equipment etc., The effective rate of GST on Scientific and Technical Instruments, Apparatus, Equipment is 18%. The appellant had also part supply of said goods to Public Funded Research Institutes at 5% rate under Notification No.47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017.

2.2  On examination of the refund claims and documents uploaded with the refund claims by the appellant, the adjudicating authority observed that the appellant procured the Scientific and Technical Instruments, Apparatus, Equipment. , from various suppliers on payment of 18% tax and supplies the same as such even without change of its packing to various research institutes under the purchase orders on the payment of 5% tax by availing exemption Notification No.47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017 and part supplies were also made to other purchasers on full rate of tax i.e. 18%. The supplies made at reduced rate resulted in accumulation of ITC of which the taxpayer have filed refund claims for the quarter ending September-2019 and December-2019.

2.3  The adjudicating authority has also found that the appellant has procured the Scientific and Technical Instruments, Apparatus, Equipment etc., and supplied the same as such i.e. without even repacking to the Public Funded Research Institutes, the provisions clause (ii) of sub section (3) of Section 54 of the CGST Act, 2017 for refund of accumulated credit (ITC) on account of rate of tax on input being higher than the rate of tax on output supplies appeared to be not applicable, as the same is not covered under the definition of input as defined under Section 2(59) of the CGST Act, 2017 for the outward supplies.

2.4  Accordingly, the adjudicating authority issued a Show Cause Notices dated 30.03.2020 to the appellant proposing therein rejection of refund claims of ₹ 6,50,000/- and 7,00,000/-   respectively. Further, after considering their submission, the adjudicating authority has rejected the refund claims and passed the impugned order vide FORM-GST-RFD-06 dated 16.04.2020 filed by the appellant.

3.  Being aggrieved with the impugned order dated 16.04.2020, the appellant has filed the appeals on the following grounds which may be summarized as under:-

• that the appellant submit that while rejecting the refund claim Ld. AO have erred in stating that Scientific and Technical Instruments, Apparatus, Equipment etc., are not covered under the definition of inputs as defined under Section 2(59) of the CGST Act, 2017.
• that the subject Goods are covered under the definition of goods.
• that as per Section 2(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;
• that, on plain reading of the above definition it is clear that any goods used by supplier in the course or for furtherance of business falls under the definition of inputs.
• that, Ld AO have out rightly erred in holding that such goods can not be classified as inputs under Section 2(59) of the CGST Act, 2017 when they are removed as such. Whereas Section 2(59) does not have any such explanation associated with it.
• that definition of Input is elaborated as under:

(i)  It should be goods other than capital goods;

(ii)  It should be used or intended to be used by supplier in the course of furtherance of business;

• that goods have been defined under Section 2(52) of the CGST Act, 2017- “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
• that all kind of moveable property excluding securities and money are considered as goods. Actionable claims are also considered as goods. In the present case Scientific and Technical Instruments, Apparatus, Equipment. , happens to be goods and are not in dispute.
• that goods shall be used by the supplier in the course of the furtherance of business. It is nowhere disputed that appellant is a supplier duly registered under the provisions of the Act. Supplier is defined under Section 2(105) of the act as

(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied;

• that in the present case Appellant is supplier of goods on perusal of definition mentioned above even agent acting on behalf of supplier who have supplied goods is also included in the definition of supplier and term supply is very broad in nature and its scope has been clearly defined under Section 7 of the CGST/SGST Act, 2019.

SECTION 7. Scope of supply. – (1) For the purposes of this Act, the expression “supply” includes -(a) all forms of supply of goods or services or such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b)  import of services for a consideration whether or not in the course or furtherance of business; [and]

(c)  the activities specified in Schedule I, made or agreed to be made without a consideration; [ * * *]

3[(d)* * *]

[ (1A) where certain activities or transactions, constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.]

(2) Notwithstanding anything contained in sub-section (1), –

(a) activities or transactions specified in Schedule Ill; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of [sub-sections (1), (IA) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as –

(a)  a supply of goods and not as a supply of services; or

(b)  a supply of services and not. as a supply of goods.

• that, phrase in the course of furtherance of business needs to be examined in detail as it has been used again in explaining scope of supply. Term business have been defined under Section 2(17) of CGST /SGST Act, 2017 “business” includes-

(c)  any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;

(d)  supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;

(e)  provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;

(f)  admission, for a consideration, of persons to any premises;

(g)  services supplied by a pa-son as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;

[ (h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and]

(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;

• that in reference of definition of business phrase “in the course or furtherance of business” is discussed below:

Every person carries out certain activities regularly for running trade or commerce. Such activity could be trading of goods, manufacturing of goods and rendering of service e.g. a photographer carries out the activity of clicking photos, processing of firms, developing and printing on paper. These activities are essential for the purpose of carrying out his activity. Therefore, these activities can be considered as performed in the course of business. In the present case appellant have procured goods to sale them to their customers to earn profit or for the purpose of commerce. Such activity even if removed as such or without repacking is termed as trade and included in the definition of business. It is worthy to mention here that Ld AO have denied their refund only on this ground that removal of goods as such or trading of goods is not in the course or for further of business.

• that Section 54 does not bar refund on account of Inverted Tax Structure in case of Trading of Goods.

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period

Provided that no refund of unutilised input tax credit shall be allowed in cases other than –

(i)  zero rated supplies made without payment of tax;

(ii)  where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council .

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty .

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies

• that there is no limitation on sanctioning of refund to trading concern. The only limitations which have been clearly specified in the first & second proviso is that it is not available in following cases
• where the goods exported out of India are subjected to export duty.
• if drawback is availed or refund with respect to IGST has been claimed by the supplier.
• that appellant are forced to sell goods at reduced rate because of notification, hence denial of refund of excess input tax credit is bad in law.

The appellant has also placed reliance on the findings pf Hon’ble Apex Court and High Court of Delhi in the case of M/s Panacea Biotech Limited.

4.  Personal Hearing in the case was held on 05.11.2020 through video conference, wherein, Shri Mohit Golyan, Chartered Accountant on behalf of the appellant, appeared for personal hearing through video conference and explained the case in detail and reiterated the submission already made in the grounds of appeal and requested to decide the case at the earliest.

5.  I have carefully gone through the case records and submission made by  the appellant in the appeal memorandum as well as oral submission at the time of personal hearing. I find that the adjudicating authority has rejected the refund claim amounting to ₹ 6,50,000/- and ₹ 7,00,000/- respectively on the ground that the appellant has procured the Scientific and Technical Instruments, Apparatus, Equipment etc., from various suppliers on payment of 18% tax and supplies the same as such even without change of its packing to various research institutes on the payment of 5% tax by availing exemption Notification No.47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017 and part supplies were also made to other purchasers on full rate of tax i.e. 18%. The adjudicating authority has not treated the impugned goods as “Input” as defined under Section 2(59) of the CGST Act, 2017 for the purpose of refund claim under Inverted duty structure and rejected the refund claim.

The issue involved in the present case is that whether the goods on which credit is accumulated and refund is claimed can be treated, as ‘Input and falls under the purview of inverted duty structure or otherwise’.

Section 2(52) and 2(59) of the CGST Act, 2017 read as under:-

“goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;

“input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;

Section 54(3) of the CGST Act, 2017 reads as under:-

Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period  :

Provided that no refund of unutilized input tax credit shall be allowed in cases other than –

(i) zero-rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council .

Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty :

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both claims refund of the integrated tax paid on such supplies.

7.  Rule 89 (5) of the CGST Rules, 2017 prescribes the formula for the maximum refund amount permissible to the assessee on account of inverted duty structure is as under.

[(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula : –

Maximum Refund Amount = { (Turnover of inverted rated supply of goods and services) x Net ITC / Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.

Explanation : – For the purposes of this sub-rule, the expressions –

(a)  Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and

(b)  [“Adjusted Total turnover” and “relevant period” shall have the same meaning as assigned to them in sub-rule (4). ]

8.  In the instant case, I find that the appellant is engaged in the trading activities and supplied the goods i.e. Scientific and Technical Instruments, Apparatus, Equipment etc., as such to Public Funded Research Institutes at 5% rate of GST by availing benefit under Notification No.47/2017-IGST(rate) dated 14.11.2017 and 45/2017-CGST(rate) dated 14.11.2017. The same goods were also supplied by the appellant at the rate of 18% GST to other purchasers. The appellant also did not carryout any further processes i.e. checking of goods, testing, inspection etc., and supplied the goods as such, I also find that no value addition has been done by the appellant. The goods procured are attracting the same rate as the appellant has also supplied the goods at the rate of 18% GST to other purchaser without availing the benefit of notification, therefore such goods can not be treated as Inputs and does not qualify the criteria prescribed under Inverted rated duty structure as provided under Section 54 (3) (ii) of CGST Act, 2017. The case law cited by the appellant is not squarely applicable in the instant case. I do not find force in the contention of the appellant.

9.  In view of the above discussion and findings, and as per legal provisions I do not find any reason to interfere in the impugned order passed by the adjudicating authority.

10.  Accordingly I reject the appeals filed by the appellant