This appeal has been filed under Section 107 of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as the ‘Act’) by M/s Durja Jewellers LLP, A-119, Shiv Shakti Nagar,Model Town, Jagatpur, Jaipur-302017 (hereinafter also referred to as the “appellant”) against the Order-in-Original No.ZP0811200148901 Dated 11.11.2020 (hereinafter as the “impugned order”) passed by the Deputy Commissioner, Central Goods & Service Tax Division-F, Jaipur (hereinafter called as the “Adjudicating Authority”).

2. Brief facts of the case:

2.1 Brief facts of the case are that the appellant having GSTIN:08AAPFD7981A1Z6 is engaged in the business of manufacturing and selling or trading of high end gold jewellery which is taxable under GST @ 3% since inception of GST Law. That during the period April-2019 to March-2020, the appellant has procured various inputs, input services and capital goods taxable at different rates varying from 3% to 28% under GST. That since the rate of tax on outward supplies is 3% whereas the rate of tax on inward supplies varies from 3% to 28%, therefore in spite of utilization of ITC in set off of output tax liability, ITC has been accumulated in Electronic Credit Ledger. Accordingly, the appellant has filed refund application for the refund of ₹ 30,10,739/- for the period from April-2019 to March-2020 accumulated ITC under the category of Inverted Duty Structure under clause (ii) of the proviso to Section 54(3) of the CGST Act,2017.

3. On examination of refund claim, the Adjudicating Authority has found that the appellant has claimed of ITC refund which is inclusive of Input services and Capital goods and the same is not admissible in view of provisions of sub section (3) of Section 54 of the CGST Act, 2017. Subsection (3) of section 54 of the CGST Act provides that refund of any unutilized ITC may be claimed 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). Further, sub section (59) of section 2 of the CGST Act defines inputs as any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Thus, inputs do not include services or capital goods. Further, the appellant has not bifurcated the amount of refund. Accordingly, the adjudicating authority has issued a show cause notice in Form of GST RFD-08 dated 20.10.2020.

4. Further, the adjudicating authority has passed the impugned order in From GST RFD-06 reference No. ZP0811200148901 Dated 11.11.2020 and rejected the refund claim amounting to ₹ 19,62,436/-.

3. Being aggrieved with the impugned order, the appellant has filed the appeal against the said order on the following grounds which may be summarized as under.

a. Sub-section (3) which is the enabling provision for refund of unutilized input tax credit itself states that a registered person may claim refund of “any” unutilized input tax credit.

b. Clause (ii) of the Proviso only provides for the condition when the refund of unutilized input tax credit may be allowed i.e. when the rate of tax on inputs is higher than the rate of tax on outward supplies, refund of any unutilized ITC can be claimed. It does not restrict the refund of unutilized ITC only to the inputs.

c. Thirdly, the formula for computation of the refund under Rule 89(5) is ultra vires the provisions of the statue in a sense that it has travelled beyond the authority of law by restricting the refund only to the inputs component.

d. Restricting refund of ITC on input services and capital goods will violate the provisions of Article 14 of the Constitution of India which in no case appears to be the intent of the legislature.

e. Restricting the refund of unutilized ITC would defeat the very object of GST as it would defeat the objective of reducing the cascading effect of taxes.

Therefore, in view of the above grounds, the applicant strongly believes that the refund of unutilized ITC is not restricted on input services and capital goods under the category “inverted duty structure” under clause (ii) of First Proviso to Section 54(3) of the CGST Act 2017.

4. Personal hearing vide this office letter C.No.APPL/JPR/CGST/JP/18/II/2021 dated 01.03.2021 in virtual mode through video conference was fixed on 10.03.2021.

5. Further, the Authorized Representative of the appellant Sh. Chirag Jain instead of attending personal hearing has sent a E mail dated 10.03.2021 therein he intimated that “the appellant has already submitted an application for withdrawal of appeal vide letter dated 19.02.2021 and copy of the same has also been enclosed for reference. That in this context, the appellant does not wish to appear for personal hearing for the same. Further, he wished to withdraw the appeal filed with immediate effect owing to the cash flow crunches in the settlement of tax liabilities of current months.”

6. In view of the appellant submission, I allow him to withdraw the appeal and accordingly appeal is dismissed as withdrawn.