Hyderabad: The Telangana High Court dismissed two petitions by PH Jewels over a Rs 3.54 crore input tax credit (ITC) refund and alleged diversion of duty-free gold into the domestic market.
The court noted that tax officials had enough reasons to reopen the case. The proceedings were neither time-barred nor lacking jurisdiction, it said.
The dispute rose from an assessment order that had permitted PH Jewels, a retail jewellery establishment, an ITC refund of Rs 3.54 crore, which was later disallowed.
Previously, in October 2023, the High Court ordered the Commercial Taxes Department to release the refund within 30 days. Instead, the department sought a review, stating that the company had withheld key facts regarding the proceedings initiated by the Customs authorities and the Directorate of Revenue Intelligence. In June 2024, the court accepted the contention, recalled the earlier order and reopened the case for fresh evaluation.
PH Jewels argues second revision was time-barred
The second revision was barred by the four-year limitation period provided under section 32 of the Telangana Value Added Tax Act, PH Jewels argued. It added that the Commissioner of Commercial Taxes had no authority to review or modify an order already subjected to revision, maintaining that there was no compelling evidence that its refund was based on forged documents.
However, the department claimed that along with PH Jewels, three other jewellers had purchased 2,458 kilograms worth Rs 638 crore of duty-free gold from nominated agencies but redirected the jewellery to the domestic market by using falsified shipping receipts to show export compliance.
‘Purchased 872 kg, exported only 456.6 kg,’ says commercial taxes dept
PH Jewels procured 872 kg of gold from Metals and Minerals Trading Corporation (MMTC) Ltd and exported just 456.6 kg through 14 shipping bills, the department alleged.
Copies of the actual shipping bills were reportedly reutilised to get more gold from State Bank of India, HDFC, and Diamond India Ltd. The officials also said they found discrepancies between cargo and airport departure logs, alleged hawala routing of export proceeds and pending DRI proceedings.
The High Court deemed the suppression of proceedings as fraud on the court and added that the fraud quashes all further acts.
The bench also said the period during which previous favourable outcomes remained applicable could be excluded when calculating the limitation period under section 32(6) of the Act. It dismissed both petitions without costs and granted PH Jewels time to submit its response to the revisional notice.
