Facts of the Case

The petitioner, M/s Chromotolab and Biotech Solutions, was engaged in trading and clearance of finished excisable goods, including analytical instruments and consumables such as mass spectroscopy products, standards and impurities machinery, laboratory products, scientific columns, modular gas generators and other goods mainly used by pharmaceutical companies.

The petitioner supplied finished goods to pharmaceutical companies located in Special Economic Zones (SEZs) under tax invoices. According to the petitioner, such invoices were examined and admitted by the competent SEZ officer. The supplies constituted zero-rated supplies under Section 16 of the IGST Act, 2017.

For supplies made during August 2017 to October 2017, the petitioner claimed refund under Section 54 of the CGST Act, 2017. The refund application was filed on the common portal in FORM GST RFD-01/RFD-01A, and an ARN acknowledgment was generated. The refund claim involved ₹3,48,497.

The petitioner was thereafter called upon to explain why an amount of ₹3,37,076 should not be rejected as barred by limitation. By order dated 19.11.2019, refund of ₹11,421 was sanctioned, while the balance claim of ₹3,37,076 was rejected as time-barred.

The petitioner subsequently submitted an undertaking that it would not file an appeal against rejection of the refund claim and requested re-credit of the rejected amount to its electronic credit ledger. According to the record, the authority later acknowledged delay in re-crediting due to a technical issue, but the re-credit was not granted despite follow-up and complaints. The petitioner therefore invoked the writ jurisdiction of the Gujarat High Court under Article 226.

Issues Involved

The principal issue before the Gujarat High Court was:

Whether, for determining the two-year limitation period under Section 54 of the CGST Act, the relevant date of filing the GST refund claim should be the date on which the refund application was electronically filed on the common portal and acknowledged through generation of ARN, or the later date on which the printout of the application with supporting documents was physically submitted to the jurisdictional proper officer?

A connected issue was whether the procedural requirements prescribed by the Circular dated 15.11.2017 could operate so as to defeat a refund claim that had already been electronically filed within the statutory limitation period.

The Court also considered the petitioner's entitlement to re-credit of the rejected refund amount under Rule 93 of the CGST Rules and consequential interest.

Petitioner’s Arguments

The petitioner contended that the refund application had been filed on the GST common portal within the prescribed period, and an ARN had been generated acknowledging the electronic filing.

It was argued that once the refund application had been validly uploaded and acknowledged on the common portal, the date of such online filing had to be treated as the date of filing for the purpose of the limitation prescribed under Section 54 of the CGST Act.

The petitioner maintained that the later physical submission of the printout and supporting documents could not retrospectively render the electronically filed refund application time-barred.

It was further contended that the respondents had failed to act upon the electronically filed application for a substantial period and that procedural requirements under a circular could not override or curtail substantive rights flowing from the statute and rules.

The petitioner also sought re-credit of ₹3,37,076 to its electronic credit ledger with interest from the date of the rejection order dated 19.11.2019 until realisation.

Respondents’ Arguments

The respondents contended that although the petitioner had generated an ARN on the common portal, the printout of FORM GST RFD-01A, together with the necessary supporting documents, was physically submitted to the department only on 17.10.2019.

Reliance was placed on the Circular dated 15.11.2017, particularly the procedural requirement that the printout of the electronically filed refund form, along with documentary evidence, be submitted before the jurisdictional proper officer within the statutory time limit.

According to the respondents, the refund application could be treated as complete only when the physical printout and necessary documents were submitted. Therefore, 17.10.2019 was asserted to be the actual date of filing the complete refund claim.

The respondents argued that invoices issued up to 16.10.2017 were hit by the two-year limitation under Section 54 and that the partial rejection of the refund claim was consequently justified.

Court Order / Findings

The Gujarat High Court held that the date of filing the refund application on the GST common portal must be treated as the date of filing the refund claim for determining compliance with the limitation requirement under Section 54 of the CGST Act read with Rule 89 of the CGST Rules.

The Court noted that it was undisputed that the petitioner had filed the refund application on the common portal and that an ARN had been generated. The Court further observed that the refund claim otherwise satisfied the requirements of Section 54 and the attendant rules and that the petitioner was eligible to seek refund.

The High Court held that the procedural mechanism contained in the Circular dated 15.11.2017, requiring physical submission of the printout and documents, could not override the statutory provisions to the detriment of the assessee.

Accordingly, the Court concluded that the refund application’s electronic filing date on the common portal was decisive for limitation purposes, and the subsequent physical submission date could not be used to treat the claim as time-barred.

The Court directed the respondents to:

  • Re-credit ₹3,37,076 to the petitioner’s electronic credit ledger;
  • Pay interest at 9% per annum from 19.11.2019, being the date of the rejection order, until realisation; and
  • Complete the exercise within two weeks from receipt of the order.

The petition was accordingly allowed, and the Rule was made absolute.

Important Clarification

This judgment establishes an important distinction between a statutory limitation requirement and a procedural requirement introduced through a departmental circular.

Where a GST refund application is filed electronically on the common portal within the prescribed statutory period and the system generates an ARN acknowledging such filing, the later physical submission of the printout and supporting documents cannot, merely by reference to a circular, shift the filing date so as to make the refund claim time-barred.

The Court specifically held that the procedure evolved through the Circular dated 15.11.2017 could not operate as a delimiting condition on the applicability of statutory provisions.

The ruling is particularly significant for refund claims concerning zero-rated supplies to SEZ developers or SEZ units, where the dispute concerns the date of electronic filing vis-à-vis subsequent physical submission of documents.

Sections and Rules Involved

  • Article 226 of the Constitution of India — Writ jurisdiction of the High Court.
  • Section 54(1), CGST Act, 2017 — Application for refund before expiry of two years from the relevant date.
  • Explanation (2) to Section 54, CGST Act, 2017 — Meaning of “relevant date” for refund limitation.
  • Section 16, IGST Act, 2017 — Zero-rated supplies, including supplies to an SEZ developer or SEZ unit.
  • Rule 89(1), CGST Rules, 2017 — Procedure for filing refund applications.
  • Rule 89(3), CGST Rules, 2017 — Debit of electronic credit ledger where refund of input tax credit is claimed.
  • Rule 90, CGST Rules, 2017 — Scrutiny, acknowledgment and deficiency procedure concerning refund applications.
  • Rule 93, CGST Rules, 2017 — Re-credit of rejected refund claim amount to the electronic credit ledger.
  • Circular dated 15.11.2017 — Procedural framework concerning filing and physical submission of refund applications and supporting documents.

Link to download the order -https://mytaxexpert.co.in/uploads/1783417525_1367compressed.pdf

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