Facts of the Case

The petitioner, M/s Captain Polyplast Limited, filed a refund application claiming ₹1,02,04,266 towards accumulated Input Tax Credit (ITC) arising due to an inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017 for the tax period 01.04.2018 to 31.08.2018.

Initially, the Deputy Commissioner sanctioned the refund. However, the appellate authority set aside the sanction order on the ground that the refund application, filed on 23.10.2020, was beyond the prescribed limitation period under Section 54 of the CGST Act and was therefore time-barred. Aggrieved by the appellate order dated 30.09.2021, the petitioner approached the Gujarat High Court.

Issues Involved

  1. Whether the refund application filed under Section 54(3)(ii) was barred by limitation.
  2. Whether the exclusion of the COVID-19 period under the Supreme Court's limitation orders and Notification No. 13/2022-Central Tax dated 05.07.2022 applied to refund applications under Section 54.
  3. Whether the refund claim was required to be treated as filed within the prescribed limitation period.

Petitioner's Arguments

  • The petitioner contended that the appellate authority wrongly treated the amendment relating to the "relevant date" as retrospective.
  • It was argued that for the relevant tax period, the limitation had to be computed from the end of the financial year, and accordingly the refund application was within time.
  • The petitioner further relied upon the Supreme Court's suo motu orders extending limitation due to the COVID-19 pandemic.
  • It was also submitted that Notification No. 13/2022-Central Tax dated 05.07.2022, issued under Section 168A, specifically excluded the period from 01.03.2020 to 28.02.2022 while computing limitation for filing refund applications under Section 54, thereby making the refund application well within time.

Respondent's Arguments

  • The department maintained that the refund application had been filed beyond the limitation prescribed under Section 54 of the CGST Act.
  • However, during the hearing, the respondents acknowledged that Notification No. 13/2022-Central Tax dated 05.07.2022 was applicable to the petitioner's case.
  • The respondents also produced an official email communication confirming that, after applying the notification, the petitioner's refund application would fall within the prescribed limitation period.

Court Order / Findings

The Gujarat High Court observed that both parties agreed that Notification No. 13/2022-Central Tax dated 05.07.2022 excluded the period from 01.03.2020 to 28.02.2022 while calculating limitation for filing refund applications under Section 54.

Since the notification squarely covered the petitioner's case, the Court held that the refund application was required to be treated as filed within the prescribed period of limitation.

Accordingly, the Court directed the competent authority to:

  • Process the petitioner's refund claim in accordance with law.
  • Treat the refund application as filed within limitation.
  • Grant the refund along with statutory interest, if the petitioner was otherwise found eligible.
  • Complete the entire exercise within 12 weeks from receipt of the Court's order.

The Special Civil Application was disposed of accordingly.

Important Clarification

  • Exclusion of the COVID-19 period under Notification No. 13/2022-Central Tax dated 05.07.2022 is applicable for computing limitation for refund applications filed under Section 54.
  • Refund applications cannot be rejected merely on limitation grounds where the excluded COVID period makes the application timely.
  • Authorities are required to process eligible refund claims after giving effect to the statutory exclusion of the limitation period.
  • Eligible taxpayers are also entitled to statutory interest wherever applicable.

Sections Involved

  • Section 54
  • Section 54(3)(ii)
  • Section 168A
  • Section 73
  • Section 39
  • Section 55 of the Central Goods and Services Tax Act, 2017.

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1784885044_1954compressed.pdf

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