Facts of the Case

The petitioners filed refund applications under Section 54 of the CGST Act, 2017 seeking refund of CGST. However, the Assistant Commissioner rejected the refund claims on the ground that the applications were filed beyond the statutory limitation period prescribed under Section 54. The Commissioner (Appeals) also upheld the rejection.

Aggrieved by these orders, the petitioners approached the Gujarat High Court seeking quashing of the orders and direction to sanction the refund along with statutory interest.

During the pendency of the petitions, the Central Government issued Notification No. 13/2022-Central Tax dated 05 July 2022, excluding the period from 01 March 2020 to 28 February 2022 while computing limitation for filing refund applications under Sections 54 and 55 of the CGST Act.

The dispute before the Court was whether the petitioners' refund applications should now be treated as filed within limitation after considering the benefit of the notification.

Issues Involved

  1. Whether the refund applications were barred by limitation under Section 54 of the CGST Act.
  2. Whether Notification No. 13/2022-Central Tax applies retrospectively to pending refund claims.
  3. Whether the period from 01.03.2020 to 28.02.2022 should be excluded while computing limitation for filing GST refund applications.
  4. Whether the petitioners were entitled to statutory interest on the refund amount.

Petitioner's Arguments

  • The petitioners submitted that their refund applications were wrongly rejected as time-barred.
  • They contended that after issuance of Notification No. 13/2022-Central Tax, the excluded period must be ignored while calculating limitation.
  • Consequently, the refund applications were well within the permissible time.
  • The petitioners further sought grant of statutory interest on the delayed refund.

Respondent's Arguments

  • The Department had originally rejected the refund applications treating them as filed beyond the prescribed limitation under Section 54.
  • During the hearing, the respondents did not dispute the applicability of Notification No. 13/2022.
  • The Department also produced an internal communication confirming that the notification covered the petitioners' cases and that their refund claims fell within the extended limitation period.

Court Order / Findings

The Gujarat High Court observed that Notification No. 13/2022-Central Tax specifically excludes the period from 01 March 2020 to 28 February 2022 for computing limitation for filing refund applications under Sections 54 and 55 of the CGST Act.

Since the notification squarely covered the petitioners' cases and even the Department accepted its applicability, the Court held that the refund applications could not be treated as time-barred.

Accordingly, the Court:

  • Set aside the objection relating to limitation.
  • Directed the competent GST authority to process the refund applications treating them as filed within time.
  • Directed that refund be granted in accordance with law if otherwise admissible.
  • Ordered payment of statutory interest wherever applicable.
  • Directed completion of the entire exercise within 12 weeks from receipt of the Court's order.

Important Clarification

  • Notification No. 13/2022-Central Tax grants the benefit of exclusion of the period from 01.03.2020 to 28.02.2022 while calculating limitation for filing GST refund applications.
  • Refund applications rejected solely on the ground of limitation require reconsideration where the notification applies.
  • Authorities must process refund claims by giving effect to the extended limitation granted under Section 168A of the CGST Act.
  • Eligible taxpayers are also entitled to statutory interest wherever permissible under law.

Sections Involved

  • Section 54 of the Central Goods and Services Tax Act, 2017 – Refund of Tax
  • Section 55 of the CGST Act, 2017
  • Section 168A of the CGST Act, 2017 – Power of Government to Extend Time Limits
  • Notification No. 13/2022-Central Tax dated 05.07.2022
  • Relevant provisions of the Integrated GST Act, 2017 and UTGST Act, 2017

Legal Significance of the Judgment

This judgment reinforces that beneficial notifications extending limitation under GST must be applied to pending refund claims. The decision provides significant relief to taxpayers whose refund applications were rejected merely because of limitation during the COVID-19 period and confirms that statutory extensions issued under Section 168A have retrospective effect for eligible cases.

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785145329_2090compressed.pdf

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