Facts of the Case

The petitioners filed applications seeking refund of CGST in Form GST RFD-01A. The Assistant Commissioner, CGST, Division-II, Bhavnagar rejected the refund applications on the ground that they had been filed beyond the limitation period prescribed under Section 54 of the CGST Act, 2017. The Commissioner (Appeals), GST & Central Excise, Rajkot upheld the rejection.

Aggrieved by these orders, the petitioners approached the Gujarat High Court seeking quashing of both orders, sanction of the refund amount, and payment of statutory interest on the delayed refund.

Issues Involved

  1. Whether the refund applications were barred by limitation under Section 54 of the CGST Act, 2017.
  2. Whether Notification No. 13/2022-Central Tax dated 05.07.2022 excluded the COVID-19 period while computing limitation for filing GST refund applications.
  3. Whether the petitioners were entitled to refund along with statutory interest.

Petitioner's Arguments

  • The petitioners contended that their refund applications could not be treated as time-barred because Notification No. 13/2022-Central Tax excluded the period from 1 March 2020 to 28 February 2022 while computing limitation for filing refund applications under Section 54.
  • They submitted that after excluding the above period, the refund applications were filed well within the prescribed limitation.
  • Accordingly, they sought sanction of the refund along with interest for the delayed payment.

Respondent's Arguments

  • The department had initially rejected the refund applications on the ground that they were filed beyond the statutory limitation period under Section 54 of the CGST Act.
  • During the hearing, the respondents did not dispute the applicability of Notification No. 13/2022-Central Tax.
  • The respondents also produced an official e-mail communication confirming that the notification applied to the petitioners' cases and that the refund applications were to be treated as filed within the prescribed period.

Court Order / Findings

The Gujarat High Court held that Notification No. 13/2022-Central Tax issued under Section 168A of the CGST Act expressly excluded the period from 1 March 2020 to 28 February 2022 while computing limitation for filing refund applications under Sections 54 and 55.

Since the petitioners' refund claims fell within the excluded period, the applications could not be considered time-barred.

Accordingly, the Court:

  • Set aside the objection relating to limitation.
  • Directed the competent GST authority to process the refund applications in accordance with law.
  • Directed that refund be granted along with statutory interest, wherever the petitioners were otherwise eligible.
  • Ordered completion of the entire exercise within 12 weeks from the receipt of the Court's order.

Important Clarification

This judgment clarifies that:

  • Notification No. 13/2022-Central Tax must be applied while computing limitation for GST refund applications.
  • The period from 01.03.2020 to 28.02.2022 is required to be excluded for limitation purposes under Sections 54 and 55.
  • Refund claims cannot be rejected merely on limitation if they become timely after applying the exclusion period.
  • Eligible taxpayers are also entitled to statutory interest where refund is granted in accordance with law.

Sections Involved

  • Section 54 of the Central Goods and Services Tax Act, 2017
  • Section 55 of the CGST Act, 2017
  • Section 168A of the CGST Act, 2017
  • Notification No. 13/2022-Central Tax dated 05.07.2022

Significance of the Judgment

The decision provides significant relief to taxpayers whose GST refund applications were rejected solely on the ground of limitation during the COVID-19 period. It reinforces the mandatory application of Notification No. 13/2022-Central Tax and ensures that genuine refund claims are processed in accordance with the extended limitation provisions introduced under Section 168A of the CGST Act.

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785143779_2080compressed.pdf

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