Facts of the Case

The petitioner, engaged in the business of trading coal, filed a writ petition challenging the rejection of its GST refund applications submitted for the tax periods July 2017 to March 2018 and April 2018 to March 2019.

The refund applications were filed on 15 September 2021 under Section 54 of the Central Goods and Services Tax Act, 2017 read with the relevant provisions of the Andhra Pradesh Goods and Services Tax Act and Rule 89 of the GST Rules.

The GST authorities issued notices proposing rejection of the refund claims on the ground that they were filed beyond the prescribed limitation period. After considering the petitioner's reply, the refund applications were rejected by order dated 05 October 2021, treating them as time-barred under Section 54 of the CGST Act and Circular No. 157/13/2021-GST dated 20 July 2021.

Aggrieved by the rejection, the petitioner approached the Andhra Pradesh High Court seeking appropriate relief.

Issues Involved

  1. Whether the refund applications filed under Section 54 of the CGST Act, 2017 were barred by limitation.
  2. Whether the concept of "relevant date" under the Explanation to Section 54 applies to refund claims relating to compensation cess and supplies made to SEZ units.
  3. Whether the authorities were justified in relying upon Circular No. 157/13/2021-GST dated 20.07.2021 while rejecting the refund applications.
  4. Whether the benefit of the subsequent Notification dated 05 July 2022 excluding the limitation period should be extended to the petitioner.

Petitioner's Arguments

The petitioner contended that:

  • The refund claims were legally maintainable under Section 54 of the CGST Act.
  • The Explanation to Section 54 prescribes the "relevant date" primarily for exported goods, whereas no specific relevant date has been prescribed for supplies made to Special Economic Zone (SEZ) units treated as zero-rated supplies under Section 16 of the IGST Act.
  • The Government of India issued a Notification dated 05 July 2022, specifically excluding the period from 01 March 2020 to 28 February 2022 while computing limitation for filing refund applications under Sections 54 and 55.
  • In view of the exclusion of limitation, the refund application filed on 15 September 2021 was well within the prescribed period.
  • Consequently, the rejection order deserved to be set aside.

Respondents' Arguments

The State authorities submitted that:

  • The refund applications had been filed after expiry of the statutory limitation prescribed under Section 54 of the CGST Act.
  • The adjudicating authority had correctly relied upon Circular No. 157/13/2021-GST dated 20 July 2021 while rejecting the refund claims.
  • Clauses 3(iii) and 4(b) of the Circular justified the rejection of the applications.
  • Therefore, no interference with the impugned order was warranted.

Court Order / Findings

The Andhra Pradesh High Court allowed the writ petition and held:

  • The subsequent Notification dated 05 July 2022 specifically excluded the period between 01 March 2020 and 28 February 2022 while computing limitation for filing refund applications under Sections 54 and 55 of the CGST Act.
  • In view of the exclusion granted by the notification, the petitioner's refund application could not be treated as barred by limitation.
  • The rejection order dated 05 October 2021 was therefore unsustainable.
  • The matter was remanded to the jurisdictional authority for fresh consideration in accordance with law.
  • The authority was directed to reconsider the refund application without treating it as time-barred.

Accordingly, the writ petition was allowed, the rejection order was set aside, and the matter was remanded for fresh adjudication.

Important Clarification

This judgment reiterates the following important principles:

  • The exclusion of limitation notified by the Central Government must be considered while deciding GST refund applications.
  • Refund claims cannot be rejected merely on limitation grounds where the excluded period is applicable.
  • Subsequent statutory notifications affecting limitation can be relied upon even if the original rejection order was passed earlier.
  • Authorities are required to reconsider refund claims in light of beneficial notifications issued under the CGST Act.
  • The decision provides important relief to taxpayers whose refund applications were filed during the excluded COVID-19 limitation period.

Sections Involved

  • Section 54, Central Goods and Services Tax Act, 2017
  • Section 55, Central Goods and Services Tax Act, 2017
  • Section 16, Integrated Goods and Services Tax Act, 2017
  • Rule 89, CGST Rules, 2017
  • Goods and Services Tax (Compensation to States) Act, 2017
  • Circular No. 157/13/2021-GST dated 20.07.2021
  • Notification dated 05.07.2022 issued by CBIC

Link to Download the Order

 https://www.mytaxexpert.co.in/uploads/1785572624_2566compressed.pdf 

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