Facts of the Case

The petitioner, M/s Sethi Sons (India), a sole proprietorship engaged in exporting goods and services, exported eight consignments between July 2017 and March 2018 and sought a refund of unutilised input tax credit accumulated on inputs used in these zero-rated exports under Section 54 of the Central Goods and Services Tax Act, 2017. Attempts to file refund applications for August 2017 (14.05.2018) and July 2017 (08.08.2018) failed due to technical errors on the GST portal, and the petitioner raised a grievance ticket. It eventually filed a consolidated Form GST RFD-01 application on 05.02.2020 for FY 2017-18, claiming a refund of Rs. 13,43,757/-. The Proper Officer rejected the claim by an Order-in-Original dated 11.03.2020 as filed beyond the two-year limitation under Section 54(1), computed from the dates of export. The Appellate Authority upheld the rejection by Order-in-Appeal dated 06.08.2021. As the GST Appellate Tribunal had not been constituted, the petitioner approached the Delhi High Court directly.

Issues Involved

  1. Whether the refund application filed on 05.02.2020 was time-barred under Section 54(1) of the CGST Act.
  2. Whether technical glitches on the GST portal that prevented timely electronic filing could excuse the delay.
  3. Whether the petitioner's claim of having been guided by jurisdictional officers to file only after GSTR-9 and bank realisation certificates was a relevant consideration.

Petitioner's Arguments

  • The authorities ignored genuine technical glitches encountered while attempting timely electronic filing of monthly refund applications.
  • Reliance was placed on Ezzy Electricals v. State of Gujarat and Anuj Gupta v. Commissioner of GST, Delhi North, where courts directed refund processing despite portal difficulties.
  • Reliance was placed on Union of India v. FILCO Trade Centre Pvt. Ltd. (SC), directing a common portal window for transitional credit due to similar glitches.
  • A vested right to refund could not be denied purely on technical grounds, relying on Indglonal Investment and Finance Ltd.

Respondent's Arguments

  • Technical issues were faced only on 14.05.2018 and 08.08.2018, after which the petitioner did not file any claim for almost one-and-a-half years, until 05.02.2020, despite no impediment in the intervening period.
  • Rule 97A, introduced from 15.11.2017, permitted manual filing where electronic filing was not possible.
  • The claim that jurisdictional officers had misguided the petitioner into filing only after GSTR-9 and bank realisation certificates was disputed and unsupported by any record.

Court Order/Findings

  • The Court accepted that the period in question was one of transition, fraught with genuine difficulties for taxpayers migrating to the new GST regime, and that the petitioner had made bona fide, timely attempts to file that failed due to portal glitches.
  • It found it difficult to accept that the petitioner's legitimate refund claim could be foreclosed on account of such technical glitches, distinguishing (with reservations) the wider view in Lenovo India that the two-year period is merely directory.
  • The Proper Officer was directed to examine the petitioner's refund claim and process it if the petitioner is found entitled.

Important Clarification

Where a taxpayer demonstrates a bona fide, timely attempt to file a refund application that failed due to documented technical glitches on the GST portal, rather than mere inaction, the two-year limitation under Section 54(1) will not be read to defeat an otherwise legitimate ITC refund claim, particularly for the transitional period following GST's rollout.

Sections Involved

  • Section 54, CGST Act, 2017 - refund of tax, including the "relevant date" for zero-rated exports.
  • Rule 89(1), CGST Rules, 2017 - manner of electronic filing of refund applications.
  • Rule 97A, CGST Rules, 2017 - manual filing where electronic filing is not feasible.
  • Section 16, IGST Act, 2017 - zero-rated supply, underlying the export transactions on which unutilised ITC accumulated.

Decision – In Favour of

In favour of the Assessee. The Delhi High Court allowed the petition and directed the department to examine and process the refund claim, rejecting the limitation objection on the facts of a bona fide, technically frustrated attempt to file within time, while expressly reserving its disagreement with the broader view that the two-year period is merely directory.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Delhi
  • Case No.: W.P.(C) 4179/2022
  • CNR: Not available
  • Coram: Justice Vibhu Bakhru and Justice Amit Mahajan
  • Decision Date: 22 December 2023
  • Disposal Nature: Allowed

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