Facts of the Case

The petitioner, GNRC Limited, a company incorporated under the Companies Act, 1956, and represented by one of its Directors, had under a misconception paid GST on the comprehensive supply of medicines, consumables, implants and related items, before later discovering that such supplies of medical services were exempt from GST. The petitioner claimed a refund of the GST so paid, but the claim was rejected by order dated 31.12.2021 on the ground that the refund application had been filed after expiry of the two-year limitation period. Pursuant to an earlier order of the High Court dated 11.03.2022, the petitioner had submitted an online representation on 22.03.2022, which was placed on record before the Court by way of an additional affidavit dated 24.03.2022. The petitioner approached the Gauhati High Court by way of this writ petition under Article 226 challenging the rejection of its refund claim.

Issues Involved

  1. Whether the applicable period of limitation for the petitioner's refund claim was two years or three years, and whether Section 5 of the Limitation Act, 1963 could be invoked to condone delay.
  2. Whether the GST department was obliged to decide the petitioner's pending representation dated 22.03.2022, after affording an opportunity of hearing, without the writ court itself pronouncing on the merits.

Petitioner's Arguments

  • In cases of this nature — refund of GST paid under a misconception on exempted medical-supply services — the applicable period of limitation ought to be three years, and not the two-year period applied by the department.
  • As per settled case law, the provisions of Section 5 of the Limitation Act, 1963 were also applicable and could be invoked to condone any delay.
  • Pursuant to the Court's earlier order dated 11.03.2022, the petitioner had already submitted an online representation on 22.03.2022, and it was a fit case for the Court to direct the competent authority to dispose of that representation after affording an opportunity of hearing.

Respondent's Arguments

  • Learned standing counsel for the GST department did not seriously contest the direction sought and submitted that four weeks' time would be sufficient for the competent authority to dispose of the petitioner's pending representation.

Court Order/Findings

  • The writ petition was disposed of with a direction to the competent authority of the GST department to dispose of the petitioner's representation dated 22.03.2022 within four weeks, after giving the petitioner an opportunity of hearing.
  • The Court expressly clarified that no opinion was expressed on the merits of the limitation question or the underlying refund claim.
  • Liberty was reserved to the petitioner to avail of appropriate remedies against any adverse order that may subsequently be passed by the competent authority.

Important Clarification

  • Where a refund claim is rejected as time-barred and the taxpayer disputes the applicable limitation period (including reliance on Section 5 of the Limitation Act, 1963), a writ court may, without deciding the limitation question itself, direct the department to decide the taxpayer's representation afresh after a hearing, preserving the taxpayer's remedies against any adverse outcome.
  • Refund claims arising from GST paid under a misconception on services later found to be exempt raise genuine questions on the correct limitation period, which are properly addressed by the competent GST authority through a reasoned, hearing-based order rather than being conclusively decided in a summary writ disposal.

Sections Involved

  • Section 54, CGST Act, 2017 — provisions governing refund of tax, including the prescribed limitation period for filing a refund application.
  • Section 5, Limitation Act, 1963 — condonation of delay, relied upon by the petitioner to argue that a longer limitation period, or condonation, should apply to its refund claim.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee — the Gauhati High Court did not decide the merits of the limitation dispute but directed the GST department to dispose of the petitioner's representation within four weeks after a hearing, leaving the petitioner free to pursue further remedies if aggrieved.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
  • Case No.: Case No. WP(C)/1742/2022 (GAHC010045662022)
  • Coram: Justice Kalyan Rai Surana
  • Date of Order: 04-04-2022

Link to Download the Order

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