The Allahabad High Court has quashed the rejection of a GST refund claim that was turned down purely on the ground of delay, holding that the department had ignored the Supreme Court's suo motu order excluding the COVID-19 period from all limitation computations.

Facts of the Case

Gamma Gaana Limited ("the petitioner") filed refund applications for the tax periods April-June 2018, July-September 2018 and October-December 2018. These were rejected by an order dated 01.07.2021 on the ground that the limitation period under Section 54(1) of the CGST/UPGST Act, as extended by the department, had expired on 30.11.2020, whereas the petitioner had filed the refund application only on 31.03.2021. The petition originally also challenged the vires of Rule 90(3) of the CGST/UPGST Rules, 2017 and paragraph 12 of Circular F. No. 125/44/2019-GST, but at the hearing the petitioner did not press these reliefs, confining the challenge to quashing of the rejection order.

Issues Involved

  1. Whether the refund application filed on 31.03.2021 was time-barred, having regard to the Supreme Court's COVID-19 limitation-exclusion order.
  2. Whether rejection of the refund application solely on the ground of delay, without applying that exclusion, was sustainable.

Petitioner's Arguments

  • Withdrew the constitutional challenge to Rule 90(3) of the CGST Rules and the Circular (reliefs A and B), pressing only for quashing of the rejection order.
  • The Supreme Court's order dated 10.01.2022 in Misc. Application No. 21 of 2022 (Suo Motu Writ Petition (C) No.3 of 2020) excluded the period from 15.03.2020 to 28.02.2022 for computing limitation in all judicial and quasi-judicial proceedings, with a further 90-day window from 01.03.2022 where limitation would otherwise have expired within that period.
  • The refund application had therefore been arbitrarily rejected on the ground of delay without applying this exclusion.

Respondent's Arguments

  • Learned Standing Counsel could not dispute the applicability of the Supreme Court's exclusion of the period from 15.03.2020 to 28.02.2022.

Court Order / Findings

  • The Court held that the refund application could not have been rejected merely on the ground of delay while ignoring the binding Supreme Court order excluding the COVID-19 period for the purposes of limitation.
  • The impugned order dated 01.07.2021 was quashed.
  • The matter was remitted to the respondent authority to decide the refund application afresh, by a reasoned and speaking order, expeditiously and preferably within six weeks, after affording reasonable opportunity of hearing to the petitioner.

Important Clarification

  • The Supreme Court's suo motu COVID-19 limitation-extension order (Misc. Application No. 21 of 2022 in Suo Motu Writ Petition (C) No. 3 of 2020) governs limitation for filing GST refund applications under Section 54(1); refund rejections that ignore this exclusion and treat applications as time-barred are liable to be quashed and remitted for a fresh, reasoned decision.

Sections Involved

  • Section 54(1), CGST/UPGST Act, 2017 — limitation period for filing refund applications.
  • Rule 90(3), CGST Rules, 2017 — deficiency memo procedure for refund applications (challenge to vires not pressed).

Decision – In Favour of

In favour of the Assessee. The rejection order was quashed and the refund application remitted for fresh, reasoned consideration.

Related Case Laws

This order is usefully read with other case notes on this site applying the Supreme Court's suo motu COVID-19 limitation-exclusion order to GST refund claims and appeals under Section 54 of the CGST Act.

Case Details

  • Court: High Court of Judicature at Allahabad
  • Case No.: WRIT TAX No. 173 of 2022
  • Coram: Hon'ble Surya Prakash Kesarwani, J. and Hon'ble Jayant Banerji, J.
  • Order Date: 03.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787076366_4626compressed.pdf

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