Facts of the Case

The petitioner, DMI Alternatives Private Limited, mistakenly reported intra-State supply as inter-State supply while filing GSTR-1 for November 2017. As a result, tax was incorrectly paid under IGST instead of CGST and SGST.

Upon discovering the error, the petitioner rectified it by paying CGST and SGST, leading to double tax payment—once under IGST and again under CGST/SGST.

Subsequently:

  • Refund application filed on 11.05.2020 was rejected.
  • Appeal against rejection was also dismissed.
  • A second refund application was filed on 14.07.2022.
  • The Appellate Authority rejected the appeal solely on the ground of limitation.

Issues Involved

  1. What is the “relevant date” for calculating limitation under Section 54 of the CGST Act?
  2. Whether refund applications filed after CBIC Circular dated 25.09.2021 are within limitation?
  3. Whether the Appellate Authority erred in ignoring the circular while rejecting the appeal?

Petitioner’s Arguments

  • The Appellate Authority failed to consider CBIC Circular dated 25.09.2021.
  • The circular clearly states that the relevant date is the date of payment under the correct head, not the incorrect one.
  • It further provides extended limitation for cases where correction was made before issuance of the circular.
  • Both refund applications were filed within the permissible limitation period as clarified by the circular.

Respondent’s Arguments

  • The refund claim was time-barred under Section 54 of the CGST Act.
  • The limitation should be calculated from the date of payment under the incorrect tax head.
  • The Appellate Authority correctly dismissed the appeal on limitation grounds.

Court Findings / Order

The Hon’ble Court held:

  • The Appellate Authority erred in ignoring the CBIC Circular dated 25.09.2021.
  • The circular clarifies that:
    • The relevant date is the date of payment under the correct head.
    • In cases where such payment occurred before 24.09.2021, refund applications could be filed within two years from the date of the circular.
  • The petitioner:
    • Paid correct tax on 19.08.2019.
    • Filed refund applications within the extended timeline.

Therefore:

  • The rejection on limitation grounds was unsustainable.
  • The impugned order was set aside.
  • The appeal was restored for decision on merits.

Important Clarification

  • The judgment reinforces that beneficial circulars must be applied retrospectively where applicable.
  • It clarifies that:
    • Refund limitation under Section 54 must align with CBIC circular interpretations.
    • Authorities cannot ignore binding clarifications while adjudicating.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/SAS16042024CW54122024_162547.pdf

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