Facts of the Case

  • The petitioner was engaged in the business of trading coal.
  • It claimed entitlement to refund of GST paid on eligible supplies under Section 54 of the CGST Act, 2017, read with Rule 89 of the CGST Rules.
  • Refund applications for the tax periods July 2017 to March 2018 and April 2018 to March 2019 were filed on 15.09.2021.
  • The department issued notices proposing rejection of the refund claims on the ground that they were filed beyond the prescribed limitation period.
  • The petitioner submitted replies explaining that the applications were within time.
  • However, the Proper Officer rejected the refund applications on 05.10.2021, relying upon the limitation prescribed under Section 54 and Circular No.157/13/2021-GST dated 20.07.2021.
  • Aggrieved by the rejection, the petitioner approached the Andhra Pradesh High Court by filing the present writ petition.

Issues Involved

  1. Whether the refund applications filed under Section 54 of the CGST Act, 2017 were barred by limitation.
  2. Whether the exclusion of limitation granted through the subsequent CBIC Notification dated 05.07.2022 was applicable to the petitioner's refund applications.
  3. Whether the rejection order dated 05.10.2021 was legally sustainable.

Petitioner's Arguments

  • The petitioner contended that the rejection of the refund applications was contrary to law.
  • It argued that the Explanation to Section 54 of the CGST Act did not prescribe a relevant date for supplies made to SEZ units, although such supplies are treated as zero-rated supplies under Section 16 of the IGST Act, 2017.
  • It was further submitted that the CBIC Notification dated 05.07.2022 specifically excluded the period from 01.03.2020 to 28.02.2022 while computing limitation for filing refund applications under Sections 54 and 55.
  • Therefore, according to the petitioner, the refund applications filed on 15.09.2021 were well within the permissible limitation period and could not have been rejected as time-barred.

Respondents' Arguments

  • The State contended that the refund applications had rightly been rejected.
  • It submitted that the Proper Officer had acted strictly in accordance with Circular No.157/13/2021-GST dated 20.07.2021.
  • According to the respondents, the applications were filed beyond the limitation prescribed under Section 54 of the CGST Act, and therefore no illegality could be attributed to the rejection order.

Court Order / Findings

The Andhra Pradesh High Court held that:

  • The petitioner had filed refund applications on 15.09.2021.
  • The subsequent Notification dated 05.07.2022 issued by the Government of India specifically excluded the period from 01.03.2020 to 28.02.2022 for computing limitation under Sections 54 and 55 of the CGST Act.
  • Consequently, the refund applications could not be treated as barred by limitation.
  • The rejection order dated 05.10.2021 was therefore unsustainable.
  • The Court allowed the writ petition.
  • The impugned order was set aside.
  • The matter was remanded to the Proper Officer for fresh consideration in accordance with law.
  • No order was passed as to costs.

Important Clarification

This judgment clarifies that:

  • The exclusion of limitation introduced through the CBIC Notification dated 05.07.2022 applies while determining limitation for GST refund applications under Sections 54 and 55 of the CGST Act.
  • Refund applications cannot be rejected merely on limitation grounds if the statutory exclusion period makes the application fall within time.
  • Authorities are required to reconsider refund claims after taking the benefit of the exclusion period into account.
  • The decision reinforces that refund claims must be examined in accordance with the latest statutory notifications governing limitation.

Sections Involved

  • Section 54, Central Goods and Services Tax Act, 2017
  • Section 55, Central Goods and Services Tax Act, 2017
  • Rule 89, Central Goods and Services Tax Rules, 2017
  • Section 16, Integrated Goods and Services Tax Act, 2017
  • Circular No.157/13/2021-GST dated 20.07.2021
  • CBIC Notification dated 05.07.2022

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785569969_2556compressed.pdf  

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