Facts of the Case

  • The petitioner was engaged in the business of trading coal.
  • The petitioner claimed entitlement to a refund under Section 54 of the CGST Act, 2017, the Andhra Pradesh GST Act, and Rule 89 of the GST Rules.
  • A refund application relating to the tax period April 2019 to August 2019 was filed on 19.11.2021.
  • On 20.11.2021, the jurisdictional authority rejected the refund application solely on the ground that it had been filed beyond the prescribed limitation period of two years under Section 54.
  • The petitioner challenged the rejection before the Andhra Pradesh High Court.

Issues Involved

  1. Whether the refund application filed under Section 54 of the CGST Act, 2017 was barred by limitation.
  2. Whether the concept of "relevant date" under the Explanation to Section 54 applied to refund claims relating to compensation cess and supplies to SEZ units.
  3. Whether the authorities were justified in relying upon Circular No. 157/13/2021-GST dated 20.07.2021 for rejecting the refund claim.
  4. Whether the benefit of the subsequent Notification dated 05.07.2022, excluding the limitation period from 1 March 2020 to 28 February 2022, should be extended to the petitioner.

Petitioner's Arguments

  • The petitioner submitted that the rejection order became unsustainable after issuance of the Notification dated 05.07.2022 by the Central Board of Indirect Taxes and Customs.
  • It was argued that the Explanation to Section 54 prescribing the "relevant date" primarily applies to exported goods and does not specifically determine the relevant date for supplies made to SEZ units, which are treated as zero-rated supplies under Section 16 of the IGST Act, 2017.
  • The petitioner further contended that the limitation period stood excluded during the notified period and, therefore, the refund application was within time.

Respondents' Arguments

  • The Government Pleader argued that the refund rejection was strictly in accordance with Circular No. 157/13/2021-GST dated 20.07.2021.
  • It was submitted that the refund application had been filed beyond the statutory limitation period of two years prescribed under Section 54 of the CGST Act.
  • According to the respondents, there was no illegality in the endorsement rejecting the refund application.

Court Findings / Order

The Andhra Pradesh High Court held that:

  • The Notification dated 05.07.2022 specifically excluded the period from 1 March 2020 to 28 February 2022 while computing limitation for filing refund applications under Sections 54 and 55 of the CGST Act.
  • In view of this statutory exclusion, the refund application could not be treated as barred by limitation.
  • The endorsement dated 20.11.2021 rejecting the refund claim was therefore liable to be set aside.
  • The matter was remanded to the concerned authority for fresh consideration in accordance with law.
  • The writ petition was accordingly allowed, without any order as to costs.

Important Clarification

  • The judgment recognizes that the statutory exclusion of limitation introduced through the Notification dated 05.07.2022 applies while determining the limitation period for GST refund applications.
  • Authorities must consider subsequent statutory notifications affecting limitation before rejecting refund claims.
  • Refund applications cannot be rejected merely on limitation grounds where the excluded period materially affects computation.
  • The Court restored the matter for fresh adjudication instead of granting the refund directly.

Sections Involved

  • Section 54, Central Goods and Services Tax Act, 2017
  • Section 55, Central Goods and Services Tax Act, 2017
  • Section 16, Integrated Goods and Services Tax Act, 2017
  • Rule 89 of the CGST Rules, 2017
  • Circular No. 157/13/2021-GST dated 20.07.2021
  • CBIC Notification dated 05.07.2022 (Exclusion of Limitation Period for Refund Applications)

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785569984_2557compressed.pdf

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