2021 (1) TMI 1168 - Commissioner - GST

Refund of accumulated ITC on account of Inverted Tax Structure - application filed within the time limitation or not - Section 54(3) of the CGST Act, 2017 - HELD THAT - The adjudicating authority has rejected the refund claim of the appellant given remarks in the RFD-06 that the claimant is agreed with the show cause notice that he has no objection with respect to rejection of their refund claim. Therefore, the rejection of refund claim of the appellant is correct and proper as appellant was himself agreed with the reason of show cause notice issued by the adjudicating authority. The appellant has taken a plea that since GSTR-3B was declared as valid return under Section 39 of the CGST Act, 2017 Vide Notification No. 49/2019-Central Tax, dated 9-10-2019 hence, application of refund was duly filed by him before expiry of two years from the relevant date when the said notification came into force on 9-10-2019; Therefore, the refund application filed by him within 2 years from the date of 9-10-2019 is valid application and not a time barred application - this notification has given effect from the retrospective effect i.e. 1-7-2017 and accordingly Rule 61(5) of CGST Rules, 2017 providing the GSTR-3B is declared as valid return under Section 39 of the CGST Act, 2017. On going through the provision under Section 54 of the CGST Act, 2017, it is found that the relevant date has been defined in sub-section (14) of Section 54 of the CGST Act, 2017 - the refund application filed by the appellant for the period October, 2017 to December, 2017 is clearly time barred as the same was filed by the appellant on 5-2-2020 i.e. after expiry of 2 years from the relevant date as mentioned in sub-section (14) of Section 54 of the CGST Act, 2017 read with sub-section (1) of Section 54 of the CGST Act, 2017. The Adjudicating Authority has taken a view that formula applied for calculation of Net ITC refund there is no such refund was available to the appellant. In view of provisions of Rule 89(5) of CGST Rules, 2017 - the appellant has not properly gone through the provisions of Section 54 of the CGST Act, 2017 the date and time limit has been clearly mentioned in Section 54(1) read with sub-section (14) of Section 54 of the CGST Act, 2017. Therefore, the submission of the appellant that time limit has not been specifically mentioned on the refund of unutilized ITC is incorrect and not acceptable. The refund application has been filed by the appellant on account of ITC accumulated due to Inverted Tax Structure whereas the appellant stated in the appeal that he has closed his business due to this reason the IGST paid in cash on import of goods is lying unutilized by him - the appellant has filed their refund claim in wrong category as it is not a case of Inverted Duty Structure as given in the provision under Section 54(3) of CGST Act, 2017. The impugned order passed by the Adjudicating Authority is proper and correct - Appeal dismissed.

Summary

Issues Involved:
1. Time-barred refund application.
2. Validity of GSTR-3B as a return under Section 39 of the CGST Act, 2017.
3. Applicability of Section 54(3) for refund of unutilized ITC.
4. Incorrect category of refund claim.

Detailed Analysis:

1. Time-barred Refund Application:
The appellant filed a refund application amounting to ?4,30,000/- for the period of October 2017 to March 2018 of accumulated ITC on account of Inverted Tax Structure under Section 54(3) of the CGST Act, 2017. The adjudicating authority observed that the refund application was filed after the expiry of two years from the relevant date, as per Section 54(1) of the CGST Act, 2017, and issued a show cause notice stating the application was liable to be rejected due to delay. The appellant contended that the relevant date for the refund claim should be the date when Notification No. 49/2019-Central Tax, dated 9th October 2019, came into force, which declared GSTR-3B as a valid return under Section 39. However, the adjudicating authority and the appellate authority found that the notification had retrospective effect from 1st July 2017, making the refund application time-barred.

2. Validity of GSTR-3B as a Return Under Section 39:
The appellant argued that GSTR-3B was not considered a return under Section 39 until the issuance of Notification No. 49/2019-Central Tax on 9th October 2019. Therefore, the two-year period for filing the refund should be counted from this date. However, the appellate authority clarified that the notification had retrospective effect from 1st July 2017, meaning GSTR-3B was always considered a valid return under Section 39. Consequently, the appellant's interpretation was incorrect, and the refund application was indeed time-barred.

3. Applicability of Section 54(3) for Refund of Unutilized ITC:
The appellant claimed that Section 54(3) allowed for the refund of unutilized ITC without any time limit. However, the appellate authority clarified that Section 54(1) and sub-section (14) of Section 54 of the CGST Act, 2017, clearly mention the two-year time limit for filing refund applications. Therefore, the appellant's argument that there was no time limit for claiming refunds under Section 54(3) was incorrect and not acceptable.

4. Incorrect Category of Refund Claim:
The appellant filed the refund claim under the category of ITC accumulated due to Inverted Tax Structure but mentioned in the appeal that the business was closed, and IGST paid in cash on import of goods was lying unutilized. The appellate authority found that the appellant had filed the refund claim in the wrong category, as it was not a case of Inverted Duty Structure as defined under Section 54(3) of the CGST Act, 2017.

Conclusion:
The appellate authority upheld the order of the adjudicating authority, finding no infirmity in the rejection of the refund claim. The appeal was disposed of, confirming that the refund application was time-barred, the relevant date for the refund claim was correctly interpreted, the time limit for filing refund applications under Section 54(1) was applicable, and the refund claim was filed under the incorrect category.