2022 (10) TMI 46 - HC - GST

Refund claim - time limitation - whether the application made by the petitioner is barred by limitation and whether all the documents as required are filed along with the said refund applications? - Section 54 of CGST Act - HELD THAT - Section 54 of the CGST Act, 2017 deals with Refund of Tax . It is also not in dispute that the said application must be made within a period of two years from the relevant date in such form and manner prescribed. But, at the same time, it is to be noted that the Government of India, Ministry of Finance issued a Circular dated 25.09.2021 on this aspect. The subject in the said Circular relates to Refund of Tax specified in Section 77(1) of CGST and Section 19(1) of IGST Act. A reading of the Circular No.162/18/2021-GST and Column No.3 of 4.3 relating to refund claim, it is clear that if A has paid tax under a correct head before issuance of Notification No.35/2021-Central Tax, dated 24.09.2021, the last date for filing refund application in FORM GST RFD-01 would be 23.09.23 (two years from date of notification). In case, the adjudicating authority holds that the transaction as an inter-State supply and if A pays IGST in respect of transaction on 10.05.2019, the last date for filing refund application would be 23.09.2023. Since the issue involved relates to period of limitation in filing the refund application, coupled with the documents to be filed, it would be just and proper, in our view, to remand the matter back to the authority i.e. third respondent/Assistant Commissioner Central Tax, to deal with the refund application in the light of the Circular No.162/18/2021-GST dated 25.09.2021, issued more particularly with regard to the applicability of the Circular issued by the Government, and then pass orders in accordance with law. The writ petition is disposed off.

Summary

Issues Involved:
1. Incorrect tagging of business premises and erroneous tax payments.
2. Refund claim rejection due to being time-barred as per Section 54 of the CGST Act.
3. Applicability of Circular No.162/18/2021-GST dated 25.09.2021 regarding refund claims.

Detailed Analysis:

1. Incorrect Tagging of Business Premises and Erroneous Tax Payments:
The petitioner, a major private bank, registered under GST in Andhra Pradesh (AP) and Telangana (TL), faced issues due to incorrect tagging of some Telangana business premises to Andhra Pradesh during the GST system configuration. This error led to the wrong determination of the 'Location of Supplier' (LOS) as Andhra Pradesh instead of Telangana, while the 'Place of Supply' (POS) was correctly identified as Telangana. Consequently, Integrated GST (IGST) was incorrectly paid from the AP GST registration instead of Central GST (CGST) and State GST (SGST) from the TL registration. The bank identified this error in 2019 and corrected the tax payments by depositing the appropriate CGST and SGST in Telangana for the affected periods (July 2017 to August 2019) and reported the same via GST Form DRC 03.

2. Refund Claim Rejection Due to Being Time-Barred as per Section 54 of the CGST Act:
The petitioner filed refund applications for the IGST paid from the AP registration on 14.02.2020, amounting to Rs.16,90,41,709/-. The refund claim was rejected on the grounds that it was time-barred as per Section 54 of the CGST Act, which prescribes a two-year period for filing refund claims. The petitioner argued that the refund claim should not be considered time-barred based on a Circular dated 25.09.2021 issued by the Government of India, which provides clarity on the matter.

3. Applicability of Circular No.162/18/2021-GST Dated 25.09.2021 Regarding Refund Claims:
The petitioner contended that the Circular dated 25.09.2021 clarifies that refund claims under Sections 77(1) of the CGST Act and 19(1) of the IGST Act are not time-barred if the correct tax was paid before the issuance of the Circular. The Circular specifies that the term "subsequently held" covers both scenarios where the taxpayer or tax officer identifies the correct tax head. The relevant date for claiming a refund is two years from the date of payment of tax under the correct head or two years from the date of the Circular for payments made before its issuance.

The court acknowledged that the impugned order rejecting the refund claim was passed before the issuance of the Circular and that the respondents' counter was based solely on Section 54 of the CGST Act. The court concluded that the matter should be remanded back to the third respondent/Assistant Commissioner Central Tax to reconsider the refund application in light of the Circular No.162/18/2021-GST dated 25.09.2021 and pass orders accordingly.

Conclusion:
The writ petition was disposed of with directions to remand the matter back to the third respondent to re-evaluate the refund application considering the Circular issued by the Ministry of Finance. The court emphasized the need for the authority to address the applicability of the Circular and ensure compliance with the law. No costs were awarded, and any pending miscellaneous petitions were closed.