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2023 (12) TMI 233 - HC - GSTRefund of IGST - Ocean Freight Charges by the respondent - Reverse Charge Mechanism (RCM) - time limitation - HELD THAT - Recently, this Court had passed an order in M/S. LENOVO (INDIA) PVT. LTD., REP. BY ITS AUTHORIZED SIGNATORY MR. SEIYADOU AHAMADOU VERSUS THE JOINT COMMISSIONER OF GST (APPEALS-1) O/O. THE COMMISSIONER OF GST CENTRAL EXCISE (APPEALS-I) , THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, DIVISION I, PUDUCHERRY COMMISSIONERATE, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, REP. BY ITS CHAIRMAN, UNION OF INDIA 2023 (11) TMI 774 - MADRAS HIGH COURT , wherein it has been held that the fixation of limitation for making refund application is only directory in nature and the same is not mandatory. Accordingly, the limitation of 2 years, which was provided under Section 54(1) of the Goods and Services Tax Act, 2017, is directory in nature. In such case, if any reasons were provided for delay in filing the refund application, the same shall be considered and the said delay shall be condoned by the respondent. Thus, this Court is of the view that the impugned order dated 24.09.2023 is liable to be set aside - petition disposed off.
Issues involved: Challenge to imposition of IGST on Ocean Freight Charges under Reverse Charge Mechanism (RCM), rejection of refund application, applicability of limitation period for refund application.
Impugned Order Challenge - IGST on Ocean Freight Charges: The petitioner challenged the imposition of IGST on Ocean Freight Charges by the respondent based on the Reverse Charge Mechanism (RCM). The petitioner argued that since the exporter normally includes the Ocean Freight Charges in the cost of goods exported, the imposition of IGST on Ocean Freight Charges for imported goods by the petitioner was unjust. The petitioner was charged IGST on Ocean Freight Charges for specific periods, and despite a previous application for refund being rejected, the petitioner sought reconsideration following the precedent set by the Hon'ble Apex Court in the Union of India vs. Mohit Minerals Pvt Ltd. case. Refund Application Rejection and Limitation Issue: The Department rejected the refund application citing non-acceptance of the petitioner's contention and limitation concerns. The Appellate Authority also upheld the rejection. The respondent contended that the rejection was based on both the petitioner's argument and the limitation aspect. However, a recent judgment by the Madras High Court clarified that the limitation period for refund applications under the Goods and Services Tax Act is directory, not mandatory. Delays in filing refund applications can be considered and condoned if valid reasons are provided. Judgment and Directions: The High Court held that the petitioner was entitled to a refund of the IGST paid on Ocean Freight Charges, following the precedent set by the Hon'ble Apex Court. The impugned order was set aside, and the matter was remitted back to the respondent for reconsideration. The respondent was directed to review the refund application in light of the legal principles established by the courts and provide a personal hearing to the petitioner. Both parties were given the opportunity to raise additional issues, and the respondent was instructed to consider all issues on their merits within three months from the date of the order. The writ petition was disposed of with no costs incurred.
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