2024 (1) TMI 623 - HC - GST

Refund of unutilised Input Tax Credit (ITC) - Barred by time limitation or not - HELD THAT - The N/N. 13/2022-C.T. dated 05.07.2022 clearly specifies that the period running from 01.03.2020 to 28.02.2022 is required to be excluded for computation of the period for limitation for filing a refund application under Section 54 of the CGST Act. The relevant date is the date of receipt of payment in convertible foreign exchange, as per Explanation (2) to sub-section (14) of Section 54. Even as regards FIRCs issued in April 2018, if the benefit of the above notification is extended to the petitioner, the refund application dated 04.09.2020 would be within the two year period, which is to be computed from the relevant date, as per sub-section (1) of Section 54 of the CGST Act. Apart from concluding that the claim is barred by limitation, no other reason has been mentioned in the appellate order for rejecting the refund claim of Rs. 7,34,732/-. For reasons set out, the said conclusion in the appellate order is unsustainable. Hence, the impugned order is quashed and, as a corollary, the 1st respondent is directed to refund the sum of Rs. 7,34,732/- to the petitioner within a period of two months from the date of receipt of a copy of this order. The writ petition is allowed.

Summary

Issues involved: Challenge to appellate order rejecting refund claim under IGST Act, exclusion of period due to COVID-19 impact, entitlement to refund under notification No.13/2022-C.T., disallowance of refund claim for wrong ITC claim.

Summary:

Challenge to Appellate Order:
The petitioner, a Business Process Outsourcing company, challenged an appellate order rejecting its refund claim of Rs. 7,34,732 under the Integrated Goods and Services Tax Act, 2017. The petitioner exports services under a letter of undertaking without payment of IGST and seeks refund of unutilised Input Tax Credit (ITC) under Section 16(3) of the IGST Act read with Section 54 of the CGST Act.

Exclusion of Period due to COVID-19 Impact:
The petitioner exported services from April 2018 to March 2019 and filed a refund application on 04.09.2020. The petitioner faced delays due to the COVID-19 pandemic and requested condonation of the same. The appellate authority considered only the export turnover from September 2018 to March 2019, excluding the earlier period as time-barred.

Entitlement to Refund under Notification No.13/2022-C.T.:
The petitioner argued that the limitation period for filing a refund application should exclude the period from 01.03.2020 to 28.02.2022, as per notification No.13/2022-C.T. This exclusion would render the refund claim within the time limit, as per Section 54 of the CGST Act.

Disallowance of Refund Claim for Wrong ITC Claim:
The show cause notice highlighted a sum of Rs. 9,22,424 as a wrong ITC claim, with specific reasons for disallowance. The appellate order rejected the refund claim of Rs. 7,34,732 mainly due to being time-barred, without citing additional reasons. However, the Court found this conclusion unsustainable and directed the refund of the said amount to the petitioner within two months.

In conclusion, the Court quashed the impugned order, directing the refund of Rs. 7,34,732 to the petitioner, considering the exclusion of the COVID-19 impacted period for limitation computation under the CGST Act.