2023 (9) TMI 1518 - HC - GST

Refund of unutilized ITC - relevant date - Vires of Circular No. 125/44/2019-GST dated 18.11.2019 - direction to file the rectified refund claim within a period of 2 years of the relevant date as defined in Explanation after sub-section 14 of Section 54 of the CGST Act - ultra vires to Section 54 of the CGST Act, 2017. Whether the petitioner is entitled to get the refund by considering the period of limitation as explained in the definition of relevant date as per the Explanation after subsection (14) of Section 54 of the CGST Act to be considered from the date of filing of the original refund application or from the date of filing of the rectified refund application after receipt of the deficiency memo from the respondents authorities? HELD THAT - Such question is considered by the Hon ble Delhi High Court in the case of National Internet Exchange of India 2023 (8) TMI 1211 - DELHI HIGH COURT , wherein after considering the provisions of Section 54 of the CGST Act and the Rule 90 of the CGST Rules, it was held 'in terms of Section 54(1) of the CGST Act, anapplication is required to be made in the prescribed form and manner before two years from the relevant date. It is clear that the petitioner had complied with the said requirement inasmuch as it had filed an application for refund on 31.10.2019 in the form and manner as prescribed in the CGST Act and the CGST Rules. Thus, in terms of Section 54(1) of the CGST Act, the period of limitation would stop running notwithstanding that the proper officer required further documents or material to satisfy himself that the refund claimed was due to the petitioner.' It is therefore clear that time period from the date of filing of the refund claim in Form GST RFD-01 till the date of communication of the deficiency in the Form of GST RFD-03 by the proper officer is required to be excluded from the period of two years, as specified in respect of any such fresh refund claim filed by the applicant after rectification of the deficiency. The insertion of proviso to Rule 90(3) of the CGST Rules is therefore clarificatory in consonance with the objective of Section 54(1) of the CGST Act - the same would be applicable in the facts of the case also where the rectified refund application filed by the petitioner is within the period of limitation after applying the above provision and shall fall within two years after excluding the period from the date of fling of the refund claim in Form GST RFD-01 till the date of communication in Form GST RFD-03, which is calculated by the petitioner as 26 days. Thus, applying the Circular No. 15/2021 also, the refund claim of the petitioner cannot be rejected and the reliance placed by the respondent on Clause 12 of Circular No. 125/44/2019-GST dated 18th November 2019 would not be applicable. The last date for filing the refund application upto December 2019 was extended upto 22nd January 2020 and considering the period of two years, the limitation period of relevant date would be over on 22nd January 2020 and considering 26 days of issuance of deficiency memo by the respondents authorities and adding the limitation for filing rectification application would therefore extend upto 17th February 2020 (22.01.2020 26 days 17.02.2020). But the petitioner has filed the second rectified application on 13th February 2020 and applying the Notification No. 15/2021, refund claim of the petitioner would be within the period of limitation. Thus, as held by the Hon ble Bombay High Court in the case of National Internet Exchange of India 2023 (8) TMI 1211 - DELHI HIGH COURT , in terms of Section 54(1) of the CGST Act, the period of limitation would stop running notwithstanding that the proper officer required further documents or material to satisfy himself that the refund claimed was due to the petitioner. The Notification No. 15/2021 dated 18th May 2021 is issued so that Rule 90(3) of the CGST Rules operates in accordance with the provisions of Section 54(1) of the CGST Act and therefore, the same is required to be applied to the facts of the case also. The impugned order dated 9th November 2020 passed by the respondent No. 4 The Joint Commissioner (Appeals) confirming the order dated 11th March 2020 passed by the Deputy Commissioner, Central GST, Division-I, Ahmedabad-South rejecting the application for refund filed by the petitioner on the ground of limitation is hereby quashed and set aside. The refund application filed by the petitioner in Form GST RFD-01 dated 16th December 2019 is restored for consideration of the proper officer a fresh on merits. Petition allowed.

Summary

Issues Involved:
1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019.
2. Application of the time limit for filing a rectified refund claim under Section 54 of the CGST Act.
3. Interpretation of Rule 90 of the CGST Rules and its amendments.

Issue-Wise Detailed Analysis:

1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019:
The petitioner challenged the validity of para 12 of Circular No. 125/44/2019-GST, which mandates that a rectified refund claim must be filed within two years from the relevant date as defined in Section 54 of the CGST Act. The petitioner argued that this provision is ultra vires to Section 54 of the CGST Act. The court found that the circular cannot override the statute and must align with the legislative intent of Section 54, which provides a two-year period for filing refund claims.

2. Application of the Time Limit for Filing a Rectified Refund Claim Under Section 54 of the CGST Act:
The petitioner filed the original refund claim within the prescribed two-year period but had to rectify it due to deficiency memos issued by the respondents. The court examined whether the time limit should be calculated from the date of the original application or the rectified application. The court referred to the Delhi High Court's decision in National Internet Exchange of India, which held that the limitation period stops running once the original application is filed within the prescribed time. The court also considered Notification No. 15/2021, which clarifies that the time between the original application and the deficiency memo should be excluded from the two-year period.

3. Interpretation of Rule 90 of the CGST Rules and its Amendments:
Rule 90(3) requires filing a fresh refund application after rectifying deficiencies. The court noted that this rule is procedural and does not restart the limitation period. The insertion of a proviso to Rule 90(3) by Notification No. 15/2021, which excludes the time taken to rectify deficiencies from the two-year period, was deemed clarificatory and applicable to the case. The court concluded that the rectified refund application was a continuation of the original application and should be considered within the limitation period.

Conclusion:
The court held that the petitioner's refund claim was within the limitation period after excluding the time taken to rectify deficiencies. The impugned order rejecting the refund claim on the ground of limitation was quashed. The proper officer was directed to reconsider the refund application on merits within 12 weeks. The rule was made absolute to this extent, with no order as to costs.