2024 (4) TMI 998 - HC - GST

Validity Of Order-in-original - application seeking refund of tax - Period of limitation - Not fulfilled the mandate issued under circular - Payment of tax under the wrong head - HELD THAT - In terms of the clarification issued by circular dated 25.09.2021, petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head i.e. before expiry of two years from 19.08.2019. However, the circular further clarifies that in cases where payment was made under the correct head prior to issuance of the circular, a further period of two years would be available from the date of circular, which implies that any application seeking refund filed on or before 23.09.2023 in respect of taxes paid under the correct head prior to 24.09.2021 would be considered within time. In the subject case, petitioner filed the first application seeking refund on 11.05.2020, which was rejected on 29.06.2020 and the appeal against the said order was also dismissed on 30.06.2021 i.e. prior to the issuance of the clarification by the circular dated 25.09.2021. After the issuance of the circular, petitioner filed a second application on 14.07.2022, which has been rejected by the order-in-original impugned before the Appellate Authority whose order is impugned before us. Clearly, both the refund applications filed by the petitioner (one on 11.05.2020 and other on 14.07.2022) are covered by the circular dated 25.09.2021 and were within limitation. Consequently, the Appellate Authority has committed an error in not noticing the said circular and rejecting the appeal holding that the application was beyond time. Accordingly, said order is not sustainable and is set aside. The appeal is restored to its original number on the record of the Appellate Authority. The Appellate Authority is directed to consider and dispose of the appeal on merits in accordance with law. Petition is allowed in the above terms.

Summary

Issues Involved:
1. Limitation period for filing refund application under GST laws.

The judgment deals with a case where the petitioner had erroneously declared the total taxable value for intra-State supply of services under the wrong tax heads, leading to a double deposit of tax. The petitioner subsequently sought a refund, but the application was rejected by the Appellate Authority solely on the ground of delay in filing the refund application within the limitation period prescribed under Section 54 of the Central Goods and Service Tax Act, 2017 (CGST Act). The main issue was whether the application seeking refund was within the prescribed time limit.

The Appellate Authority had held that the application seeking refund was belated and dismissed the appeal on the ground of delay. However, the petitioner contended that the circular dated 25.09.2021 issued by the Central Board of Indirect Taxes and Customs clarified the interpretation of the "Relevant Date" for filing refund applications, which could affect the limitation period for their case. The circular specified that the "Relevant Date" for filing refund applications would be the date when tax is paid under the correct head.

The petitioner had paid tax under the wrong head on 20.12.2017 and under the correct head on 19.08.2019. As per the circular, the petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head. The petitioner filed the first refund application on 11.05.2020, which was rejected before the issuance of the circular. Subsequently, a second application was filed on 14.07.2022, which was also rejected. However, both applications were within the limitation period as clarified by the circular dated 25.09.2021.

The High Court held that both refund applications were covered by the circular and were within the limitation period. The Appellate Authority erred in not considering the circular and wrongly dismissing the appeal on the ground of delay. The court set aside the order of the Appellate Authority and directed it to reconsider the appeal on its merits in accordance with the law. The petition was allowed in favor of the petitioner.