2024 (9) TMI 1582 - HC - GST

Seeking to quash deficiency memo - refund of GST paid by the petitioner concern has been rejected on the ground of limitation - petitioner is also seeking a direction to the respondents to process and release the GST refund of petitioner - HELD THAT - In terms of Section 54 of CGST Act of 2017, the application for refund of tax was to be filed before the expiry of two years from the relevant date, i.e., the application was to be filed by or before 19.09.2020. A perusal of annexure IV to the writ petition, i.e., Form-GST-RFD-01 reveals that the petitioner concern filed the application for refund of tax on 08.09.2020, i.e., well before the expiry of two years from the relevant date. It is very strange that in the deficiency memo dated 23.09.2020 the respondent No.2 did not take the ground of limitation or that the original application of petitioner concern dated 08.09.2020 was barred in terms of Section 54 of CGST Act of 2017, which leads to the conclusion that on 08.09.2020 the original application of petitioner concern for refund of GST was within time from the relevant date. However, the application dated 28.03.2020, which was filed on the asking of respondent No.2, was rejected by respondent No.2 only on the ground of limitation. Once the respondents had treated the original application dated 08.09.2020 as within time from the relevant date, then how the second application dated 28.09.2020, which was in continuation to the original application dated 08.09.2020 and was filed only on the advice of respondent No.2, became barred by limitation. A perusal of the objections filed by the respondents reveals that the respondents have miserably failed to justify their action in rejecting the claim of petitioner concern. It seems the objections have been filed only for the sake of objections and was a mere formality; the same seem to be evasive in nature. In the objections the respondents have failed to aver anything about the first application filed by the petitioner concern on 08.09.2020 - A perusal of the objections reveals that the respondents instead of taking a particular stance to controvert the claim of petitioner concern tried to avoid the same by simply averring no comments, which leads to the conclusion that the respondents were avoiding to make a direct reply and the same is sufficient for this Court to draw an adverse inference. It seems that before filing the objections the respondents did not go through the case of petitioner concern thoroughly and have taken the matter very lightly. The deficiency memo (Form-GST-RFD-03) issued by Assistant Commissioner, Goods and Services Tax quashed - petition allowed.

Issues Involved:
1. Quashing of the deficiency memo (Form-GST-RFD-03) on the ground of limitation.
2. Direction to process and release the GST refund.
3. Opportunity of being heard before rejecting the refund claim.
4. Maintainability of the writ petition in light of alternative remedies under Section 108 of CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Quashing of the deficiency memo (Form-GST-RFD-03) on the ground of limitation:
The petitioner sought to quash the deficiency memo dated 15.10.2020, issued by the Assistant Commissioner, GST, rejecting the refund application on the ground of limitation under Section 54 of the CGST Act, 2017. The court noted that the petitioner filed the initial refund application on 08.09.2020, well within the two-year limitation period from the relevant date of 20.09.2018. The deficiency memo dated 23.09.2020 did not mention any issue of limitation, indicating that the original application was timely. The court emphasized that the follow-up application dated 28.09.2020 was a continuation of the original application and should not be considered a new application for the purposes of limitation. Consequently, the rejection of the refund application on the ground of limitation was deemed inappropriate.

2. Direction to process and release the GST refund:
The court directed the respondents, particularly respondent No.2, to process and release the GST refund of Rs.2,91,650/- along with interest at the rate of 7% from the date it became due until its final realization. The court highlighted that the original application dated 08.09.2020 was within the limitation period and the follow-up application was merely a continuation, thus the refund claim was valid.

3. Opportunity of being heard before rejecting the refund claim:
The court observed that the respondents admitted in their objections that no opportunity of being heard was afforded to the petitioner before rejecting the refund claim. Rule 92(3) of the CGST Rules mandates that no application for refund shall be rejected without giving the applicant an opportunity of being heard. The court held that the deficiency memo dated 15.10.2020 was issued in violation of this rule, further justifying the quashing of the memo.

4. Maintainability of the writ petition in light of alternative remedies under Section 108 of CGST Act, 2017:
The respondents contended that the writ petition was not maintainable due to the availability of an alternative remedy under Section 108 of the CGST Act, 2017. However, the court noted that the respondents did not raise this issue in their initial objections. Therefore, the court deemed the writ petition maintainable and proceeded to allow it.

Conclusion:
The court allowed the writ petition, quashed the deficiency memo dated 15.10.2020, and directed the respondents to process and release the GST refund along with interest. Additionally, the respondents were ordered to bear and pay the costs of Rs.30,000 to the petitioner within two months, failing which the Registrar (Judicial) was directed to frame a separate robkar against them.

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