2024 (11) TMI 456 - HC - GST

Refund of the tax paid by the petitioner on the Inverted Duty Structure - relevant dates - time limitation - petitioner filed an application for refund in the format RFD-01 on 12.04.2023 in terms of Rule 89(1) read with Section 54 of the GST Act much later to the limitation period and claimed a refund paid under IGST - HELD THAT - When the amounts remaining in the credit ledger was set off as against the demand, the character of the said amounts which remained in the credit ledger changed and acquired the status of tax recovered by the department. An appeal was filed from the aforesaid demand raised by the Assessing Officer which was allowed on 20.02.2022. The appellate order is also said to have been received only on 15.08.2022. The petitioner has now filed an application for refund of the amounts credited to the credit ledger on the appeal being allowed. Hence, what remains in the credit ledger of the petitioner is the amount of tax recovered which is enabled for refund as per the appellate order. Clause (2) of the second Explanation to Section 54 provides that when tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, the date of communication of such judgment, decree, order or direction is the relevant date. Hence, the relevant date as per the Explanation is 15.08.2022 on which date the order was communicated. The petitioner s online application was not uploaded, presumably by reason of a technical glitch. The Government Advocate, however, points out that the uploading was not possible since the Inverted Duty Structure refund is possible only for two years. Petition allowed.

Summary

Issues:
Claim for refund of tax paid under the 'Inverted Duty Structure' for bottling LPG; Timeliness of filing refund application; Extension of limitation period; Set off of amounts from credit ledger against demand raised; Applicability of refund provisions under CGST Act.

Analysis:
The petitioner sought a refund of tax paid under the 'Inverted Duty Structure' for bottling LPG, as provided under Section 54 of the CGST Act. The petitioner purchased LPG in bulk, bottled it, and sold it to customers at different rates, collecting tax accordingly. The refund claim was made for the Financial Year 2018-19, filed beyond the limitation period, leading to a dispute with the Assessing Officer (AO) regarding the timeliness of the application.

The petitioner contended that the limitation period for filing the refund application should commence from the date the appellate order was received, not from the end of the relevant financial year. Additionally, the petitioner highlighted issues of demand raised by the AO, alleged bribe demands, and subsequent recovery from the credit ledger, affecting the refundable amount under the 'Inverted Duty Structure'.

The Court analyzed the relevant provisions under Section 54 and the CGST Rules, emphasizing the importance of timely filing of refund applications and the impact of set off of amounts against demands on the availability of refundable tax. The Court noted that the amounts set off against demands changed their character and were considered as tax recovered by the department.

Considering the peculiar facts of the case, including the appeal allowed by the Appellate Authority and subsequent filing of a refund application, the Court directed the refund of the amounts set off from the credit ledger as tax due on the enhanced demand made for the Assessment Years 2018-19 and 2019-20. The Court clarified that the remaining amount in the credit ledger, now refundable as per the appellate order, should be considered for refund under the relevant provisions of Section 54.

The Court allowed the writ petition, directing the refund to be made within two months from the date of receipt of the judgment, acknowledging the technical glitch in the online application process and affirming the eligibility of the petitioner for refund based on the appellate order and the tax recovered from the credit ledger.