REFUND OF IGST PAID ON EXPORT OF GOODS

[DR.MARIAPPAN GOVINDARAJAN]

Refund of tax

Section 54(1) of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.  The Explanation 2 to this section defines the expression ‘relevant date’ as-

• in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, –

• if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or
• f the goods are exported by land, the date on which such goods pass the frontier; or
•  if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

• in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished.
•  in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies

Therefore, if the refund application is filed after the limitation period of 2 years from the relevant date, then such application is liable to be rejected by the Department.

Case laws

In M/S PROXIMA STEEL FORGE PVT. LTD. VERSUS UNION OF INDIA AND OTHERS - 2024 (10) TMI 376 - PUNJAB AND HARYANA HIGH COURT, the refund application was rejected on the ground of limitation.  The Punjab and Haryana High Court held that after the appeal was allowed by the Joint Commissioner setting aside the order of rejection of the refund claim on the ground that subordinate officer could not have refused to examine the case on merits when remanded.

In NITREX CHEMICALS INDIA LTD VERSUS ASSISTANT COMMISSIONER GOODS AND SERVICE TAX DIVISION VIII VALSAD - 2025 (2) TMI 201 - GUJARAT HIGH COURT, the petitioner was exporting Nitrocellulose to various countries in the world, under Section 54 of the GST Act read with section 16 of the Integrated Goods and Service Tax Act, 2017.  The petitioner was entitled to refund of the IGST paid on the zero-rated supplies in form of export.  The refund application was filed by the petitioner on 15.06.2020 for the period from July 2017 to March 2018 for the refund of IGST paid on export. The refund application was rejected on the ground that the refund application is time barred. 

Being aggrieved against the rejection order the petitioner filed the present writ petition before the High Court.  The petitioner submitted the following before the Supreme Court-

• The delay on part of the petitioner was inadvertent.
• The petitioner should not be deprived of its rightful claim of refund.
• As per Circular No. 06/2020 dated 03.02.2020, time period for filing of the return was extended up to 05.02.2020.
• The petitioner has filed refund application on 15.06.2020, and the same would fall within the relevant period and therefore, the Department ought to have granted the refund for the period from July, 2017 to March, 2018.
• The delay in filing the application may be condoned as the petitioner is otherwise entitled to refund as per the provisions of section 54 (3) of the Act.
• The petitioner is required to file refund claim for tax period only after filing the details in Form GSTR-1.
• As per Circular No. 45/19/2018-GST dated 30.05.2018 the petitioner is to file refund application after the two years from the date of filing of Form GSTR-1.
• Therefore, the petitioner is entitled for refund as per the said circular.

The petitioner relied on the judgment of Madras High Court in M/S. LENOVO (INDIA) PVT. LTD., REP. BY ITS AUTHORIZED SIGNATORY MR. SEIYADOU AHAMADOU VERSUS THE JOINT COMMISSIONER OF GST (APPEALS-1) O/O. THE COMMISSIONER OF GST & CENTRAL EXCISE (APPEALS-I) , THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, DIVISION I, PUDUCHERRY COMMISSIONERATE, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, REP. BY ITS CHAIRMAN, UNION OF INDIA - 2023 (11) TMI 774 - MADRAS HIGH COURT.  In the said judgment, the Madras High Court held that reading section 54 (1) of the GST Act would make it clear that assessee can make application within two years and the term used in the said section ‘may make application before two years from the relevant date in such form and manner as may be prescribed’ which means that the assessee may make application within 2 years and it is not mandatory that the application has to be made within two years and in appropriate cases, refund application can be made even beyond 2 years.

The petitioner submitted that the delay in filing the application may be condoned as the petitioner is otherwise entitled to refund as per the provisions of section 54 (3) of the Act.

The Department submitted the following before the High Court-

• The petitioner had exported goods from July, 2017 to March, 2018 and application for refund was filed on 15.06.2020.
• The application for refund was filed beyond the prescribed beyond of 2 years as per the provisions of section 54 (1) of the Act.
• The petitioner's claim that the delay in filing of refund for the tax period from July, 2017 to March, 2020 due to nationwide lockdown announced in March 2020 due to Covid-19 pandemic cannot be sustainable as lockdown was announced in the month March, 2020 whereas the last date of filling of refund claim application for the period from July, 2017 to February, 2020 was ends on 20.03.2020 well before of lockdown.
•  Any refund claim which is filed beyond the time period prescribed by statute cannot be granted.
• When there is no such condonable limit and the claim is filed beyond time period prescribed by statue, than there is no discretion to any authority to extend the time limit.
• The rejected refund amount is re-credited in the credit ledger of the petitioner in respective heads i.e. CGST/SGST/IGST/Cess by way of issuing PMT-03 as per sub-rule (4) of Rule 86 of CGST Rules, 2017 and the same can be used for payment of tax by the petitioner.

Therefore, the petitioner is not entitled for refund of the compensation cess paid by him on the export.

The High Court considered the submissions of both the parties.  The High Court observed on conjoint reading of Explanation 2 with Section 54 (1), that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, has to make application before the expiry of 2  years from the relevant date and as per Explanation 2, relevant date means in the case of goods exported out of India is the date on which such goods are loaded either in Ship or aircraft, leaves India is the relevant date. Therefore, in the facts of the case relevant date for the goods exported by the petitioner would be from the date of shipping mentioned in the shipping bills. Therefore, period of two years is required to be calculated from the date of shipping.  The refund claim of the petitioner was required to be filed as per the provisions of section 54 (1) of the GST act only.

The High Court held that since the petitioner has failed to file the refund claim within the prescribed period of 2 years from the relevant date, the respondent authority has rightly rejected such refund claim as being time barred.