2022 (7) TMI 1425 - HC - GST

Rejection of refund claim on the account of being time barred - application for refund made on 28-5-2021 for the tax period May 2018 to July 2018 was time barred or not? - period of limitation prescribed under section 54(1) of the CGST Act, 2017 stood extended in view of the order dated 23-3-2000 passed by the Apex Court in Suo Motu Writ Petition (Civil) No. 3/2020 and successive orders or not. HELD THAT - Various High Courts have decided the issue in favour of the Assessee on the same question of applicability of the period of limitation in making refund application such as, Madras High Court in W.P No. 18165 18168 of 2021 2021 (11) TMI 973 - MADRAS HIGH COURT and analogous cases dated 28-9-2021 M/s GNC Indra LLP Rep. by Partner/Authorized Signatory versus Assistant Commissioner (Circle), High Court of Bombay in Writ Petition (L) No. 1275/2021 dated 10-1-2022 Saiher Supply Chain Consulting Pvt. Ltd. v. The Union of India and Ors. 2022 (1) TMI 494 - BOMBAY HIGH COURT and High Court of Allahabad in Writ Tax No. 173/2022 dated 3-3-2022 in Gamma Ganna Limited v. Union of India and Ors. 2022 (3) TMI 578 - ALLAHABAD HIGH COURT - By the aforesaid decisions, it has been held that the order passed by the Apex Court in Suo Motu Writ Petition (Civil) No. 3/2020 IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2021 (5) TMI 564 - SC ORDER would govern the application for refund made under the GST Act - the views of jurisdictional High Courts are agreed upon. As per the Scheme of CGST Act and Rules, any such application for refund has to be processed within the time period and in case such refund application is to be rejected, a proper show-cause notice in Form-GST-RFD-08 has to be issued before the order of rejection containing the grounds is passed in Form-GST-RFD-06 i.e. with due opportunity to the person/Assessee. It therefore, clearly shows that the proceedings are in the nature of quasi-judicial proceeding which also get the benefit of extension of time limit, as per the orders passed by the Apex Court in Suo Motu Writ Petition from time to time. CBIC Circular dated 20-7-2021, cannot narrow down the scope of the order passed by the Apex Court in Suo Motu Writ Petition (Civil) No. 3/2020 under Article 32 of the Constitution of India. The rejection of the refund application by the impugned order at Annexure-5 dated 1-7-2021 is set aside. The matter is remanded to the Respondent No. 3 to take a fresh decision in accordance with law, after giving due opportunity of hearing, if necessary - petition allowed by way of remand.

Summary

Issues:
Challenge to ex-parte rejection order for refund application based on limitation period extension due to COVID-19 lockdown and subsequent Supreme Court orders.

Analysis:
1. The petitioner sought to quash an ex-parte rejection order for a refund application, claiming it was contrary to law and Supreme Court orders extending limitation periods due to COVID-19. The rejection was solely on the grounds of being time-barred, despite the petitioner's timely filing and submission of a show-cause reply. The petitioner requested directions to allow the refund claim of Rs. 53,13,706 for compensation cess paid on exports from May 2018 to July 2018, citing Supreme Court orders extending limitation periods.

2. The impugned order dated 1-7-2021 rejected the refund application for the tax period May 2018 to July 2018 as time-barred under Rule 92(3) of CGST Rules, 2017. The petitioner had initially applied for a refund for April 2018 to October 2018, received a defective memo, and then filed a fresh application for May 2018 to July 2018. Despite the petitioner's argument of limitation extension due to Supreme Court orders, the claim was rejected under Rule 92(1), 92(3), 92(4), 92(5), and 92(7) of the Act. The respondents contended that the Supreme Court's limitation extension did not apply to GST refund applications.

3. The key issue was whether the refund application made on 28-5-2021 for the period May 2018 to July 2018 was time-barred, considering the Supreme Court's orders extending limitation periods due to COVID-19. The court referred to the Apex Court's order dated 27-4-2021, which extended limitation periods but noted that the extension was not applicable to all proceedings under GST laws. However, several High Courts had ruled in favor of extending the limitation period for GST refund applications based on the Supreme Court's orders.

4. The High Court concurred with the jurisdictional High Courts and emphasized that the refund application process under the CGST Act involved quasi-judicial proceedings, benefiting from the Supreme Court's orders on limitation extension. The court held that the rejection of the refund application solely based on limitation was incorrect. Consequently, the impugned order was set aside, and the matter was remanded to the Respondent to reconsider the decision in accordance with law, providing a hearing if necessary. The court clarified that it did not comment on the merits of the case.