2021 (6) TMI 20 - Commissioner - GST

Refund of accumulated ITC on account of Inverted Tax Structure - refund claim rejected on the ground of time bar issue as the appellant has filed refund application beyond two years from the relevant date - HELD THAT - The provisions of Section 54 of the CGST Act, 2017 have been introduced w.e.f. 1-2-2019 and the question arises is whether the same have got retrospectively effect or prospective effect. The said provisions have been introduced w.e.f. 1-2-2019 vide the CGST (Amendment) Act, 2018 and there is no stipulation in the CGST (Amendment) Act, 2018 that the same shall apply retrospectively. However, Rules of interpretation provide that whenever any statute is newly added the same has got only prospective effect unless it is specifically provided in the amending statute or the amendment is by way of substitution of an existing provision mainly by way of clarification or removal of defects. Accordingly, the said provisions has got only prospective effect. Thus with effect from 1st February, 2019, the meaning of relevant date may be reckoned within 2 years from the due date of furnishing of return under Section 39 of the CGST Act, 2017 relating to the period in which such claim for refund arises. The amended provisions under sub-section (14) of Section 54 of the CGST Act, 2017 for relevant date was made effective from 1-2-2019, while the fresh refund application was filed by the appellant on 25-1-2020 which absolutely beyond the two years from the relevant date - the appellant s contention is not acceptable that their refund application in respect of inverted duty structure should be processed as per un-amended provisions of sub-section (14) of Section 54 of the CGST Act, 2017 since the tax period of refund claim in this case pertains to December, 2017. The appeal is dismissed.

Issues Involved:
1. Interpretation of the amendment to the explanation of "relevant date" under Section 54 of the CGST Act, 2017.
2. Applicability of Circular No. 125/44/19-GST, dated 18-11-2019.
3. Procedural compliance and technical glitches affecting the refund application.
4. Substantive right to refund of accumulated input tax credit (ITC).

Detailed Analysis:

1. Interpretation of the Amendment to the Explanation of "Relevant Date" under Section 54 of the CGST Act, 2017:

The appellant argued that the amendment to the explanation of "relevant date" effective from 1st February 2019 should be considered prospective. They contended that for the tax period December 2017, the relevant date should be the end of the financial year in which the refund claim arises, allowing them to file the refund application by 31st March 2020. The appellant filed the original refund application on 20th January 2020, within the prescribed time limit under the old law.

The adjudicating authority, however, applied the amended provision, which defines the "relevant date" as the due date for furnishing the return under Section 39 for the period in which the refund claim arises. This interpretation led to the rejection of the appellant's refund application as time-barred since the fresh application was filed on 25th January 2020, beyond the two-year limit from the relevant date.

2. Applicability of Circular No. 125/44/19-GST, dated 18-11-2019:

The appellant contended that the circular cannot override the law and that compliance with the circular was impossible in their case. The circular requires that a fresh refund application in response to a deficiency memo must also be filed within the original two-year time limit. The appellant argued that this requirement was impractical, as the deficiency memo was issued on 23rd January 2020, after the original refund application deadline of 20th January 2020.

The adjudicating authority upheld the circular's applicability, emphasizing that the fresh refund application must be filed within the two-year limit from the relevant date, as defined in the amended provision.

3. Procedural Compliance and Technical Glitches Affecting the Refund Application:

The appellant claimed that technical glitches on the GST portal prevented them from attaching necessary documents to the original refund application filed on 20th January 2020. They argued that the deficiency memo issued on 23rd January 2020 and the subsequent fresh application filed on 25th January 2020 should be considered a continuation of the original application.

The adjudicating authority did not accept this argument, stating that the fresh application filed in response to the deficiency memo was treated as a new application and must comply with the amended time limit.

4. Substantive Right to Refund of Accumulated Input Tax Credit (ITC):

The appellant argued that the refund of accumulated ITC due to the inverted duty structure is a substantive right and cannot be denied by retrospective application of the amended provision. They cited several judgments to support their claim that substantive rights should not be affected by procedural amendments.

The adjudicating authority maintained that the amended provisions have prospective effect and apply to all applications filed after 1st February 2019, regardless of the tax period to which the refund claim pertains.

Conclusion:

The appeal was rejected, and the order of the adjudicating authority was upheld. The adjudicating authority found no infirmity in the Order-in-Original, concluding that the appellant's refund application was time-barred under the amended provisions of Section 54 of the CGST Act, 2017. The substantive right to refund was not denied, but the procedural compliance with the amended time limit was required. The appeal was disposed of accordingly.

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