2025 (1) TMI 201 - HC - GST

Rejection of refund application filed by the petitioner on the ground that it is filed belatedly and beyond the time permitted by Section 54 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 - HELD THAT - Rule 90 of the CGST Rules deals with acknowledgement of an application for refund. Sub-rule (3) of Rule 90 of the CGST Rules no doubt requires the filing of a fresh refund application after rectification of deficiencies pointed out in respect of the first application. However, the said sub-rule does not contemplate that the date of the fresh application has to be considered for the purposes of determining the period of limitation for filing an application for refund under sub-section (1) of Section 54 of the CGST/SGST Acts - The rejection of the application for refund filed by the petitioner by Ext.P4 communication on the ground that the second application filed by the petitioner was beyond the time specified in subsection (1) of Section 54 of the CGST/SGST Acts cannot be sustained in law. Conclusion - The date of the original refund application should be considered for time limit purposes under Section 54, provided deficiencies are rectified. Rule 90(3) should not reset the statutory time limit. Petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the rejection of the petitioner's refund application as time-barred under Section 54 of the CGST/SGST Acts is legally sustainable.
Whether Rule 90(3) of the CGST Rules, which requires the filing of a fresh refund application upon notification of deficiencies, is consistent with the statutory provisions of the CGST/SGST Acts.
Whether the date of the original refund application should be considered for the purpose of determining compliance with the time limits prescribed by Section 54 of the CGST/SGST Acts.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Rejection of Refund Application as Time-Barred

Relevant Legal Framework and Precedents: Section 54 of the CGST/SGST Acts prescribes a two-year time limit for filing a refund application from the relevant date. Rule 90(3) of the CGST Rules requires a fresh application if deficiencies are noted in the initial application.
Court's Interpretation and Reasoning: The court interpreted that while Rule 90(3) mandates a fresh application upon deficiency notification, it does not imply that the date of this fresh application should determine compliance with the time limit under Section 54.
Key Evidence and Findings: The petitioner initially filed the refund application on 05-04-2021, and a deficiency notice was issued on 19-04-2021. The petitioner filed a fresh application on 30-09-2021, which was rejected as time-barred.
Application of Law to Facts: The court applied Section 54 and Rule 90(3) and concluded that the initial filing date should be considered for time limit purposes, provided deficiencies are rectified.
Treatment of Competing Arguments: The petitioner's argument that the original filing date should be considered was accepted, while the respondent's contention that the fresh application date should apply was rejected.
Conclusions: The rejection of the refund application as time-barred was deemed unsustainable, and the application should be treated as filed on the original date, 05-04-2021.

Issue 2: Consistency of Rule 90(3) with Statutory Provisions

Relevant Legal Framework and Precedents: Rule 90(3) of the CGST Rules requires a fresh refund application upon deficiency notification, which must align with Section 54 of the CGST/SGST Acts.
Court's Interpretation and Reasoning: The court found that Rule 90(3) does not alter the statutory time limits set by Section 54 and should not be interpreted to disadvantage applicants by resetting the filing date.
Key Evidence and Findings: The court focused on the statutory language and intent of Section 54, emphasizing the importance of the original application date.
Application of Law to Facts: The court applied a harmonious interpretation, ensuring Rule 90(3) complements rather than contradicts Section 54.
Treatment of Competing Arguments: The court favored the petitioner's interpretation, ensuring procedural rules do not override statutory rights.
Conclusions: Rule 90(3) is consistent with Section 54 when interpreted to maintain the original application date for time limit purposes.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The rejection of the application for refund filed by the petitioner by Ext.P4 communication on the ground that the second application filed by the petitioner was beyond the time specified in subsection (1) of Section 54 of the CGST/SGST Acts cannot be sustained in law."
Core Principles Established: The date of the original refund application should be considered for time limit purposes under Section 54, provided deficiencies are rectified. Rule 90(3) should not reset the statutory time limit.
Final Determinations on Each Issue: The court quashed the rejection of the refund application and directed that it be processed as filed on 05-04-2021, contingent upon rectification of deficiencies.

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