Relevant date under Refund, Goods and Services Tax - GST

[Ashiesh Prremji]

Dear Sir,

Please clear what will be "Relevant Date" in case of Refund for tax paid in wrong head CGST/SGST instead of IGST & Vice-Versa? Which date of payment shall be considered for 2Yrs. computation, whether its date of payment in wrong head or date of payment in correct head ?

Thanks for your kind attention!

Posts / Replies

[KASTURI SETHI]

Date of payment of tax under wrong head (Type of tax). See Explanation 2 (h) below Clause 14 of Section 54 of CGST Act.

[Ashiesh Prremji]

Dear Sir,

Thanks for your reply Sir!

As per explanation 2 sub-clause (h) of Section 54(14) says only date of Payment of tax will be Relevant date. It means if we paid tax in CGST/SGST in July 17 & after GST audit only came to know that we need to pay in IGST in Jan 20,accordingly if tax is paid in correct head in Jan 20. So now 2Yrs completed from July 17 as per above explanation & refund cann't be filed.

My query is what can be done in above situation to get refund of payment made in wrong head?

Thanks,

[KASTURI SETHI]

Suppose GSTR 3 B return for July, 17 was filed on 20.8.17. You made the payment wrongly on 20.8.17. You could apply for refund claim on or before 19.8.19. That amount of tax which was wrongly paid is to be applied for refund and not that amount which you have correctly paid under correct head. Under Section 77 of CGST Act, no interest is payable for payment of tax under incorrect head.. No other relaxation is admissible. Regarding time bar limitation, no relaxation is available to you. Nobody can go beyond law. There is no remedy if refund claim is hit by time limitation.

If you have come to know late in January, 20 that has no basis.

[Rachit Agarwal]

If Refund has become time barred, refund can be claimed by way of Writ u/s 18 of Indian Contract Act, 1872. Supreme Court in case of Mafatlal Industries

[KASTURI SETHI]

There is a wide gulf between the definitions of 'Refund' pertaining to pre-GST era ( Central Excise/Service Tax) and post GST era (CGST Act).

[Kashish Gupta]

Dear Ashimesh Prremji

If we read section 77 of the CGST Act, 2017 it appears that law says that refund shall be provided. Phraseology of this section is very different from section 54 of the CGST Act wherein it is provided that refund application has to be filed within a period of 2 years from relevant date. Therefore, in my view, relevant date shall not be a problem in your case and it should not be as the taxes has already been paid and it's merely a case of adjustment between taxation heads.

Also, when refund would be lodged, there is no need to pay IGST first and then claim refund of CGST/SGST. It can be argued that proper officer will adjust the IGST dues from refundable amounts of CGST/SGST.

Non-applicability of relevant date can further be argued from the use of words "held" in section 77 of the Act.

[KASTURI SETHI]

For filing refund claim under CGST Act, there is only one Section (54) and here is 54(8)(d) of CGST Act.

(d) refund of tax in pursuance of section 77; Section 77 is not independent.

 

[Ashiesh Prremji]

Thanks a lot for expressing your views!

From above discussion, it seems there is no remedy under GST provisions if tax paid in wrong head is time barred & again gst has been paid in correct head.

is there any remedy if we go for excess payment of tax u/s 54(8)(e), which we have paid later in correct head ?

[KASTURI SETHI]

Sh.Ashiesh Prem Ji,

In this scenario, the relevant question is which amount of tax has been paid in excess. As already mentioned, amount of tax paid correctly cannot be treated as 'excess'. Moreover, time bar limit is also applicable to Section 54 (8)(e). Time bar limit is applicable to all sub-sections of Section 54. Time bar limit is also applicable to Section 77 because this section is integrally related to Section 54. In simple words, Section 54 allows refund under Section 77. also. Conditions are to be fulfilled. The words, 'any amount' mentioned in Section 54 includes all amount whether in the form of tax or otherwise.

[Ashiesh Prremji]

Thank you very much to all of you for giving your precious time!

So final conclusion is, we can't get refund of tax paid neither under wrong head due to time barred nor gst paid in correct head as it will not treated as excess payment of tax eligible for refund.

In this scenario, means only observation to be given under GST Audit not payment to be made.

[Dinesh Tambde]

It appears that, there is a scope for argument that limitation period specified in Section 54 is directory and not mandatory as the word "may" is used in sub-section (1) of Section 54 and not "shall". Further there is a scope to say that annual return is a self assessment which resulted liability to tax under CGST/SGST and eventually refund of IGST. Therefore, "date of payment of CGST/SGST" is the relevant date for claiming IGST. Although Section 54(1) talks about refund of tax paid into Govt Treasury but Section 54(14)(2)(h) does not specifically contemplates the date of payment of excess or wrong tax for calculating limitation period.

[Baljit Khara]

Article 265 of the Constitution of India says: no tax can be levied or collected without the authority of law. A registered person paying tax in a wrong head is not an evader. The relevant part reads: "... shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed." The word "shall" used here is in the sense of "must" as per such usage of this word in the legal texts. "Prescribed" as per clause (87) of section 2 of the CGST/SGST Act "means prescribed by rules made under this Act..." The corresponding rule is 89 which covers all refunds excluding refund under Section 55 only. It is pertinent to mention that section 54 is not mentioned as such in sub-rule (1) of Rule 89; refund under section 77 of CGST/SGST Act or section 19 of IGST Act, as the case may be are specifically covered under Rule 89(2)(j). There is no mention of application of the provisions of section 54 in section 77 as we find at certain other places, e.g. sections 10(5), 21, 35(6) & 129(2) etc. where provisions of certain other section have been made applicable mutatis mutandis .

Mention of "refund of tax in pursuance of section 77" in section 54(8)(d) is apparently clarificatory to the fact that merely collecting of tax amount which was paid in wrong head(s) (CGST+SGST/UTGST instead of IGST or vice versa u/s 77 CGST Act or u/s 19 of IGST Act) does not debar the the person from claiming the refund on "unjust enrichment" principle as he has now paid tax in the correct head(s) which was already paid in wrong head(s). No enrichment is there. Section 77 & 19 clearly stipulate that No interest is demandable when the payment is made under the correct head as the tax amount (or the amount equal to the correct head(s) tax amount) was with the exchequer.

There is no time limit specified in section 77 of CGST Act within which the supply can "...subsequently held to be inter-State supply" or in section 19 of IGST Act to hold a supply as "inter-State supply". It simply means when it is held so, the refund of wrongly paid tax "shall" be granted. Therefore, in view of this author no limitation appears to be there in section 77 of CGST Act or section 19 of the IGST Act as the case may be which are directly covered under Rule 89 of CGST Rules as made applicable to IGST also and SGST Rule respective Rules. The author is of this humble view that the provisions which are not there, should not be invented.

The views expressed here are strictly personal views of the Author based on the analysis of the legal provisions and do not express views of any other organisation, entity or agency whatsoever.

[Baljit Khara]

Dear Sir,

This is in continuation to my reply dated 15.08.2020 above. Rule 89 covers all refunds except refund under Section 55 and refund of IGST paid on goods exported out of India.

It is a fact that section 77 of the CGST Act and section 19 of IGST Act do not start with non obstante: "NOTWITHSTANDING" with regard to provisions of section 54 of the CGST Act, however, they also do not contain any wording like "subject to the provisions of ....." referring to any other section including section 54, as many other provisions such as section 10(1), 10(2A), 16(2)(c), 60(5) etc. contain such provisions referring to some other section. Both the sections only stipulate that the amount of tax(s) so paid [under wrong heads] shall be refunded "in such manner and subject to such conditions as maybe prescribed" and the manner and conditions are prescribed in Rule 89 of the CGST Rules. Further, there is nothing to suggest that rule 89 is under section 54 only, it is a rule for procedure for filing refund under GST except to specific exclusions.

In view of the above discussion, it appears that the refund under section 77 of CGST Act or section 19 of the IGST Act (both sections have to be read together) beyond two years may not be a gone case but a case worth contesting before the learned adjudicating authorities and if required, before the higher appellate authorities/Forums.

[KASTURI SETHI]

The word, 'may' is enabling word. Enabling words are construed as compulsory whenever the object of the power to effectuate a legal right.

The word 'may' was also mentioned in Section 11B of Central Excise Act and now it is mentioned in Section 54 of CGST Act. The word, 'may' does not give freedom of coming out of the clutches of 'time bar limit'.

The refund claimant is statutorily bound to file refund claim within two years from the relevant date. There is no hope of any relaxation from any court.

[Baljit Khara]

Dear Sir,

The refund under section 77 of the CGST Act / section 19 of the IGST Act arises only when the supply is "held" inter-State or intra-State contrary to the original position when the tax was paid by the registered person, when there is no time limit for such "holding", how we can expect a registered person to have premonition that his 'this' or 'that' supply is going to be held "inter-state" in place of "intra-state" or vice -versa and file refund within two years (in advance), when that "is held' happens in third year or later?

Any issue cannot be prejudged or decided without looking at the counter argument. It is humbly submitted that let the real stake holders "the registered person" or the GST Department or the adjudicating authority or the appellate authority or the higher appellate forums, take informed decision(s) in such cases on the basis of the facts of the particular case and legal provisions. The facts of the situation are not so ambiguous, attempt has been made in this and the previous posts to analyze them threadbare. GST is a new law, we have to think in the light of the stipulated provisions of this law only and not on the basis of provisions in the previous laws or any conjectures.

Rest is with the enlightened readers of this esteemed FORUM, the affected registered persons and/or the concerned authorities to decide the issue. The purpose of this post is just to make a humble attempt to put forth an alternate view on the query on the basis of analysis of facts and legal provisions without any claim for any definite final outcome. Nothing more to add.

The views expressed here are strictly personal views of the author and not of any organization or entity whatsoever.

[Srinivasan Krishnamachari]

Discussion was already held on sound lines by many learned members. However, this is not so explicitly provided in the Acts and hence the query. The application of Sec 54 can't be ruled out, in view of the specific connection it bears upon Sec 77/ under 54(8)(d), regarding disbursal of it in cash. However, it is implied that no unjust enrichment test is necessary in view of mention of 77 under 54(8) (d). Also 77/19 respectively, waive imposition of any interest at the time of deposit of tax for the original supply, made afresh under CGSTA/IGSTA as the case may be. When a new supply is recognized in place of old short of the new tax, meaning without interest, the element of time for demand of tax also stands waived. The justification for the same is found in the tax paid already in the credit of the Exchequer of the center. This not a case of an amount collected without the authority of Law as envisaged under Article 265,since taxable supply is made but the type of tax paid under the tax head alone is wrong. Therefore, as a natural corollary to the leeway provided under 77/19 to make the fresh deposit without interest and also without involving sec 73, so also the refund if any may be made without any time limit under the Act. Here, no exception to Sec 50 or sec 73 is made but the non applicability of interest is explicitly stated in 77(2)/19(2) for fresh deposit of tax for a back dated supply. In the same manner, refund application for the tax remitted under wrong tax head CG/IGST as the case may be, has to be preferred only under 54. Refund is to be granted through PMT-04 I think. I don't know if there's a patch made to overlook time limit of 2 years in the portal. Similarly, I am not sure of the provision in the portal for waiver of interest under 77/19 as well. But, principally, both cases of deposit and release of the tax money by refund, belonging to different tax heads is a simultaneous process, endowed with the same immunity of time. It's a mutual swap between account heads which was managed by the PAO, but due to the involvement of Articles 246 A(2)/269 A(1) to(4), a new deposit is insisted even as a new refund is assured, with no interest on either side and with no time limit or unjust enrichment test either. But Rule 89 is made applicable automatically to all refunds as it's a procedural rule already in place by the mention of the word as prescribed, but one discovers nothing is prescribed to the above effect, to the contrary of granting the refund without imposing the time limit of 2 years, either in Sec 54 or 77/19 or rule 89. In the above back drop, by applying the doctrine of harmonious construction, the refund needs to be granted without time limit of 2 years in the same manner as the fresh deposit is required to be made, without time for demand of tax and interest. Hope I have done my best to explain the issue. Discussion was already held on sound lines by many learned members. However, this is not so explicitly provided in the Acts and hence the query. The application of Sec 54 can't be ruled out, in view of the specific connection it bears upon Sec 77/under 54(8)(d), regarding disbursal of it in cash. However, it is implied that no unjust enrichment test is necessary in view of mention of 77 under 54(8)(d). Also 77/19 respectively, waive imposition of any interest at the time of deposit of tax for the original supply, made afresh under CGSTA/IGSTA as the case may be. When a new supply is recognised in place of old short of the new tax, meaning without interest, the element of time for demand of tax also stands waived. The justification for the same is found in the tax paid already in the credit of the Exchequer of the center. This not a case of an amount collected without the authority of Law as envisaged under Article 265, since taxable supply is made but the type of tax paid under the tax head alone is wrong. Therefore, as a natural corollary to the leeway provided under 77/19 to make the fresh deposit without interest and also without involving sec 73, so also the refund if any may be made without any time limit under the Act. Here, no exception to Sec 50 or sec 73 is made but the non applicability of interest is explicitly stated in 77(2)/19(2) for fresh deposit of tax for a back dated supply. In the same manner, refund application for the tax remitted under wrong tax head CG/IGST as the case may be, has to be preferred only under 54. Refund is to be granted through PMT-04 I think. I don't know if there's a patch made to overlook time limit of 2 years in the portal. Similarly, I am not sure of the provision in the portal for waiver of interest under 77/19 as well. But, principally, both cases of deposit and release of the tax money by refund, belonging to different tax heads is a simultaneous process, endowed with the same immunity of time. It's a mutual swap between account heads which was managed by the PAO, but due to the involvement of Articles 246 A(2)/269 A(1) to(4), a new deposit is insisted even as a new refund is assured, with no interest on either side and with no time limit or unjust enrichment test either. But rule 89 is made applicable automatically to all refunds as it's a procedural rule already in place by the mention of the word as prescribed, but one discovers nothing is prescribed to the above effect, to the contrary of granting the refund without imposing the time limit of 2 years, either in Sec 54 or 77/19 or rule 89. In the above back drop, by applying the doctrine of harmonious construction, the refund needs to be granted without time limit of 2 years in the same manner as the fresh deposit is required to be made, without time for demand of tax and interest. Hope I have done my best to explain the issue. K. Srinivasan(IRS)

Sr. Associate

RANK Associates, Chennai

98404 64654

krishsri19[email protected]

[CA.Tarun Agarwalla]

in a similar case where the deficiency memo has been issued we present the case that the relevant date is the date when the corresponding correct taxes were paid. it is admitted and the refund order passed. even though the law is having apparent limitations one can try.

[Srinivasan Krishnamachari]

Dear Ashish Premji,

Relevant under for refund under SEC 77/19 of CG/IG STA.

Relevant date under SEC 77/19 is undoubtedly the date of payment in correct head,as per my view in this matter.

I think I have already given a lengthy reply to the above query in this Portal.

l have written an article in addition to the above in another Portal sometime back in reply to the response sought by Mr.Sumit Srivatsava to the Article that he came across with a different/contrasting view.

Curious case of refund of tax paid to the wrong 'government' https://taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MzkzNTM=

.Please follow the link below to follow my response.

As per your request, here's my response. Please follow the link. https://taxguru.in/goods-and-service-tax/section-77-19-cgst-igst-act-replayed-redefined.html

Also I find Mr.Tarun Agarwala has shared his actual practical experience as follows.

"In a similar case where the deficiency memo has been issued we present the case that the relevant date is the date when the corresponding correct taxes were paid. it is admitted and the refund order passed. even though the law is having apparent limitations one can try".

I hope you have plenty of material before you and as also our readers to take a well informed decision in this issue,please.

Regards

K. Srinivasan (IRS)

Advocate/Sr. Associate

RANK Associates, Chennai