The Bombay High Court has quashed an order by the GST authorities that had rejected the refund claim of an assessee because it was filed after two years, a time limit set by the rules. This was done since the authorities have not taken into cognizance the earlier Supreme Court verdict that excluded the period from March 15, 2020 and October 02, 2021 from the time limit due to Covid.
However, the high court did not go into the validity of the circular and the question of striking it down.
The petitioner concerned filed the first refund application for the period July 2018 to September 2018 on August 21, 2020 online on the GST portal. The said application, however, was rejected by the assistant commissioner of CentralGST (CGST) in Mumbai on September 05, 2020 on the ground that there were certain deficiencies in the said application.
As such, the petitioner filed the second refund application on September 08, 2020, but this was also rejected by the assistant commissioner, pointing out deficiency.
Thereafter, the petitioner filed a third refund application on September 30, 2020, but that was rejected by the official mentioned above on the ground that the application had surpassed the time of two years, set by GST rules given in a circular issued by the Central Board of Indirect Taxes and Customs.
Aggrieved petitioner went to the Bombay high court, seeking to declare a said rule of limiting the refund within two years as ultra vires the Constitution.
The petitioner also sought quashing and setting aside the rejection order and direction to restore the third refund application of the petitioner.
HC observed that it is not in dispute that the first and second refund applications were rejected on the ground of certain deficiencies in those applications.
The third refund application was required to be filed within two years in accordance with the GST rules.
However, in this petitioner’s case, such limitation period fell between March 15, 2020 and October 02, 2021, a period which was excluded by the Supreme Court in all proceedings irrespective of the limitation prescribed under the general law or special law.
Earlier, the apex court in a suo motu writ petition had issued directions that in computing the period of limitation in any suit, appeal, application and or proceedings, the period from March 15, 2020 till October 2, 2021 will stand excluded due to Covid waves.
As such, the high court ruled that the assistant commissioner, CGST, is required to exclude the period of limitation falling during the said period.
It ruled that the third refund application filed by the petitioner was within the period of limitation prescribed.
Owing to this, the high court found the order by the CGST official to be contrary to the order passed by the Supreme Court.
However, the high court did not go into the validity of the circular which prescribes the time limit for refund claims, saying the same can be considered in the appropriate case.
Sandeep Sehgal, partner tax at AKM Global, said,"The GST department, without taking cognizance of the relaxations available therein for the limitations, rejected the refund application. Hence, the high court has rightly ruled in favour of the taxpayer."
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