Delhi HC Permits Tax Refund Claim Beyond Deadline Due to Delay Caused by GST Portal Glitches

The Delhi High Court in the case of M/S SETHI SONS (INDIA) Vs. ASSISTANT COMMISSIONER has permitted the GST Refund claim beyond the limitation time owing to a late filing because of GST Portal Glitches.

The petitioner lodged this petition due to being dissatisfied with the refusal to refund unused input tax credit (ITC) gathered from paying Goods and Services Tax on inputs for zero-rated supplies—goods exported without Integrated Goods and Services Tax (IGST)—between July 2017 and March 2018.

The applicant is an individual and has the business of inter alia, exporting goods and services under the name of its sole proprietorship concern, M/s Sethi Sons (India).

The applicant had exported 8 consignments in the duration from July 2017 to March 2018. The first consignment was exported dated 08.09.2017 beneath the export invoice on 02.09.2017 and the Shipping Bill on 04.09.2017. The last of the 8 consignments was exported dated 29.01.2018, which was covered through the export GST invoice on 24.01.2018, under a Shipping Bill on 25.01.2018.

The applicant has tried to file a refund application for the unused input tax credit (ITC) for August 2017 on 14.05.2018. However, the applicant can not finish the online filing of this application because of a technical error that has been prompted on the GST portal.

Once again the applicant has tried to file a refund application for the unused ITC for July 2017 dated 08.08.2018. The applicant was not able to finish the procedure because of technical errors on the GST portal.

Frustrated by the inability to submit refund applications online, the petitioner lodged a complaint through the GST portal under the GST Redressal Section. The petitioner’s grievance was duly acknowledged, and a ticket numbered 2018080832227 was generated in response.

The petitioner asserts having attempted multiple times to manually submit their application, yet the concerned officer refused to accept it. However, the respondents dispute this claim, stating they have no record of such attempts.

The applicant has created a consolidated application (in FORM GST RFD-01) for the refund of unutilized ITC exports effected in the FY 2017-18 on 05.02.2020 claiming a refund of Rs.13,43,757.

The petitioner’s refund application under Section 54 of the CGST Act was rejected as it surpassed the two-year period from the relevant date, which was the export date of the consignments. According to the Proper Officer, the deadline for filing the refund for unutilized ITC concerning the first export was 07.09.2019, based on the export date of 08.09.2017.

For the last export dated 29.01.2018 (invoice dated 24.01.2018), the filing deadline was considered as 24.01.2020. Additionally, the Officer highlighted that claims from July 2017 to March 2018 needed filing by September 2019, leading to rejection under Section 54(1) of the CGST Act.

While the petitioner indeed tried to upload the refund application, technical glitches prevented its submission. It seems unjust that the petitioner’s legitimate right to a refund could be nullified due to these technical issues.

As per Rule 97A of the CGST Rules, effective from 15.11.2017, the petitioner had the option to file the application manually. Yet, it’s crucial to acknowledge that the period in focus was a transitional phase, marked by numerous challenges encountered by taxpayers transitioning to the new regime.

Delays were seen in carrying out refunds on the grounds of various taxpayers. In this case, it was declared by the petitioner that he did not apply for the refund manually given he was instructed by the Jurisdictional GST Officers to apply for the refund claim after filing the actual GST return in Form GSTR-9 and after receiving bank recognition certificates.

The petitioner claimed that the return was filed on 30-01-2020 and just after that filed a refund application. The respondent argued that the petitioner had been misguided by the concerned officer in any way and lack of record being the concerned officer provided advice regarding this. Despite the general rule that oral inquiries for refund applications do not excuse delays, we are inclined to accept the petitioner’s claim in this case.

However, it is important to acknowledge that during the initial phase of implementing the GST regime, both taxpayers and GST officials encountered numerous challenges that required attention. Some of these difficulties are still ongoing and are being dealt with. Considering this context, it is reasonable to believe that the petitioner sought guidance from the jurisdictional officers. It is undisputed that the petitioner acted truly.

It’s undisputed that the petitioner tried twice to submit a refund application via the GST portal, but technical issues prevented the upload. Additionally, the petitioner lodged a complaint, resulting in the creation of a corresponding ticket.

Given the unique circumstances of this case, we cannot justify denying the petitioner’s refund claim solely based on the grounds of delay.

Based on the aforementioned points, we instruct the proper officer to review the petitioner’s refund claim and proceed with processing it if they are found to be eligible.

The petition is entitled to the above-said terms.