It was held by the Jammu and Kashmir and Ladakh High Court that the time limit for GST refund is to be decided from the date the original application is filed by the taxpayer, and not from the date of the follow-up application.
The applicant is a garment manufacturer and is been issued a memo of deficiency and application of compliance, which it had submitted for GST refund on the departments’ recommendation, but was denied because of limitation of time.
Within the said limit u/s 54 of Central Goods and Services Tax Act, 2017 the original application asking for a refund of tax paid in excess was submitted.
As per the provisions, the filing limitation of the refund application is two years from the pertinent date.
For the same case, the applicant’s concern has furnished the final GST return dated September 09, 2018. Subsequently, the application for a tax refund was to be furnished before the expiry of two years from the pertinent date i.e. by September 19, 2020.
Under Rule 89 of GST Rules 2017, an application was furnished by the applicant for a refund on September 08, 2020. The returns of January, February, March, June, July & August 2018 along with the CA certificate have kept the application.
On September 23, 2020, under Rule 90(3) of GST Rules, a deficiency memo was furnished via the department asking for the related documents. It is to be recommended to the applicant to file a new refund application post rectification of the deficiencies.
On September 28, 2020, a new refund application was furnished via the applicant. But it came to be denied based on limitations.
The division bench Chief Justice Tashi Rabstan and Justice Puneet Gupta carried that the time duration for refund must be decided from the date of the original application (September 08, 2020) and not the follow-up application, since the latter was a part of the original proceedings.
Once the respondents had considered the original application on 08.09.2020 as within time from the pertinent date, then how the second application on 28.09.2020, which was in continuance to the original application on 08.09.2020 and was filed only on the recommendation of respondent No.2, became barred by limitation, it expressed.
Reliance was placed on National Internet Exchange of India vs Union of India & ors (2023) where the Delhi High Court carried that as per Section 54(1) of the CGST Act, the span of limitation stops running notwithstanding that the proper officer demanded additional documents or material to satisfy himself that the refund asserted was due to the applicant.
A division bench of the Delhi High Court in Bharat Sanchar Nigam Limited vs Union of India & ors (2023), carried that just because specific additional documents or clarifications are asked via issuing a Deficiency Memo, it does not generate the application via the taxpayer as non est.
Indeed the court criticized the revenue for denying the claim without furnishing a chance of hearing to the applicant levied a cost on the revenue.
“Rule 92(3) specifically provides that no application for refund shall be rejected without giving the applicant an opportunity to be heard. Therefore, on this score alone the impugned deficiency memo requires to be quashed.”
A cost of Rs 30,000 has been charged by the court to the department for incorrectly withholding the amount tax filed in excess via the concern of the applicant.
The court concluded that permitted the writ petition of the applicant and quashed the deficiency memo furnished via the assistant commissioner (GST).
It asked the J&K tax department specifically the Assistant Commissioner (GST) to process and release the GST refund of the applicant including a 7% interest rate from the date it fell to the applicant’s concern till the date of its final realization.
Petitioner Advocates Vishal Goel and Dinesh Dogra appeared and Advocate Jagpaul Singh appeared for the Department.
| Case Title | Hallmark vs. GST Department Assistant Commissioner |
| Citation | WP(C) No.2025/2020 and CM No.7929/2020 |
| Date | 25.09.2024 |
| For Petitioner | Mr Vishal Goel and Mr Dinesh Dogra |
| For Respondents | Mr. Jagpaul Singh |
| Madras High Court | Read Order |
