Patna HC: GST Refund Limitation to Be Computed from Date of Correct Tax Payment

The limitation for GST refund claimed under the wrong head ceases to apply from the date of correct payment, the Patna High Court has ruled.

After reading Section 77 of the CGST Act, 2017, read with Section 19 of the IGST Act, Justices Rajeev Ranjan Prasad and Shailendra Singh viewed that the date of counting the period of limitation will start from the date when the taxpayer has deposited the tax under the IGST Act.

The taxpayer for the financial year 2017-18 filed his GSTR-01, GSTR-3B & GSTR-09 and paid all due taxes as per the returns.

Under Section 65(6) in the GST ADT-02 Form, the Audit Report, which has been prepared, specifies that the taxpayer has not fully paid the Integrated Goods and Services Tax, recognizing certain transactions to be Inter-State transactions which the taxpayer had ministered as Intra-State transactions under the CGST/SGST Act, 2017, and had paid the taxes.

The assessee indicated that the department acknowledged the entitlement to a refund but ultimately rejected the refund application based on Section 54 of the BGST Act, 2017, citing the grounds of limitation.

As per the State as the tax asked to be refunded was filed in January 2018, and the application for refund was submitted by the taxpayer dated 17.01.2024; hence, it was late by nearly 4 years.

As per the bench, the department has made a mistake concerning the fact that 2 years would be counted from January 2018, when the amount, on account of SGST and CGST, was deposited with the Returns of the FY 2017-18.

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The bench remarked that if the department’s order is allowed to remain in effect, it will effectively render Section 77 of the BGST/CGST Act, 2017, Section 19 of the IGST Act, and Clarificatory Circular No. 162/18/2021-GST useless.

As per the bench, the taxpayer is qualified to obtain the refund of the amount paid for the SGST and CGST in January 2018 with interest of 6% per annum from the date that shall start after three months from the date of filing of the application for refund, till the date of payment.

The bench in the above view has permitted the petition.