Court rules excess IGST payment as tax, not deposit; refund application time-barred under Section 54

The court upheld the rejection of the appellant's refund application, ruling that the excess IGST paid was considered a tax, not a deposit. The court found the refund application to be time-barred under Section 54 of the CGST Act, as it was filed beyond the two-year period from the relevant date. The court determined that the principle of natural justice was followed as the appellant was given an opportunity to be heard through a show cause notice and personal hearing. As a result, both appeals filed by the appellant were rejected.

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Issues Involved:
1. Whether excess payment of IGST mistakenly would be considered as a deposit or tax.
2. Whether the application for refund filed by the appellant is time-barred in terms of Section 54 of the CGST Act, 2017.
3. Whether the principle of natural justice has been followed in the instant case.

Detailed Analysis:

Issue 1: Whether excess payment of IGST mistakenly would be considered as a deposit or tax.

The appellant argued that the excess IGST paid for September and October 2017 should be considered a deposit rather than a tax. The appellant's contention was rejected. The adjudicating authority found that the appellant had offset his liabilities for the said months by debiting from the Cash or Credit ledger and filed GSTR-3B accordingly. Therefore, the payment was considered a tax, not a deposit. The adjudicating authority stated, "the disputed amount paid by the appellant is nothing but it is tax only and it may not be considered as pre-deposit or deposit by any stretch of imagination."

Issue 2: Whether the application for refund filed by the appellant is time-barred in terms of Section 54 of the CGST Act, 2017.

The appellant contended that the excess IGST paid was in the nature of a deposit and should be refunded without attracting the limitation clause. The adjudicating authority referred to Section 54 of the CGST Act, which mandates that a refund application must be filed within two years from the relevant date. The relevant date for the tax period of September and October 2017 was 20th November 2019, but the appellant filed the refund application on 11th February 2020, beyond the stipulated two-year period. The adjudicating authority concluded, "refund application should have been filed for the said tax period up to 20th November 2019 while the appellant filed the refund application on 11-2-2020 which is clearly beyond two years from the relevant date as prescribed under Section 54(14) of the CGST Act."

The appellant also argued that the refund claim should be governed by Section 19 of the IGST Act read with Section 77 of the CGST Act, which do not prescribe any time limit for refund. The adjudicating authority rejected this argument, stating that any kind of refund is governed by Section 54 of the CGST Act read with Rule 89 of the CGST Rules, 2017. Therefore, the period for filing a refund in such cases will apply as per Section 54, and the relevant date will also be taken as per these provisions.

Issue 3: Whether the principle of natural justice has been followed in the instant case.

The appellant argued that they were not given an opportunity to be heard and that the copy of the order (RFD-06) was not communicated by the adjudicating authority. The adjudicating authority found that the proper officer had issued a show cause notice in Form GST RFD-08 and granted a personal hearing. The appellant submitted a reply in Form GST RFD-09. The adjudicating authority noted that the show cause notice and rejection order were communicated to the appellant through the common portal, and this was also intimated to the appellant via a letter dated 12-6-2020. The adjudicating authority concluded, "I do not find any merits of the appellant in this regard."

Conclusion:

The adjudicating authority upheld the rejection of the refund application on the grounds of being time-barred and confirmed that the excess IGST paid was considered a tax, not a deposit. The principle of natural justice was deemed to have been followed as the show cause notice and rejection order were communicated through the common portal. Consequently, both appeals filed by the appellant were rejected.

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