2022 (1) TMI 494 - HC - GST

Court restores time-barred refund application, citing pandemic extension, leaves constitutionality open for future.

The court quashed the rejection of the petitioner's third refund application as time-barred, restoring the application for further consideration by the ... Exclusion of limitation period between 15th March 2020 and 2nd October 2021 - extension of limitation by Supreme Court under Article 142 - computation of limitation for refund under Section 54(1) of the CGST Act - quashing of order rejecting refund as time barred - restoration and merit consideration of refund applicationExclusion of limitation period between 15th March 2020 and 2nd October 2021 - extension of limitation by Supreme Court under Article 142 - computation of limitation for refund under Section 54(1) of the CGST Act - The period of limitation falling between 15th March 2020 and 2nd October 2021 is excluded for computing time for filing the refund application under the Circular dated 18th November 2019 read with Section 54(1) of the CGST Act, and therefore the third refund application dated 30th September 2020 was within time. - HELD THAT: - The court applied the Supreme Court's Orders in Re: Cognizance for Extension of Limitation (Orders dated 23rd March 2020 and 23rd September 2021) which excluded the period from 15th March 2020 to 2nd October 2021 for computing limitation. The court held that those Orders, issued under Article 142 and declared binding under Article 141, required authorities to exclude that period when computing limitation under special statutes, including the timeline prescribed by the Circular issued under Section 54(1) of the CGST Act. As the limitation period for the petitioner's third refund application fell within the excluded period, the application could not be treated as time barred. [Paras 12, 13, 14]The period from 15th March 2020 to 2nd October 2021 is to be excluded in computing limitation for the refund application, rendering the third refund application of 30th September 2020 within time.Quashing of order rejecting refund as time barred - restoration and merit consideration of refund application - The impugned Order dated 26th November 2020 rejecting the third refund application as time barred is quashed; the third refund application is restored and the authority is directed to consider it on merits. - HELD THAT: - Having concluded that the limitation period was excluded as per the Supreme Court's Orders, the court found the respondent's rejection of the third refund application on time-bar grounds to be contrary to those Orders. Consequently, the court set aside the impugned rejection, restored the third refund application to the file of Respondent No.2 and directed that it be decided expeditiously on its merits and in accordance with law. [Paras 15]Impugned order quashed; third refund application dated 30th September 2020 restored and directed to be considered on merits.Leave to amend prayer clause and correction of application date - Leave to amend the petition to correct the date of the third refund application and to amend the prayer was granted; re-verification was dispensed with. - HELD THAT: - The court permitted the petitioner to amend the prayer Clause (c) and to correct the date '3.9.2020' to '30.9.2020' within two days and dispensed with re-verification as part of procedural directions. [Paras 1]Amendment permitted and re-verification dispensed with.Final Conclusion: The writ petition is allowed: the rejection order dated 26th November 2020 is quashed, the third refund application dated 30th September 2020 is restored and Respondent No.2 is directed to consider it on merits; procedural amendment sought is permitted. The court did not decide the validity of the Circular or Rule 90(3) and left those questions open for appropriate cases. Issues:Challenge to Rule 90(3) of Central Goods and Services Tax Rules, 2017 | Rejection of third refund application as time-barred | Application of limitation period under Circular dated 18th November 2019 | Extension of limitation period by Supreme Court ordersAnalysis:The petitioner sought a declaration that Rule 90(3) of the Central Goods and Services Tax Rules, 2017 is unconstitutional and the rejection of their third refund application should be set aside. The petitioner filed refund applications which were rejected due to deficiencies, leading to the third application being filed on 30th September 2020. The rejection of this third application on grounds of being time-barred was contested by the petitioner.The petitioner relied on Supreme Court orders dated 23rd March 2020 and 23rd September 2021, extending the limitation period due to the pandemic. The third application fell within this extended period, as per the petitioner's argument. Reference was made to a Madras High Court judgment supporting the extension of the limitation period in similar cases.The respondent argued that the first and second applications were rightfully rejected for deficiencies. They contended that the third application was filed after the two-year limitation period prescribed under Circular No.20/16/04/18-GST dated 18th November 2019. However, the Supreme Court's orders extended the limitation period, making the third application timely.The court noted that the limitation period between 15th March 2020 and 2nd October 2021 was excluded as per the Supreme Court orders, including in cases of refund applications. Consequently, the third application fell within the extended limitation period and should not have been rejected as time-barred. The court quashed the rejection order, restored the third refund application, and directed the respondent to consider it on its merits and in accordance with the law.The court emphasized that it did not assess the validity of the Circular or Rule 90(3) in this order, leaving it open for consideration in an appropriate case. The parties were instructed to act based on an authenticated copy of the court's order, and no costs were awarded in the matter.