2022 (7) TMI 804 - HC - GST

IGST Refund Claim Upheld: Two-Year Limitation Period Applies from Date of Correct Tax Payment Under Section 19(1)

The HC quashed the order rejecting petitioner's IGST refund claim under section 19(1) of IGST Act. The court determined that the two-year limitation ... Refund claim - time limitation - constitutional validity of section 54 of the CGST Act - relevant date in cases of refunds under section 19(1) of the IGST Act - date on which the supply on which IGST was erroneously paid was held to be an intrastate supply amenable to CGST/IGST or the date of payment of tax under the correct head - HELD THAT:- Undisputed facts of the case are, GST (Goods and Service Tax) has been paid for the Assessment year 2017-18 on January 30, 2020 and refund application has been filed on July 07, 2020. In Para 4.2 of the Circular dated September 25, 2021, Ministry of Finance has clarified that the limitation shall be two years from the date of payment of tax. Admittedly, tax has been paid in January 30, 2020. In our considered view, refund application is in time. Though the learned Standing Counsel for the revenue is right in his submission that there is appeal remedy, since petitioner has paid tax twice relegating petitioner to the Appellate authority would not be just and appropriate. Petition allowed. Issues:1. Applicability of time limits specified in section 54 of the CGST Act to refund claims under section 19(1) of the IGST Act.2. Constitutionality of section 54 in relation to refunds under section 19(1) of the IGST Act.3. Interpretation of 'relevant date' in cases of refunds under section 19(1) of the IGST Act.4. Validity of the order rejecting the petitioner's refund claim.5. Entitlement to refund based on the Circular issued by the Ministry of Finance.6. Maintainability of the writ petition in light of appeal remedy under Section 107 of the CGST Act, 2017.Analysis:1. The petitioner sought a declaration regarding the applicability of time limits specified in section 54 of the CGST Act to refund claims under section 19(1) of the IGST Act. The court considered the undisputed facts that the petitioner paid IGST for the Assessment Year 2017-18 and filed a refund application on July 7, 2020. The Ministry of Finance clarified in a Circular that the limitation for refund applications is two years from the date of payment of tax. Since the tax was paid on January 30, 2020, the court held that the refund application was within the time limit. Despite the availability of an appeal remedy, the court found it just and appropriate to allow the writ petition, given that the petitioner had paid tax twice.2. The petitioner also challenged the constitutionality of section 54 in relation to refunds under section 19(1) of the IGST Act. The court did not delve deeply into this issue as the primary focus was on the timing of the refund application and the petitioner's entitlement to the refund based on the Circular issued by the Ministry of Finance.3. The interpretation of the 'relevant date' in cases of refunds under section 19(1) of the IGST Act was crucial to determining the petitioner's entitlement to the refund. The court held that the relevant date for such refunds would be the date on which the supply on which IGST was erroneously paid was held to be an intrastate supply amenable to CGST/IGST or the date of payment of tax under the correct head. This interpretation played a significant role in deciding the outcome of the case in favor of the petitioner.4. The court addressed the validity of the order rejecting the petitioner's refund claim. After considering the arguments presented by both parties, the court quashed the impugned order and directed the respondent to consider the petitioner's application and refund the amount within a specified time frame.5. The petitioner's entitlement to the refund based on the Circular issued by the Ministry of Finance was a pivotal point in the case. The court considered this circular, which clarified the time limit for refund applications, and concluded that the petitioner was indeed entitled to the refund based on the timing of the tax payment and the application.6. The issue of the maintainability of the writ petition in light of the appeal remedy under Section 107 of the CGST Act, 2017 was raised by the respondent. However, the court found it appropriate to allow the writ petition considering the circumstances of the case and the petitioner's double payment of tax. The court's decision to allow the writ petition and quash the impugned order was based on the unique facts and equities involved in the case.