Coal Trading Refund Claim Revived: Limitation Period Exclusion Validates Application Despite Initial Time-Barred Rejection

HC found the refund application for coal trading was improperly rejected as time-barred. The court set aside the rejection order and remanded the matter for fresh consideration, noting the subsequent notification excluding the limitation period from March 2020 to February 2022. The writ petition was disposed of without costs, providing relief to the petitioner.

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Issues:
Challenge to Circular No.157/13/2021-GST dated 20.07.2021
Rejection of refund application as time-barred

Analysis:
The petitioner sought relief to set aside Circular No.157/13/2021-GST and the order rejecting the refund application as time-barred. The petitioner, engaged in coal trading, filed a refund application for tax paid from May 2018 to May 2019 on 22.09.2021. However, a show cause notice was issued on 12.10.2021 proposing rejection due to being time-barred under Section 54(14) of the CGST Act and Circular dated 20.07.2021. The first respondent rejected the application on 16.06.2022, leading to the writ petition.

The petitioner argued that a subsequent Notification dated 05.07.2022 rendered the rejection of the refund application unlawful. On the other hand, the Government Pleader for Commercial Tax defended the order based on the Circular dated 20.07.2021, emphasizing Clauses 3(iii) and 4(b) to justify the rejection.

The petitioner's counsel contended that the relevant date for the refund application was not clearly defined for supplies to SEZ units under zero-rated sales, unlike for goods exported out of India. Notably, a recent Notification dated 05.07.2022 excluded the period from 1st March, 2020 to 28th February, 2022, for computing the limitation period for filing refund applications under Section 54 or Section 55 of the Act.

Consequently, the Court found that the refund application was not time-barred as argued. The challenged order was set aside, and the matter was remanded to the first respondent for fresh consideration in compliance with the law. The writ petition was disposed of without costs, and any pending miscellaneous petitions were closed.

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