Refund application for unutilised Input Tax Credit held within limitation period under amended Rule 54

Gujarat HC held that petitioner's refund application for unutilised Input Tax Credit, filed on 02.05.2020, was within limitation period despite appearing time-barred. Court applied amended Rule 54 explanation providing two-year limitation from due date of GSTR 3B returns filing. Crucially, notification excluded period from 01.03.2020 to 28.02.2022 from limitation calculation. Authority directed to reconsider refund claim. Petition disposed of favorably.

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Issues:
1. Refund claim under GST Act
2. Barred by limitation
3. Relevant date for filing refund application
4. Exclusion of period for computation of limitation

Analysis:
The petitioner, a company engaged in manufacturing and supply, filed a petition under Article 226 seeking to set aside an order passed by the Joint Commissioner (Appeals), Central GST, and allow a refund of Rs.17,50,227. The petitioner supplied goods to an SEZ unit in February 2018, which qualifies as a zero-rated supply under Section 16 of the Integrated Goods and Service Tax Act. The petitioner sought a refund of unutilized Input Tax Credit under Section 54(3) of the Central Goods and Service Tax Act, which requires the refund claim to be filed within two years from the relevant date, as per Section 54(1). The relevant date for filing the refund application was clarified by an explanation to Section 54 and an amendment introduced by the CGST (Amendment) Act, 2018. The relevant date was determined as two years from the due date of furnishing GSTR 3B returns, as per the amended explanation.

The respondent rejected the refund application as time-barred since it was filed on 02.05.2020, beyond the prescribed deadline. Despite the petitioner's argument regarding the extension of the time limit due to the COVID-19 pandemic, the respondent found the application untimely, as the petitioner failed to provide supporting documents or attend the personal hearing. However, during the pendency of the petition, a notification was issued excluding the period from 01.03.2020 to 28.02.2022 for computing the limitation period for filing refund applications under Section 54 of the Act. Consequently, the petitioner's refund application, filed on 02.05.2020, fell within the excluded period, entitling them to the benefit of the notification.

Considering the notification's impact on the limitation period, the court directed the competent authority to reconsider the petitioner's refund claim in light of the notification and pass an appropriate order. The petition was disposed of based on this direction, emphasizing the importance of the excluded period for computing the limitation for filing refund applications under the GST Act.

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