2023 (4) TMI 495 - HC - GST

GST refund application remains valid despite deficiency memo under Rule 89(2) Section 54 CGST Act

Bharat Sanchar Nigam Limited Versus Union Of India & Ors.

Delhi HC held that GST refund application cannot be treated as non-existent merely because authorities sought additional clarifications through deficiency ... Seeking refund of the excess payment of tax - time limitation - petitioner’s application was rejected on the ground that the same was beyond the period of limitation - HELD THAT:- It is pointed out that the Adjudicating Authority had proceeded on the basis that it had communicated the deficiencies in Form GST RFD 03 on 31.01.2020 electronically and the said deficiency was resolved after the expiry of two years as stipulated in Section 54 of the CGST Act. The Adjudicating Authority had referred to Rule 90(3) of the Rules and had proceeded on the basis that the said Rule provides for filing of a fresh refund application after rectification of deficiencies. And, the date for filing the fresh application was required to be considered for the purpose of limitation - Rule 90(3) cannot be applied in the manner as sought to be done by the Adjudicating Authority. Merely because certain other documents or clarifications are sought by way of issuing a Deficiency Memo, the same will not render the application filed by a taxpayer as non est. If the application filed is not deficient in material particulars, it cannot be treated as non est. If it is accompanied by the “documentary evidences” as mentioned in Rule 89(2) of the Rules, it cannot be ignored for the purposes of limitation. The limitation would necessarily stop on filing the said application. This is not to say that the information disclosed may not warrant further clarification, however, that by itself cannot lead to the conclusion that the application is required to be treated as non est for the purposes of Section 54 of the CGST Act. It is erroneous to assume that the application, which is accompanied by the documents as specified under Rule 89(2) of the Rules, is required to be treated as complete only after the taxpayer furnishes the clarification of further documents as may be required by the proper officer and that too from the date such clarification is issued. The petitioner does not seek to press and challenge the validity of Rule 89(2) and Rule 90(3) of the Rules - the matter is remanded to the Adjudicating Authority to consider afresh in the light of the observations made by this Court. Issues involved:The petitioner challenges an order rejecting their appeal for refund of GST and questions the validity of certain rules and circulars under the Central Goods and Services Tax Act.Refund of GST:The petitioner sought refund of excess GST amounting to Rs. 2,63,98,462, claiming it was paid in error due to misunderstanding regarding the inclusive nature of taxes in a payment received for a project. The petitioner filed an application for refund within the limitation period as per Section 54 of the CGST Act.Deficiency Memo and Application Rejection:The Adjudicating Authority issued a Deficiency Memo seeking additional documents for the refund application. The petitioner responded to the memo online, but there was a discrepancy in how the response was treated. The Adjudicating Authority rejected the application as beyond the limitation period based on a misinterpretation of the filing date.Appellate Authority's Decision:The Appellate Authority upheld the rejection of the application, considering the online submission as a fresh application and ignoring the initial filing date. The Appellate Authority's reasoning was based on the misconception that applications could only be filed online, leading to the dismissal of the petitioner's appeal.Legal Interpretation and Remand:The High Court found the Appellate Authority's decision flawed as the initial application was filed within the limitation period and accompanied by the required documents. The Court criticized the misapplication of Rule 90(3) and emphasized that a complete application with necessary documents should not be disregarded. The Court set aside the orders and remanded the matter to the Adjudicating Authority for reconsideration based on the Court's observations.