2023 (8) TMI 1211 - HC - GST

IGST refund application filed within two years under Section 54(1) stops limitation period despite later document requests

National Internet Exchange Of India Versus Union Of India & Ors.

Delhi HC allowed the petition challenging rejection of IGST refund application on limitation grounds. The court held that a complete application filed ... Rejection of Refund of Integrated Goods and Services Tax - Period of limitation - defective application - zero-rated supplies - rejection on the ground that the petitioner’s application was filed beyond the period stipulated under Section 54(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- An application can be rejected as deficient only where any deficiencies are noted. The contextual reading of Sub-rule (3) with Sub-rule (2) of Rule 90 of the CGST Rules, indicates that the deficiencies referred to in Sub-rule (2) of Rule 90 of the CGST Rules are those that render an application incomplete in terms of Sub-rules (2), (3) and (4) of Rule 89 as stipulated in Sub-rule (2) of Rule 90. Thus, if an application is complete in terms of Sub-rule (2), (3) and (4) of Rule 89 of the CGST Rules, the same cannot be rejected, relegating the taxpayer to file afresh. In any view of the matter, the period of processing the said application under Sub-section (7) of Section 54 of the CGST Act, is required to be counted from the said date. It is clear from the deficiencies as mentioned that the proper officer had noticed certain discrepancies in the documents. In addition, he also required the petitioner to provide certain documents in order to verify its claims for refund. It is also apparent that some of the documents demanded were not relevant as the petitioner’s claim was for refund of IGST and not unutilised ITC. The nature of the deficiencies as set out in deficiency memo no. 2 clearly indicate that the application filed by the petitioner was not incomplete in terms of Rule 89(2) of the CGST Rules. Sub-rules (3) and (4) of Rule 89 of the CGST Rules are not applicable in the facts of the present case. The petitioner had, in terms of Clause (c) of Sub-rule (2) of Rule 89 of the CGST Rules, submitted a statement containing the number and date of invoices and the relevant Bank Realisation Certificates/Foreign Inward Remittance Certificates. It was also accompanied by the necessary declaration as specified. In terms of Section 54(1) of the CGST Act, an application is required to be made in the prescribed form and manner before two years from the relevant date. It is clear that the petitioner had complied with the said requirement inasmuch as it had filed an application for refund on 31.10.2019 in the “form and manner” as prescribed in the CGST Act and the CGST Rules. Thus, in terms of Section 54(1) of the CGST Act, the period of limitation would stop running notwithstanding that the proper officer required further documents or material to satisfy himself that the refund claimed was due to the petitioner. The present petition is allowed and the impugned order dated 13.04.2022 rejecting the petitioner’s application for refund on the ground of limitation is rejected. Issues Involved:1. Rejection of refund claim on the grounds of being filed beyond the stipulated period.2. Validity of the impugned Circular and Rule 90(3) of the CGST Rules.3. Completeness of the refund application as per the CGST Rules.Summary:1. Rejection of refund claim on the grounds of being filed beyond the stipulated period:The petitioner, National Internet Exchange of India, contested the rejection of its IGST refund claim for zero-rated supplies, which was denied by the Assistant Commissioner, Department of Trade and Taxes, on the grounds that the application was filed beyond the period stipulated under Section 54(1) of the CGST Act. The petitioner argued that its initial application was timely and subsequent applications were merely clarifications to address deficiencies highlighted by the concerned officer.2. Validity of the impugned Circular and Rule 90(3) of the CGST Rules:The petitioner challenged the impugned Circular No. 125/44/2019-GST dated 18.11.2019 and Rule 90(3) of the CGST Rules as unconstitutional and ultra vires the CGST Act. The court, however, did not find it necessary to examine this broader challenge as the case was covered by a precedent set in Bharat Sanchar Nigam Limited v. Union of India & Ors.3. Completeness of the refund application as per the CGST Rules:The court examined whether the petitioner's refund application was complete in terms of Rule 89(2) of the CGST Rules. It was noted that the application was accompanied by the necessary documents as prescribed. The court held that the application could not be disregarded simply because the proper officer sought further clarifications. The period of limitation would stop running once the application, complete with the required documents, was filed.Conclusion:The court allowed the petition, setting aside the impugned order dated 13.04.2022, and directed that the refund application be reconsidered on its merits by the proper officer. The petition was allowed, and the pending application was disposed of accordingly.