Excess GST payment refund cannot be rejected on limitation grounds when corrected application filed after removing deficiencies

The Punjab and Haryana HC allowed a petition challenging denial of GST refund for excess payment made by mistake. The petitioner paid excess tax in September 2017 and filed refund application on 18.10.2019 within the two-year limitation period. After a deficiency memo was issued on 01.11.2019, the petitioner filed a corrected application on 05.11.2019 which was rejected as time-barred. The HC held that since the initial refund application was filed within the prescribed time limit, the subsequent corrected application after removing deficiencies could not be rejected on limitation grounds. The matter was remanded to the Adjudicating Authority for fresh consideration following Delhi HC precedent in BSNL v. Union of India.

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Issues involved:
The issues involved in the judgment are the rejection of a refund claim by the petitioner, the validity of Rule 90(3) of the Central Goods and Service Tax Rules, 2017, and the application of the limitation period for filing refund applications.

Refund Claim Rejection:
The petitioner mistakenly paid excess SGST under reverse charge mechanism while filing form GSTR-3B for September 2017. The petitioner filed a refund application for the excess amount, but it was rejected by the authorities as time-barred, leading to subsequent appeal and the present writ petition.

Validity of Rule 90(3) of CGST Rules, 2017:
The petitioner challenged the validity of Rule 90(3) of the CGST Rules, which requires the filing of a fresh refund application post rectification of deficiencies. The court referred to a judgment where it was observed that deficiencies raised in a deficiency memo should not render the original application as non est if the application is not deficient in material particulars and is accompanied by necessary documentary evidence.

Application of Limitation Period:
The court held that the petitioner's second refund application, filed after rectifying deficiencies, could not have been rejected on the ground of being time-barred. The court emphasized that since the initial refund application was filed within the limitation period, subsequent applications post rectification should not be rejected based on the limitation period.

The judgment allowed the petition, setting aside the orders rejecting the refund claim and remanding the matter back to the Adjudicating Authority for fresh consideration in line with the court's observations.

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