Refund application timely after exclusion of 01.03.2020-28.02.2022; rejection for non-response to show cause violated natural justice

HC allowed the petition, finding violation of natural justice where the refund application was rejected solely for non-response to a show cause notice. The court noted a subsequent CBIC notification excluding 01.03.2020-28.02.2022 from limitation computations, which renders the refund application timely. The matter was remitted to Respondent No. 3 to reconsider the refund application afresh in light of the 05.07.2022 circular and to process the application expeditiously, in any event within eight weeks. Petition disposed.

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Issues involved:
The issues involved in this case are the rejection of the application for refund of accumulated input tax credit (ITC) by Respondent No. 2 on the ground of delay, the failure of the petitioner to respond to the Show Cause Notice, and the subsequent issuance of a circular by the Central Board of Indirect Taxes and Customs excluding a specific period for computing the period of limitation for such applications.

Details of the Judgment:

1. The petitioner challenged the order dated 27.07.2022, which rejected the application for refund of ITC relating to tax periods July 2020 to December 2020. The Respondent issued a Show Cause Notice proposing rejection due to delay, to which the petitioner did not respond. The rejection was solely based on the lack of response to the notice.

2. After the impugned order, a circular was issued excluding the period from 01.03.2020 to 28.02.2022 for computing the period of limitation for applications under the Central Goods and Services Tax Act, 2017. This circular made the petitioner's application fall within the period of limitation.

3. An appeal against the order was dismissed on the ground of limitation, along with four other similar appeals. The petitioner approached the court regarding these appeals, and orders of remit were passed in their favor.

4. Considering the circumstances and the circular issued post the rejection of the application, the Court decided to allow the petition and remand the matter to Respondent No. 3 for a fresh consideration of the application in light of the circular dated 05.07.2022.

5. Respondent No. 3 was directed to process the petitioner's application for refund expeditiously, within a period of eight weeks from the date of the judgment. The petition was disposed of accordingly.

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