Gujarat HC rules limitation period pauses when tax officer requests additional documents for refund applications under Section 54 CGST Act

Gujarat HC held that the period between filing original refund application and receiving deficiency memo must be excluded from the two-year limitation period under Section 54 CGST Act. Following Delhi HC precedent in National Internet Exchange case, the court ruled that limitation stops running when proper officer seeks additional documents. The petitioner's rectified refund application filed within extended timeframe was within limitation period. Orders rejecting refund application on limitation grounds were quashed, and matter remanded for fresh consideration on merits.

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Issues Involved:
1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019.
2. Application of the time limit for filing a rectified refund claim under Section 54 of the CGST Act.
3. Interpretation of Rule 90 of the CGST Rules and its amendments.

Issue-Wise Detailed Analysis:

1. Validity of Circular No. 125/44/2019-GST dated 18.11.2019:
The petitioner challenged the validity of para 12 of Circular No. 125/44/2019-GST, which mandates that a rectified refund claim must be filed within two years from the relevant date as defined in Section 54 of the CGST Act. The petitioner argued that this provision is ultra vires to Section 54 of the CGST Act. The court found that the circular cannot override the statute and must align with the legislative intent of Section 54, which provides a two-year period for filing refund claims.

2. Application of the Time Limit for Filing a Rectified Refund Claim Under Section 54 of the CGST Act:
The petitioner filed the original refund claim within the prescribed two-year period but had to rectify it due to deficiency memos issued by the respondents. The court examined whether the time limit should be calculated from the date of the original application or the rectified application. The court referred to the Delhi High Court's decision in National Internet Exchange of India, which held that the limitation period stops running once the original application is filed within the prescribed time. The court also considered Notification No. 15/2021, which clarifies that the time between the original application and the deficiency memo should be excluded from the two-year period.

3. Interpretation of Rule 90 of the CGST Rules and its Amendments:
Rule 90(3) requires filing a fresh refund application after rectifying deficiencies. The court noted that this rule is procedural and does not restart the limitation period. The insertion of a proviso to Rule 90(3) by Notification No. 15/2021, which excludes the time taken to rectify deficiencies from the two-year period, was deemed clarificatory and applicable to the case. The court concluded that the rectified refund application was a continuation of the original application and should be considered within the limitation period.

Conclusion:
The court held that the petitioner's refund claim was within the limitation period after excluding the time taken to rectify deficiencies. The impugned order rejecting the refund claim on the ground of limitation was quashed. The proper officer was directed to reconsider the refund application on merits within 12 weeks. The rule was made absolute to this extent, with no order as to costs.

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