Refund application for unutilized Input Tax Credit not time-barred due to COVID-19 exclusion period benefit

The Gujarat HC held that a refund application for unutilized Input Tax Credit for March 2018, filed on 27.05.2020, was not time-barred despite the normal limitation period expiring on 20.04.2020. The court applied the benefit of exclusion period from 01.03.2020 to 28.02.2022 due to COVID-19 notifications. The HC directed the competent authority to reconsider the petitioner's refund claim by applying proper consideration and following the relevant circular dated 05.07.2022. The petition was disposed of favorably.

---

---

Issues:
1. Refund claim under GST Act barred by limitation.
2. Interpretation of relevant date for filing refund application.
3. Impact of notification on computation of limitation period for filing refund application.

Analysis:
1. The petitioner, a company engaged in manufacturing and supply, sought to set aside an order rejecting a refund claim of Rs. 14,39,897 under the GST Act. The petitioner contended that the refund claim was not time-barred and should be decided on merits by the adjudicating authority. The respondent had rejected the claim as time-barred, citing the filing date of 02.05.2020, which was deemed late. The respondent held that the petitioner failed to provide sufficient documents to prove timely filing and dismissed the claim based on available records. The respondent also disregarded the impact of the pandemic on timelines, as per Notification No. 35/2020-Central Tax. The High Court noted the petitioner's argument and directed a reconsideration of the refund claim by the competent authority.

2. The key issue revolved around the interpretation of the relevant date for filing a refund application under Section 54 of the GST Act. The petitioner's claim was related to unutilized Input Tax Credit for supplies made to a unit in the SEZ, which is considered zero-rated supply under Section 16 of the Integrated Goods & Service Tax Act, 2017. The relevant date for filing the refund application was determined to be two years from the due date of furnishing GSTR 3B returns, as per the explanation to Section 54. The High Court highlighted the importance of adhering to the prescribed timelines for filing refund applications and clarified the impact of subsequent amendments and notifications on such deadlines.

3. A significant development during the proceedings was the issuance of Notification No. 13/2022-Central Tax, which excluded the period from 01.03.2020 to 28.02.2022 for the computation of the limitation period for filing refund applications under the GST Act. This notification had a direct bearing on the petitioner's case, as the refund application was filed on 27.05.2020. The High Court acknowledged the applicability of the notification and directed the competent authority to reconsider the refund claim in light of the exclusion period mentioned in the notification. The Court's decision emphasized the importance of considering relevant notifications and circulars that impact the computation of limitation periods for filing refund applications under the GST Act.

---