Refund claim allowed as application filed within extended Covid-19 limitation period under SC order

The HC allowed the appeal and set aside the Commissioner (Appeals) order rejecting a refund claim on limitation grounds. The court held that the appellant's refund application filed on 18.01.2021 was within the extended limitation period as per SC's suo-motu writ petition (Civil) No. 3/2020, which excluded the period from 15.03.2020 to 28.02.2022 from limitation computation during Covid-19 pandemic. The court emphasized that SC orders under Articles 142 and 141 are binding on all authorities, who cannot plead ignorance of such law. The Commissioner was directed to pay the refund amount of Rs. 20,69,268 with applicable interest within two months.

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The core legal question considered in this appeal is whether the refund claim filed by the appellant was barred by limitation, particularly in light of the general period of exemption from limitation granted by the Hon'ble Supreme Court in suo-motu writ petition (Civil) No. 3/2020 during the Covid-19 pandemic.

Another related issue is the applicability of the Supreme Court's extension of limitation period to refund applications under the relevant customs law, and whether the authorities below erred in rejecting the refund claim on the ground of limitation without considering this extension.

Additionally, the appeal raises the question of the binding nature of the Supreme Court's orders under Article 142 and Article 141 of the Constitution of India on all courts, tribunals, and authorities, and the consequent obligation of such authorities to apply the extended limitation period.

Issue-wise Detailed Analysis

1. Legality of rejection of refund claim on ground of limitation without considering Supreme Court's extension of limitation period during Covid-19 pandemic

The relevant legal framework includes the suo-motu writ petition (Civil) No. 3/2020 initiated by the Hon'ble Supreme Court, wherein the Court exercised its extraordinary jurisdiction under Article 142 of the Constitution to exclude the period of limitation from 15.03.2020 to 28.02.2022 in all proceedings, irrespective of the limitation prescribed under general or special laws. This order was passed to mitigate the hardship caused by the Covid-19 pandemic and was communicated as binding on all courts, tribunals, and authorities under Article 141 of the Constitution.

In the present case, the appellant had filed refund applications beyond the one-year limitation period prescribed under the customs law. However, the appellant contended that the limitation period must be computed by excluding the period from 15.03.2020 to 28.02.2022 as per the Supreme Court's orders. The Commissioner (Appeals) rejected the refund claim on the ground that it was filed beyond the one-year limitation period, without applying the extended limitation period granted by the Supreme Court.

The Court examined the orders passed by the Commissioner (Appeals) and found that the appellant's submission regarding the extension period was not adequately considered. The Court emphasized that the Supreme Court's orders are binding on all authorities and cannot be ignored or treated as unknown law. The Court referred to the relevant portion of the Supreme Court's order which excluded the period from 15.03.2020 to 14.03.2021 from the computation of limitation, thereby effectively extending the limitation period for all proceedings, including refund claims.

The Court also noted that the appellant's refund application was filed on 18.01.2021, which falls within the extended limitation period when the exclusion of the Covid-19 period is taken into account. Therefore, the refund application was not barred by limitation.

2. Applicability of the extension period to refund applications and reliance on precedent

The appellant relied on the decision in Saiher Supply Chain Consulting Pvt. Ltd. Vs. Union of India, where the Bombay High Court held that the extension of limitation period granted by the Supreme Court during the Covid-19 pandemic applied to refund claims under GST law. This decision was subsequently affirmed by the Hon'ble Supreme Court, thereby reinforcing the applicability of the extension to refund applications.

The Court in the present case accepted this precedent as directly applicable, reasoning that the principle of exclusion of the Covid-19 period from limitation computation applies equally to refund claims under customs law, given the similar nature of limitation provisions and the binding effect of the Supreme Court's orders. The Court held that the refund application filed by the appellant was within the extended limitation period and thus valid.

3. Binding nature of Supreme Court's orders and obligation on authorities

The Court underscored the constitutional mandate that the Supreme Court's orders under Article 142 and the law declared under Article 141 have binding effect on all courts, tribunals, and authorities. The authorities below cannot ignore or take a plea of ignorance regarding such binding orders. The Court observed that the Commissioner (Appeals) erred in not applying the extension period granted by the Supreme Court, which amounts to non-application of the binding law.

The Court emphasized that the extension period granted by the Supreme Court was intended to ensure complete justice and mitigate the hardships caused by the pandemic, and it must be applied uniformly to all relevant proceedings, including refund claims.

Conclusions

The Court concluded that the appellant's refund application was filed within the extended limitation period as per the Supreme Court's suo-motu writ petition orders. The rejection of the refund claim on the ground of limitation by the Commissioner (Appeals) was therefore unsustainable.

The Court allowed the appeal, set aside the order of the Commissioner (Appeals), and directed the Respondent Commissioner to make payment of the refund amount of Rs. 20,69,268/- along with applicable interest within two months.

Significant Holdings

"Hon'ble Supreme Court's order being law of land and the authorities below cannot take a plea that they are unaware of the law declared by the Hon'ble Supreme Court specifically under Article 142 of Constitution of India in exercise of power to ensure complete justice with a direction to communicate it to all concerned authorities that the order is having binding effect within the meaning of Article 141 of the Constitution of India, on all courts, Tribunals and Authorities."

"In computing the period of limitation for any suit, appeal, application or proceedings, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021."

"The order-in-Original and Order-in-Appeal passed by the authorities below in disallowing the refund on the ground of limitation without considering the extension period granted by Hon'ble Supreme Court cannot be sustained."

"The appeal is allowed and the Order-in-Appeal dated 17.08.2022 passed by the Commissioner (Appeals) is hereby set aside with a direction to the Respondent Commissioner to make payment of the refund of Rs. 20,69,268/- with applicable interest within a period of two months."

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