2026 (1) TMI 1144 - HC - GST

Refund of IGST on ocean freight: appellate limitation observations set aside; refund to be processed with interest.

Refund claims for IGST paid on ocean freight under the reverse charge mechanism were contested on limitation and admissibility grounds; the appellate ... Refund of IGST paid on ocean freight - Reverse charge mechanism - limitation period in refund claims arising from mistake of law - appellate authority directing adjudicating authority to verify admissibility on limitation - Rejection of refund u/s 54 - Entry 10 of Notification No.10/2017-Integrated Tax (Rate) - Mistake of law - HELD THAT:- While disposing of the appeal of the petitioner, which was filed assailing the order dated 08.02.2023, the appellate authority has directed the adjudicating authority to process the refund application of the petitioner and also to verify the admissibility of the refund claim in respect of period of limitation. Appellate authority was not required to make the observations in the appellate order relating to limitation. It appears that the petitioner is also not offered any opportunity of hearing since the show-cause notice dated 30.01.2023 does not refer to any date of 03.02.2023 on which the petitioner was asked to remain present for personal hearing. The petitioner in his writ petition has categorically averred that the petitioner was never afforded opportunity of hearing as it is impossible to do so within a period of 3 days from the issuance of show-cause notice. On this count also, the impugned order is required to be quashed and set-aside. We are not remanding the matter as it was remanded on earlier occasion and in light of the settled legal precedent, the impugned order dated 30.10.2023 is hereby quashed and set-aside. The respondents are directed to process the refund claim of the petitioner filed in prescribed Form RFD-01 through online portal for the month of July, 2017, along with consequential interest @ 6% p.a. Issues: Whether the appellate authority erred in directing the adjudicating authority to verify the admissibility of the petitioners refund claim with reference to period of limitation and remanding the matter instead of directing disposal, and whether the petitioner is entitled to quashing of the impugned appellate order and direction to the respondents to process the refund claim of IGST paid on ocean freight under Entry 10 of the Notification No.10/2017-IGST.Analysis: The Court examined the legal framework governing refund of IGST paid on ocean freight under Entry 10 of Notification No.10/2017-IGST and the statutory procedure for refund under Section 54 of the CGST Act, 2017. The Court considered precedents addressing refund claims made pursuant to declarations of invalidity of notifications (including Mohit Minerals and subsequent Gujarat High Court decisions) and principles governing limitation where payment is made under a mistake of law, including application of Section 17 of the Limitation Act, 1963. The appellate orders paragraph directing verification of limitation and remanding for further adjudication was compared with earlier decisions which require that once the notification has been declared ultra vires, authorities should process refund claims without raising technical or limitation objections, and where administrative orders inconsistent with those principles should be quashed. The Court also noted the absence of a genuine hearing opportunity to the petitioner as alleged, and found the appellate authoritys observation on limitation to be unnecessary and contrary to settled precedents requiring processing of such refund claims.Conclusion: The writ petition is allowed; the appellate order dated 30.10.2023 is quashed and set aside to the extent it directed verification of limitation and remand. The respondents are directed to process the petitioners refund claim in Form RFD-01 through the online portal for the relevant period and to grant consequential interest at 6% per annum.