2026 (3) TMI 141 - HC - GST

Exclusion of limitation period requires recalculation of refund limitation and fresh adjudication with hearing and reasoned order.

Exclusion of the period from 15.03.2020 to 28.02.2022 from computation of limitation, as directed by the Supreme Court, applies to statutory refund ... Denial of refund applications - condonation of delay - Exclusion of limitation period from 15.03.2020 to 28.02.2022 - Exclusion of limitation period from 15.03.2020 to 28.02.2022 - Impugned rejection of the petitioners' refund applications on the sole ground of delay, without applying the Supreme Court's exclusion of the limitation period, is unsustainable and requires fresh consideration. - HELD THAT:- The petitioners filed refund applications in respect of Financial Year 2018-2019 and 2019-2020 which were rejected by respondent no.3 on the ground that the limitation period under Section 54(1) had expired. The Supreme Court's order excluding the period from 15.03.2020 to 28.02.2022 for purposes of limitation was relied upon by the petitioners and the exclusion was not disputed by the Standing Counsel. In these circumstances the High Court held that the refund applications could not be rejected merely on the ground of delay while ignoring the aforequoted Supreme Court order. The impugned order was therefore quashed and the matter remitted to respondent no.3 for fresh decision in accordance with law after affording a reasonable opportunity of hearing and by a reasoned and speaking order. [Paras 6, 8, 10, 11] Impugned order quashed; refund applications to be decided afresh in accordance with law, by reasoned and speaking order after hearing the petitioners. Final Conclusion: The writ petition is disposed of by quashing the impugned deficiency memos; the refund applications shall be reconsidered by the respondent in accordance with the Supreme Court's exclusion of limitation and decided expeditiously after affording opportunity of hearing. Issues: Whether the impugned rejection of the petitioners' refund applications on the ground of delay was sustainable in light of the exclusion of the period from 15.03.2020 to 28.02.2022 directed by the Hon'ble Supreme Court for the purposes of limitation, and whether the deficiency memos and consequent rejection should be quashed and the refund applications reconsidered.Analysis: The petitioners filed refund applications under the GST regime which were rejected by respondent on the ground that the period of limitation under Section 54(1) had expired. The Supreme Court by its order dated 10.01.2022 directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation and provided for availability of the balance period or a 90-day period from 01.03.2022 as applicable. The exclusion period applies to computation of limitation for judicial and quasi-judicial proceedings including proceedings for refund where limitation is prescribed. The respondent did not dispute the applicability of the Supreme Court's exclusion. In view of the exclusion, the ground of delay relied upon in the impugned deficiency memos and the rejection cannot be sustained and the matter requires fresh adjudication after affording opportunity of hearing.Conclusion: The impugned deficiency memos and the order rejecting the refund applications are quashed and the matter is remitted to the respondent to decide the refund applications afresh in accordance with law by a reasoned and speaking order after affording the petitioners a hearing.Ratio Decidendi: Where a higher court has directed exclusion of a specified period from computation of limitation, that exclusion must be applied in computing limitation for statutory refund proceedings and a dismissal solely on the ground of delay ignoring such exclusion is unsustainable.