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 proceedings and must be recognised when assessing delay; accordingly, rejection of refund applications solely on the ground of limitation without applying that exclusion is unsustainable. The respondent conceded applicability of the exclusion but relied on delay in deficiency memos; those memos and the rejection are quashed, and the refund applications are remitted for fresh adjudication with an opportunity of hearing and a reasoned, speaking order.

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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.

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