GST Refund

[Ethirajan Parthasarathy]

Section 54(1) of CGST Act provides for claiming of any tax, interest if any on such tax or any other amount paid.

Proviso to Sec.54(1) refers to claiming of any balance in Electronic “Cash” Ledger.

ITC neither can be treated as tax paid by the assessee nor it gets reflected in Electronic “Cash” Ledger. ITC appears in Electronic “Credit” Ledger.

Hence, refund of ITC due to inverted rate supplies is entirely governed by section 54(3) and two years time limit from “relevant date” prescribed u/s 54(1) has no relevance of ITC refund which is separately covered u/s 54(3)

In other words, sec.54(3) and sec.54(1) are independent of each other.

From the above, it appears as per sec. 54(3), ITC refund claim can be done at the “end of any tax period” without any time limit of two years from relevant date which is only for sec.54(1)

Is my understanding right. If yes, it is not clear to me though “relevant date” is referred to only in Sec.54(1) why, explanation 2(e) prescribes meaning of relevant date for ITC refund u/s 54 (3)

AI Summary

Clarification on ITC Refunds: Two-Year Limit Under Section 54(1) Applies to All GST Refunds, Including ITC Claims. A user inquired about the refund process for Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework, specifically questioning the applicability of the two-year time limit outlined in Section 54(1) of the CGST Act. They noted that ITC appears in the Electronic Credit Ledger, not the Cash Ledger, and believed Section 54(3) allows ITC refunds at the end of any tax period without a two-year limit. A respondent clarified that the two-year limit applies to all refunds, including ITC, and is calculated from the end of the financial year in which the claim arises.