Show Cause Notice Issued Rejecting Refund Time Barred

[I Bhasin]

We filed our Refund Application in the time limit as notified in Circular 35/2020 & 55/2020. We were issued Deficiency Memo's 3 times on 14th, 15th and 16th day from date of filing our application. Finally we were issued acknowledgment RFD-02 for our application 4th time followed by a Show Cause Notice issued on 60th day rejecting our refund on the grounds of Time Barred.

We were informed earlier by an Officer that since our 1st application was filed within due time our refund wouldn't be time barred. Just wanted to know if there is any Notification or Circular issued in this regard to so that we can mention the same in our SCN.

[CA HemanthKumar]

Kindly refer refund master circular No.125/44/2019 dated 18.11.2019 where it state that limitation will not apply for applications filed after issues of deficiency memo.

Para 8 ".........This principle / limitation,however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier."

Regards

CA Hemanth Kumar

[I Bhasin]

Thanks Sir for your valuable guidance.

Unfortunately, they have issued RFD-06 rejecting our total claim citing -Reply not satisfactory. No document found attached. Rejected.

We attached a pdf file with detailed response and reasons which they claim as not attached.

Our effort of more than 5 months in filing a refund application 4 times and waiting for a refund gone down the drain.

Do we have the option of Appeal online or is it worth undergoing the same till we hopefully get a decision in our favor.

[Kashish Gupta]

Dear Sir

The Hon’ble High Court of Delhi has been pleased to issue notice in the case of Insitel Services Pvt. Ltd. V. Union of India W.P. (C) 6486/2020 = 2020 (9) TMI 779 - DELHI HIGH COURT, where the illegality of Rule 90(3) of the CGST Rules have been challenged.

It is pertinent to mention that Rule 90(3) of the CGST Rules provides for the filing of fresh refund application if a notice of deficiency in FORM RFD-03 has been issued to the assessee.

The Challenge in the petition has been made to the Rule 90(3) for being ultra vires the Article 14 and Article 19(1)(g) of the Constitution of India. Alternatively the petitioner has also prayed that the Rule 90(3) may be read down to the effect that the rectification of deficiencies shall not be treated as submission of fresh application of refund for the purpose of computing limitation for refund applications and grant of interest on delayed refund.

Best Regards

Kashish Gupta

8510806440

[Kashish Gupta]

Dear Sir

With due respect to the eminent experts, in my view, Para 8 of the circular cited above is not applicable on facts of your case. Said para read in entirety as under, -

"8. The applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. Registered persons having aggregate turnover of up to ₹ 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or clubbing successive quarters as aforesaid. However, refund claims under categories listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period. This principle / limitation, however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier."

In my view, you must approach jurisdictional High Court by way of filing writ petition. Since the provision of rules provide to consider the application submitted after rectification of deficiencies being a fresh application, first appellate authority will also issue order against the assessee. There is no use of making a futile attempt.

AI Summary

Business Faces GST Refund Rejection Despite Timely Application and Compliance with Deficiency Memos; Considers High Court Appeal A business filed a GST refund application within the stipulated time but received multiple deficiency memos, ultimately leading to a show cause notice rejecting the refund as time-barred. An officer initially assured them that the refund would not be time-barred since the first application was timely. A professional advised referring to a circular stating that the limitation does not apply if a fresh application follows a deficiency memo. Despite attaching necessary documents, their claim was rejected. They consider appealing, referencing a Delhi High Court case challenging the legality of Rule 90(3) of the CGST Rules. An expert suggests approaching the High Court directly, as lower authorities may not rule favorably.