GST NOTICE VALIDITY- ERRONEOUS REFUND

[VENKAT S]

A company received a notice in November 2024 under Section 73(1) for an erroneous refund issued for the period January to March 2020. Can the department consider the refund period as part of FY 2019-20 and apply the extended time limit of November 30, 2024, even though the original deadline (of 3 years from the refund received date) is already elapsed? Can the validity of the notice be questioned?

[KASTURI SETHI]

Dear Querist,

What is the date of Refund Order ?

[VENKAT S]

Refund order dated 19 June 2020.

[KASTURI SETHI]

(i) A period of three years is to be computed from the date of issuance of Refund Order for recovery of refund claim sanctioned erroneously. The date of order of refund is 19.6.2020 and thus the period of three years expires on 18.6.2023.

(ii) The Hon'ble Supreme Court vide Order dated 10.01.22 - 2022 (1) TMI 385 - SC ORDER excluded the period from 15.03.20 to 28.2.2022 for computation of time limitation under ANY law for the assessees as well as Govt. due to Corona virus epidemic.

(iii) The date order of refund is covered under this period. The extension granted by Hon'ble Supreme Court was applicable to the refund claims also.

(iv) So examine the validity of the Notice issued under Section 73 in the light of the Order of the Apex Court. There is also case law of High Court in this aspect.

(v) The issue is worth examination.

[KASTURI SETHI]

In continuation of my above post, if SCN is issued under Section 73 (1), the recovery of refund cannot be confirmed under Section 74 by invoking extended period. In case the department intends to confirm the recovery of erroneous refund under Section 74, that is possible only by way of corrigendum. Otherwise such confirmation of recovery of refund is time barred. Secondly, in case the Apex Court's Order is not applicable to your case, the demand will be time-barred.

[VENKAT S]

thank you Kasthuri Sir. 

AI Summary

Limitation tolling may validate erroneous refund recovery notices; confirmation under Section 74 requires a corrigendum or risks being time-barred. A notice for recovery of an erroneous refund must be measured by the three year limitation from the refund order date (19 June 2020); the pandemic tolling period may extend that limitation and thus impacts the notice's validity. If the department attempts to confirm recovery under a different recovery provision after limitation has expired, such confirmation requires a corrigendum, otherwise the demand may be time barred.