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2021 (6) TMI 20
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....ion 54(3) of the CGST Act, 2017. 2.2 Further, on scrutiny of refund application submitted by the appellant, the adjudicating authority had rejected the refund claim on the ground of time bar issue as the appellant has filed refund application beyond two years from the relevant date and accordingly rejected the refund claim vide FORM-GST-RFD-06 reference No. ZO0803200063792, dated 4-3-2020. 3. Being aggrieved with the impugned vide FORM-GST-RFD-06 reference No. ZO0803200063792, dated 4-3-2020, the appellant has filed the appeal on 19-6-2020 on the following grounds :- (A) The assistant commissioner erred in law interpreting that the amendment made to the explanation w.e.f. 1st February, 2019 would affect the refund application made by the appellant in case of refund application related to inverted duty structure for tax period December, 2017. (A.1) The appellant is engaged in manufacturing of oil. The rate on outward supply of the appellant is 5% whereas the rate of inward supplies of the appellant is 5%, 12%, 18% and 28%. Due to the inverted duty structure, input tax credit accumulated in the electronic credit ledger of the appellant du....
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....owever, vide CGST Amendment Act, 2018, with effect from 1st February, 2019, the meaning of relevant date was changed prospectively which provided that the refund can be claimed within 2 years from the due date of furnishing of return under Section 39 relating to the period in which such claim for refund arises. The relevant extract of the amended provision of relevant date is as follows : (2) "relevant date" means - ...... (e) in the case of refund of unutilised input lax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises; [Emphasis Supplied] (A.7) Since the amendment was made on 1st Feb., 2019, appellant is of the considered view that the amendment is prospective in nature and it cannot affect any refund claimed for any tax period falling prior to February, 2019. Thus, for filing the refund application for the month of December, 2017, appellant had 2 years' time limit from the end of financial year 2017-18 i.e. the application could have been filed up to 31st March, 2020. (A.8) T....
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....44/19, dated 18-11-2019. Since the fresh refund application filed in response to deficiency memo was filed on 25th Jan., 2020 it was treated as time barred by him and thereby he rejected the refund application. (A.12) we submit that since the amendment in definition of "relevant date" was made on 1st Feb., 2019, therefore it is a prospective amendment. It should be applicable for the refund application pertaining to tax period commencing only after 1st Feb., 2019 and not for any refund application pertaining to tax periods falling before February, 2019. The first reason behind our belief is that it is no where mentioned that the amendment shall come into force from a retrospective date while making the amendment. If it had been the intention of the legislature it would had been mentioned but it was not done so. Second reason behind our belief is that one plans all his future actions with respect to anything or acts done by him on the basis of law which is in force on the day on when he performs such act. In this ease, the refund arose in Dec., 17. Therefore, as per the law which was there at that time, the appellant had 2 years time period available with him fr....
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....t given by the law for any act done before any amendment in such law. Thus, such right given before the amendment in such law cannot be curtailed or time for exercising such right cannot be reduced by such amendment in the same way as punishment for any act done prior to enactment of such law cannot be increased by such law. (A.18) The appellant made the supplies in December, 2017, therefore the law in force at the time of such supplies shall be applicable and any amendment made after December, 2017 shall not affect the right given by the act to claim the refund within 2 years from the end of the financial year in which such refund claim arises. Thus, appellant is legally correct in claiming such refund and it shall not be rejected on the ground that it is time-barred. As soon as the appellant files his return and in that return he is fulfilling the condition laid down under clause (ii) of first proviso to the CGST Act, 2017 then refund according to Sec. 54 becomes vested right which has accrued to him. Such accrual attaches a time within itself within which this right is to be exercised. Now by way of an amendment that right cannot be taken away from him till the or....
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....application was filed on 20th January it is very obvious that the deficiency memo, if any, would be issued after this date and not before the date of filing of original refund application. Accordingly, it was issued on 23rd January, 2020. When the deficiency memo was issued on 23rd January, it is also but natural that its compliance will be made after this date and not before this: thus, its compliance was made on 25th January, 2020 i.e. within a very short span of 2 days. But the Circular No. 125/44/19, dated 18-11-2019 requires that the compliance of deficiency memo also must have been made by 20th January. It was an impossible task because compliance of a deficiency memo issued on 23rd January, 2020 cannot be made by 20th January, 2020 i.e. three days before the date of issue of the deficiency memo. Hence, the said Circular does not work here and looses its legal sanctity. So, we submit that the refund application cannot be rejected on the basis of a Circular which does not have legal sanctity, which does not work, which is inconsistent with the spirit of the law and whose compliance is also impossible. On the basis of such circular the refund application cannot be treated as ti....
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.... and it should resolve the operational difficulties but in the present case it has created operational difficulties and made it impossible to comply in the time frame provided in the said circular. Hence, the Circular is ultra vires and the refund application cannot be treated as time barred on the basis of such invalid Circular when the original refund application is within the prescribed time limit both in view of the old amended provision. (C) That the refund of accumulated input tax credit is the substantive vested right and it cannot be denied by accepting contention of the assessing officer (C.1) That the refund of accumulated Input Tax credit on account of inverted duty structure is a substantive right of any assessee as such credit accumulates due to the reason that there is an anomaly in the tax structure created by the Government. Due to such anomaly the taxes on the inputs are higher than that of Output supplies. (C.2) It is a settled legal principle that the procedural laws may have retrospective effect but substantive law or the law affecting substantive right should be made applicable with prospective effect. (C.3)....
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....given by the law cannot be affected by any amendment made in the law. As the amendment in the relevant date had substantially affected the vested right of the appellant and it should not be interpreted in such a way as done by the assessing officer. (C.8) That as per the judgments it is clear that the appellant had practical difficulties in filing the, correct refund application in first attempt and the substantive right of the appellant to claim the refund of unutilized input tax credit cannot be denied treating the fresh refund application filed in response to deficiency memo as time barred, whereas the fresh refund application was only in continuation of the original refund application which was filed in time and limitation has to be seen only from the date of filing of original application. Hence, the appellant should be granted the refund of Rs. 11,47.235/-. (D) That the appellant could not file the original refund application properly due to technical glitches and refund in this case cannot be rejected (D.1) Without prejudice to the submissions made hereinbefore, if it is assumed that the amendment made w.e.f. 1st February, 2019 af....
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....ld not be attached in first attempt. Since the original refund application was in time and fresh application was also in time as it was only a continuation of the original refund application. However, even if the interpretation of the AO is taken in light of the above mentioned circular, we submit that there is no fault of appellant in making any delay in attaching the required documents as it was only due to the technical glitches faced by the appellant while filing the original application that it was submitted without any supporting documents. Thus, the refund cannot be rejected on such ground. (D.5) Had the GST portal responded properly, the appellant would have attached all the supporting documents in the original application filed by him on 20th January, 2020 which was on time and no deficiency memo would have been issued. Therefore, it is clear that appellant was not at fault in filing the application by delay and refund should be allowed to him. (D.6) That according to the principle of natural justice, refund of the appellant should not be denied as there was no delay at all from the appellant's point of view. However, even if it is to be seen ....
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....er, 2017 upto 20th January, 2020 and he filed the application on time. However, deficiency memo was issued on 23rd January, 2020 and a fresh application against it was filed on 25th January, 2020 which was considered altogether a new application having no nexus with original refund application and it was then considered time-barred on the ground that as per Circular 125/44/19-GST, dated 18-11-2019 it must have also been submitted within the time period for submitting original application i.e. 20th January, 2020. In this case, the deficiency memo was issued on 23rd Jan., 2020 i.e. after the last date for submission of application for refund. Hence, it was practically impossible to comply with this condition to file the rectified fresh refund application by 20th January, 2020 as no fresh application can be filed against deficiency memo before the issuance of deficiency memo itself. (E.4) That there was a sudden change in the procedure where earlier, the rectified refund application filed against deficiency memo was considered to be in continuation of the original refund application and same ARN as generated originally was used for the fresh application as well. But, al....
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....v. Union of India & Ors. - 2019 (5) TMI 899 - Delhi High Court = 2019 (26) G.S.T.L. 164 (Del.) M/s. Pitambra Books Pvt. Ltd. v. Union of India & Others - 2020 (2) TMI 169 - Delhi High Court = 2020 (34) G.S.T.L. 196 (Del.) where it was held that : Jakap Metind Pvt. Ltd. v. Union of India and Others, 2019 (31) G.S.T.L. 422 (Guj.) Blue Bird Pure Pvt. Ltd. v. Union of India & Ors. - 2019 (5) TMI 1102 Hon'ble Delhi High Court = 2019 (29) G.S.T.L. 660 (Del.) That considering the above judgments, it is clear that circulars are issued for clarification purpose and to resolve operational difficulties. They should be consistent with the spirit of law but where it is impossible to comply with the condition in circular, it is considered illegal and ultra vires. 4. Personal Hearing in the case was held on 22-12-2020 through video conference, wherein, Shri Ranjan Mehta, Chartered Accountant, appeared, on behalf of appellant for personal hearing through video conference and reiterated the submission already made in their appeal memo and in view of the submission, he requested to decide the case. 5. I have carefully gone through the case records, and w....
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....end of any tax period : Provided that no refund of unutilised input tax credit shall be allowed in cases other than - (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council : Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty : Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. (14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant....
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....ised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises :] (as amended by CGST (Amendment) Act, 2018 w.e.f. 1-2-2019). Further as per sub-rule (3) of Rule 90 of the CGST Rules, 2017 - Acknowledgement. (3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03* through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies. Further as per Paras 9, 10, 11 & 12 of Circular No. 125/44/2019-GST, dated 18-11-2019 issued by the CBIC, New Delhi states as under :- "9. It may be noted that if the application for refund is complete in terms of sub-rule (2), (3) and (4) of rule 89 of the CGST Rules, an acknowledgement in FORM GST RFD-02 should be issued within 15 days of the filing of the refund application. The date of generation of ARN for FORM GST RFD-01 is to be considered as the date of filing of the refund a....