TaxTMI 
TaxTMI 
2026 (3) TMI 1200
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....appeals raise common questions. Learned counsel appearing on both sides addressed common submissions. Hence, the appeals are disposed by common judgment. For convenience, the facts in Writ Appeal No.110/2026 are referred. A. Facts in brief: 3. The respondent-assessee is a company engaged in the business of healthcare, life sciences, and electronics, providing intermediary services to foreign entities and earning commission income therefrom. The assessee filed its return in Form GSTR-3B for the tax period October 2017 and paid Integrated Goods and Services Tax (IGST). Subsequently, the assessee filed another return in Form GSTR-3B in March 2018 and paid Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). 3.1 In the return filed earlier, the services were treated as "export of services", and IGST was paid. However, in the return filed in March 2018, the assessee paid CGST and SGST, treating the transaction as intra-State supplies. It is stated that the erroneous payment of IGST was not refunded. Notification No.35/2021-Central Tax dated 24.09.2021 inserted Rule 89(1A) of the Central Goods and Services Tax Rules, 2017 (for short, "CGST Rules"), p....
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....period of two years from the date on which the sub-rule came into force for claiming refund. It is submitted that the refund claim was not made either within the period prescribed under Section 54 or within the time stipulated under Rule 89(1A). The assessee, having failed to claim the refund within the prescribed time, cannot now seek the benefit of refund, which would otherwise amount to unjust enrichment. 4.2 It is further submitted that when a specific procedure and timelines are prescribed for claiming refund, the same must necessarily be complied with within the stipulated period. According to the learned counsel, the time limit prescribed has relevance to other adjudicatory procedures under the Act. If the period of limitation prescribed under Section 54 is construed as directory and not mandatory, and consequently no limitation is enforced, the other adjudicatory proceedings under the Act, which are intended to be time-bound, would be rendered nugatory. 4.3 It is further submitted that the learned Single Judge has not considered the object of prescribing the timeline under Section 54, and that the said provision is mandatory in nature. It is contended that the authori....
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....thout raising any plea based on technicalities. It is submitted that the refund application dated 30.03.2024 was filed within a reasonable time, and the learned Single Judge was justified in directing the authorities to process the refund application by holding that an application under Section 54 is not governed by any limitation. Accordingly, he prays that the appeal be dismissed. C. Points for Consideration: 6. Having considered the submissions made by the learned counsel for the parties and upon perusal of the appeal papers, the following points arise for consideration by this Court: (i) Whether filing of an application within the time provided under Section 54 of the CGST Act is mandatory? (ii) If Point No.(i) is answered in the affirmative, is the Assessee/registered person left with no remedy to claim genuine refunds? (iii) What is the mechanism to condone the delay in filing the refund application under Section 54 of CGST Act. D. Scheme of GST Act: 7. Before proceeding to answer the above points, it is necessary to analyze the scheme of the Act. 7.1 Chapter III of the Act deals with the levy and collection of tax. This Chapter provi....
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....2 Sub-section (8) of Section 49 mandates the discharge of tax liability through self-assessed tax, either for the previous period or the current period. Sub-section (9) further deals with the presumption that the incidence of tax has been passed on to the recipient of such goods or services or both, unless the contrary is proved. 7.6.3 Section 50 provides for interest on delayed payment of tax, Section 51 deals with Tax Deduction at Source and Section 54 provides for refund of tax. 7.7 Chapter XII deals with the assessment of tax payable under the Act by every registered person. Section 59 mandates self-assessment. Section 60 provides for provisional assessment, enabling a registered person to request the proper officer to determine the rate of tax applicable. Upon such request being made, the proper officer is required, in terms of sub-section (3) of Section 60, to pass the final assessment order within six months. Sub-section (4) of Section 60 imposes a liability to pay interest on the tax payable pursuant to provisional assessment. Thereafter, sub-section (5) provides for refund in accordance with Section 54, subject to necessary adjustments. 7.7.1 Similarly, Section 61....
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....(5) falls short of the amount actually payable, the proper officer shall proceed to issue a notice under sub-section (1) in respect of the amount which falls short of the actual tax payable. Sub-section (8) provides that where the tax along with interest is paid after issuance of the show-cause notice under sub-section (1) and within the prescribed time, all proceedings in respect of such notice shall be deemed to be concluded. Sub-section (9) enables the proper officer to issue an order determining the amount of tax, interest, and penalty payable. 8. The CGST Act, 2017 does not provide for any reassessment in cases of non-payment or short payment of tax, erroneous refund, or wrongful availment or utilisation of input tax credit. The determination in such circumstances is specifically provided for under Sections 73 and 74. 8.1 When a refund application is considered, the grant of refund is not automatic. Section 54 is a code by itself, enabling multifaceted consideration of a refund claim. In the process of examining a refund application, if a situation contemplated under Sections 73 or 74 is noticed, the proper officer cannot be rendered remediless. 8.2 To enable the acti....
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....Act provides for refund under Section 54, which prescribes a period of two years from the relevant date. The expression "relevant date" is explained in the Explanation to Section 54 with reference to different types of transactions. In residuary cases, the relevant date is the date of payment of tax. 9.2 In the above context, it is also necessary to read Section 77 along with Section 54. According to Section 77 of the Act, where a registered person has paid Central tax and State tax on a transaction considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, such person shall be entitled to refund of the taxes so paid, in such manner and subject to such conditions as may be prescribed. Similarly, where tax has been paid treating a transaction as an inter-State supply, and it is subsequently held to be an intra-State supply, the registered person shall not be required to pay any interest on the amount of Central tax and State tax payable on such supply. 9.3 A reading of Section 77 no doubt indicates that where tax has been paid under IGST treating the transaction as "export of services", and subsequently CGST and SGST are also paid tr....
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.... its plain language, assigning to it its natural meaning. While interpreting such provisions, nothing can be added or omitted by implication. This is the fundamental principle governing the interpretation of fiscal statutes. 9.10 For the above reasons, we hold that Point No.(i) is to be answered in the affirmative. Regarding Point No.(ii) 10. While answering Point No. (i), it has been held that filing an application under Section 54 within two years from the relevant date is mandatory. Section 77 mandates the refund of taxes paid in certain circumstances. However, the Act does not provide any mechanism to redress grievances or difficulties that may arise in the course of compliance with its provisions. Unless expressly provided, the proper officer or any authority under the Act cannot be conferred with such powers. 10.1 There may be instances where, due to genuine or unavoidable reasons beyond the control of the taxpayer, the period prescribed under Section 54 lapses. If no remedy is made available in such circumstances, the provision may operate with undue harshness and arbitrariness. In the absence of any such enabling provision under the Act, the jurisdiction of this....
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....0157/1968), examined the exercise of jurisdiction under Article 226 of the Constitution of India to order refund where a complete mechanism is not provided under the statute. It is held as under: "13. This Court after examining the jurisdiction under Art. 226 concluded that the High Court had the power to order refund in proceedings for a writ since complete relief could not be said to be given if only a declaration were given. The Court, however, observed : "At the same time we cannot lose sight of the fact that the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defences legitimately open in such actions." 14. Pointing out that where a defence of limitation could be raised or other issues of fact had to be tried, it was held that the Court should leave the party aggrieved to seek his remedy by the ordinary mode of a civil suit. Therefore in those cases (there were 31 appeals before this Court) where the writ was asked for within three years, this Court upheld the order of refund by the High Court in its writ jurisdiction, but in those cases in which the....
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....ey has been realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the court has power to direct the refund unless there has been avoidable laches on the part of the petitioner which indicate either the abandonment of his claims or which is of such nature for which there is no probable explanation or which will cause any injury either to respondent or any third party. It is true that in some cases the period of three years is normally taken as a period beyond which the court should not grant relief but that is not an inflexible rule." In view of the above, where the time limit prescribed for making a refund claim under the Act has expired, the remedy under Article 226 of the Constitution of India may be invoked, however subject to and to the extent indicated while answering Point No. (iii). Regarding Point No.(iii): 11. While analysing the provisions of the Act, we have referred to the entire scheme of the enactment. It has been held in the preceding paragraphs that the period of two years prescribed under Section 54 carries both relevance and purpose. While adopting a view to consider a belated refund....
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....n, we conclude as under: (a) The period of two years prescribed under Section 54 of the CGST Act, 2017 is mandatory. (b) As no remedy is provided under CGST Act to consider a refund claim under Section 54, if filed belatedly, it is open to any person claiming refund to avail remedy under Article 226 of the Constitution of India. (c) The condonation of delay ordered by the Court shall be subject to the condition that corresponding extension of time is granted in favour of the proper officer to invoke other applicable provisions, including Sections 73 and 74 of the Act, as may be necessary. (d) If such other remedies were otherwise available had the refund claim been filed within two years under Section 54 of the Act, the same shall continue to remain available. (e) Once condonation of delay is granted by the Court in filing the refund claim, the claim shall be treated as having been filed within the prescribed period of two years, thereby enabling all consequential benefits to the claimant as well as the exercise of appropriate powers by the proper officer under the Act. (f) The scope of a writ petition under Article 226 would or....