TaxTMI 
TaxTMI 
2026 (4) TMI 1346
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....introduced in the statute. Before examining the legal framework, it is necessary to set out the relevant facts. Factual Background Facts in W.P.(C) 12512/2021 3. The Petitioner is a partnership firm engaged in the business of readymade garments and holds a GST registration bearing GSTIN No. 07AAKFK6680N1ZL. 4. At the time of export of goods, it did not pay any tax and hence, the supplies were zero-rated supplies of goods, exported out of India. After the exports were effected, the Petitioner filed a refund application dated 29th March, 2020, claiming refund of Input Tax Credit (hereinafter, 'ITC') accumulated as on 31st March, 2018 amounting to Rs. 21,88,802/-, for the period July, 2017 to March, 2018. 5. Pursuant thereto, a Show Cause Notice dated 22nd April, 2020 was issued by the Deputy Commissioner, Central Goods and Services Tax (hereinafter, 'CGST') to the Petitioner in respect of the refund application dated 29th March, 2020. Vide the said Show Cause Notice, the Petitioner was called upon to show cause as to why the refund claim should not be rejected. In response, the Petitioner filed a reply dated 30th April, 2020 and contested on various grounds. 6. The ....
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....ber, 2017 and 20th March, 2018 i.e., date of exports and rejected the refund claim of the Petitioner dated 29th March, 2020, to the tune of Rs. 21,88,802/-, as being time-barred. The operative portion of the OIO-1 is set out below: "ORDER I hereby reject an amount of INR Rs. 21,88,802/- (Rs. 21,88,802/-SGST) (Rs. Twenty One Lakh Eighty Eight Thousand Eight Hundred and Two only) to M/s Kanika Exports, M-36, Greater Kailash-II, South Delhi-110048, having GSTIN: 07AAKFK6680N1ZL, ARN No. AA07073200412031 dated 29-03-2020 as refund of ITC on export of goods without payment of IGST under Section 16(3)(a) of the IGST Act, 2017 & Section 54(1) & (3) of the CGST Act, 2017 and rules made there under." 11. Vide the OIA-1, the Appellate Authority concurred with the reasoning of the Adjudicating Authority and upheld the rejection of the refund claim of the Petitioner on the same ground of it being time-barred. The operative portion of OIA-1 reads as under: "ORDER In view of above discussions, analysis and statutory provisions cited in para 6, the appeal filed by the appellant does not hold merit and deserve to be rejected. Hence, the appeal is her....
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....or refund arises. Notably, this is the relevant date as per the amended Explanation 2(e) to Section 54 of the CGST Act. Accordingly, it was observed that the restriction of two years for filing of the refund application applies from the relevant date. 18. Based on the said reasoning, it was also observed that the Petitioner failed to furnish a proper bifurcation of the refund claim to demonstrate whether any portion fell within the prescribed limitation period. Accordingly, the entire refund claim was treated as time-barred. 19. Further, the Adjudicating Authority also noted that pursuant to Notification No. 35/2020-CT dated 3rd April, 2020 and Notification No. 55/2020-CT dated 27th June, 2020, the time limit for compliances stood extended only up to 30th August, 2020. Since the refund applications were filed on 28th March, 2021 for the period July 2017 to March 2018, and on 30^th March, 2021 for the period April 2018 to March 2019, it remained beyond the extended limitation period and was therefore not admissible. The operative portion of the refund orders is set out below: For the refund application dated 28th March, 2021: "8. In view of the above, I find ....
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....only shortens the time period for filing refund claim. A registered person still had sufficient time period in respect of refund claim pertaining to period July 17. Every refund claim filed on or after 1 Feb 2019 will be governed by amended section 54 of CGST Act 2017 even if the refund claim pertains to period prior to 1 Feb 2019. 8.2.1.2 The refund claim for the period July 2017 to March 2018 filed on 28.03.2021 is time barred. Similarly the refund claim filed by the Appellant for the period April 2018 to March 2019 on 30.03.2021 is also time barred and further the Appellant did not non-submitted bifurcation of relevant details for the period if any, which is within prescribed time. XXX 9. In view of the above, I pass the following order: ORDER The Appeals filed by the Appellant are rejected. The refund rejection orders ZX0707210010520 dated 01.07.2021 amounting to Rs. 6,61,234/- for the period July 2017 to March 2018 and ZU0707210004731 dated 01.07.2021 for Rs. 17,46,013/- for the period April 2018 to March 2019 passed by the Adjudicating Authority are upheld." Submissions on behalf of the parties Submissions on behalf of the Pe....
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....pon the decision of the Supreme Court in 'Government of India vs. Indian Tobacco Association', 2005 (7) SCC 396. The relevant portion of the said decision is set out below: "15. The word "substitute" ordinarily would mean "to put (one) in place of another"; or "to replace". In Black's Law Dictionary, Fifth Edition, at page 1281, the word "substitute" has been defined to mean "To put in the place of another person or thing" or "to exchange". In Collins English Dictionary, the word "substitute" has been defined to mean "to serve or cause to serve in place of another person or thing"; "to replace (an atom or group in a molecule) with (another atom or group)"; or "a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague". 16. By reason of the aforementioned amendment no substantive right has been taken away nor any penal consequence has been imposed. Only an obvious mistake was sought to be removed thereby. 17. There cannot furthermore be any doubt whatsoever that when a person is held to be eligible to obtain the benefits of an exemption notification, the same should be liberally construed. ....
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....e effect of a beneficent statute was sought to be extended keeping in view the fact that the benefit was already availed of by the agriculturalists of tobacco in Guntur, it would be highly unfair if the benefit granted to them is taken away, although the same was meant to be extended to them also. For such purposes the statute need not be given retrospective effect by express words but the intent and object of the legislature in relation thereto can be culled out from the background facts." 29. Relying on the said decision, the contention of the Petitioner is that the substitution made in Explanation 2(e) to Section 54 of the CGST Act, w.e.f. 1st February, 2019, takes away the right of the Petitioner to claim the refund of unutilized ITC, which is an incentive for the Petitioner. Hence, it is stated that the substitution cannot be used to deny the substantive export benefit to the Petitioner. 30. Further, Mr. Dinesh Parashar, ld. Counsel for the Petitioner places reliance upon the judgment of the Bombay High Court in W.P. (C) 5600/2021 titled 'M/s Babasaheb Keda Shetkari Sahakari Soot Girni limited vs. The State of Maharashtra through its Principal Secretary Finance & Ors.' t....
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....the relevant date would be the date on which the export took place. (iii) Section 54(1) read with Explanation 2(a) of the CGST Act specifically deals with exports, whereas Section 54(3) read with unamended Explanation 2(e) was a generic provision dealing commonly with both zero-rated supplies and inverted tax structure. In case of ambiguity, the specific provision shall prevail over the generic provision. Further, non-application of Section 54(1) read with Explanation 2(a) of the CGST Act, when exports are involved, will make the said clause redundant. (iv) It is also stated that Explanation 2(e) to Section 54 of the CGST Act was amended vide Central Goods and Services Tax (Amendment) Act, 2018 dated 30th August, 2018 and came into effect on 1st February, 2019. The amended provision specifically restricted the application of the provision to cases of refund of unutilised ITC under clause (ii) of the first proviso to Section 54(3) of the CGST Act viz., transactions of inverted duty structure. Since the refund application was filed on 29th March, 2020 i.e., after the amendment came into effect, the unamended Explanation 2(e) to Section 54 of the CGST Act would not b....
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.... excluded while computing the period of limitation. Since the limitation in the present case would have expired on 20th March, 2020, falling within the excluded period, the benefit of such exclusion would be applicable, thereby rendering the claim within time. However, in the latter case, the exclusion shall not come to the aid of the Petitioner, as the two year period came to an end in October, 2019 itself. 39. Additionally, Mr. Aditya Singla, ld. SSC submits that the manner in which Explanation 2(e) to Section 54 of the CGST Act is to be read, is no longer res integra. The same has been decided by the ld. Single Judge of the Madras High Court in 'Gillette Diversified Operations pvt. Ltd. v. The Joint Commissioner of GST and Central Excise (Appeals-II)'(2025) 28 Centax 263 (Mad.). In the said decision, ld. Single Judge was considering the same very provision and it was held that the amendment is clarificatory in nature and Explanation 2(e) to Section 54 of the CGST was not relevant as the limitation had to be counted from the date of exports. 40. It is further submitted that a similar view was also taken by the Gujarat High Court in 'Nitrex Chemicals India Ltd v. Assistant C....
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....tation period was extended by the Supreme Court by In Re: Cognizance for extension of Limitation (Supra) vide order dated 8th March, 2021, wherein period from 15th March, 2020 to 14th March, 2021 was to be excluded and a grace period of 90 days was also to be provided. Accordingly, in the former case, the refund claim filed on 28th March, 2021 was within the period of limitation. 47. In the latter case, two years from the relevant date would be 31st March, 2021 and the refund claim was filed on 30th March, 2021. Hence, the same was also filed within the period of limitation. 48. Thus, it is contended that the Department has erroneously applied the amendment to Explanation 2(e) to Section 54 of the CGST Act retrospectively, and on that basis, rejected Petitioner's refund claims as being time-barred, vide the refund orders and OIA-2. Submission on behalf of the Department in W.P.(C) 17538/2022 49. The case of the Department is that, since the refund applications were filed by the Petitioner in 2021, the relevant date would be as per the amended Explanation 2(e) of the CGST Act. 50. In that context, the relevant date would be the due date for furnishing the return under....
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....ct would be inapplicable also because the limitation period cannot commence before the right to claim the refund of unutilised ITC accrues in favour of the registered person. (iii) Further, as per the language used in unamended Explanation 2(e), the said provision applies to all cases where a refund of unutilised ITC is claimed. (iv) In addition, it is also contended that the limitation for claiming refund of unutilised ITC under Explanation 2(e) cannot commence before the lapse of limitation for claiming ITC. Reliance is place upon the decision in New India Insurance Co. Ltd. v. Shanti Misra (1975) 2 SCC 840 and T. Kaliamurthi v. Five Gori Thaikkal wakf and Ors. (2008) 9 SCC 306 to contend that when a law of limitation is in operation on the commencement of an action, a new law of limitation cannot extinguish a right of action, by providing a shorter period of limitation. (v) Finally, it is his submission that where a statutory remedy is conferred, the Court ought to adopt a liberal and expansive interpretation, whereas any provision curtailing such remedy must be construed strictly. In this regard, reliance is placed upon the decision of the High Court ....
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....s under: (i) Refund of tax paid on zero-rated supplies of goods and services or both; (ii) Refund of tax paid on inputs or input services used in making such zero-rated supplies; (iii) Refund of tax on the supply of goods regarded as deemed exports; (iv) Refund of unutilised ITC in terms of Section 54(3); 62. Thus, in respect of all the above four categories of amounts, refund applications can be filed. 63. Coming to the second aspect, i.e., the limitation period within which refund can be claimed, the general rule is that refund applications have to be made prior to the expiry of two years from the relevant date. The expression relevant date is defined in Explanation (2)(a) to (h) to Section 54 of the CGST Act. The provision stipulates distinct relevant dates depending upon the nature of transaction, including supplies, exports, etc. For the sake of ready reference, Explanation (2) to Section 54 of the CGST Act is extracted below: "[...] (2) "relevant date" means- (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the input....
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....her case, the date of payment of tax." 64. The determination of the relevant date depends upon several factors. It depends upon the nature of the refund amount as also the nature of the supply of goods or services. Explanation (2) to Section 54 of the CGST Act can be simplified as under: (i) Under Explanation 2(a), which is applicable to goods exported out of India, refund can be of either tax which is paid in respect of goods themselves or the tax paid on the inputs or input services used in such goods. In such a case, depending upon the mode of transport used, the broad principle is that the period of two years under Section 54(1) of the Act, is to be reckoned from the date on which the ship or aircraft was loaded, in case of export by sea or air. In case of land transport, the date on which the goods pass the border. In case of postal export, the date of dispatch by the post office. (ii) In the case of supply of deemed exports under Explanation 2(b), the relevant date would be the date of furnishing of return. (iii) In cases of zero-rated supply of goods/services to SEZ developer or SEZ units, where a refund of tax paid is claimed, the relevant date....
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.... the category of the refund claimed. The statutory scheme highlighted hereinabove provides a comprehensive framework for indentifying the relevant date in diverse transactions, including exports, deemed exports, services, unutilised ITC etc. Consequently, in each case, the applicable clause of Explanation 2 must be carefully applied, in light of the nature of the transaction in question. 66. Having considered the scheme of Section 54 of the CGST Act, it is also relevant to consider the provision governing zero-rated supplies, as the Petitioner in W.P.(C) 12512/2021 is seeking refund of ITC on export of goods without the payment of tax. 67. Section 16 of the IGST Act defines 'zero-rated supply'. The same is extracted below for ready reference: "16. Zero rated supply.--(1) "zero rated supply" means any of the following supplies of goods or services or both, namely:-- (a) export of goods or services or both; or (b) supply of goods or services or both [for authorised operations] to a Special Economic Zone developer or a Special Economic Zone unit." 68. In terms of the above provision, zero-rated supplies would include export of goods or services or b....
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.... prescribed under Section 54(1) would apply in the following terms: "19. In view of the above, there is no cavil that the petitioner was required to make an application for refund under Sub-section (1) of Section 54 of the CGST Act within two years of the goods leaving India or crossing its territorial frontiers." 73. However, it was further observed that, since the Petitioner's refund application could not be uploaded in time due to technical glitches, the same ought to be considered on merits and not be denied on the ground of limitation. The relevant portion of the said decision reads as under: "[...] 29. It is also acknowledged that there were delays in processing refund due to various taxpayers. In the present case, the petitioner has affirmed that he did not file refund applications manually as he was guided by the jurisdictional GST Officers that the refund claim was required to be filed after the actual GST return in Form GSTR-9 was filed and after obtaining bank realization certificates. The petitioner claims that he filed his return on 30.01.2020 and filed an application for refund immediately thereafter. The respondent has denied that the co....
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....te of export of the goods concerned by any mode. Since the refund claim pertains to exports made between July 2017 and November 2017 and the refund application was filed on 09.01.2019, it is clear that such refund application was made within two years from the relevant date. Circular No. 37, which was relied upon by learned counsel for the petitioner, clarifies that refund claims may be made not only on a calendar month basis but by clubbing claims pertaining to more than one calendar month or more than one quarter.... XXX 7. The above discussion leads to the conclusion that the refund claim of the petitioner was made within the period of limitation prescribed by statute." 75. The High Court of Gujarat in Nitrex Chemicals India Ltd (Supra) was considering the relevant date for filing of the refund application under Section 54 of the CGST Act. In the said case, the Petitioner was claiming refund of IGST paid on zero-rated supplies in the form of exports. Thereby, the Court had held that the relevant date would be the 'date of exports', as per Explanation 2(a) to Section 54 of the CGST Act. In this regard, the operative portion of the said decision reads as under....
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....ication No.02/2019-CT dated 29.01.2019 pursuant to CGST Amendment Act, 2018 (31/2018) dated 30.08.2018 was intended clarify what was explicit in Clause (ii) to Proviso to Section 54(3) of CGST Act, 2017. 55. By the above amendment, the Parliament has clarified that the period of limitation for refund of utilized Input Tax Credit in the case of refund of unutilized 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." 79. Further, the Madras High Court found that, in the facts of the said case, the Petitioners were not claiming refund on the basis of ITC on account of inverted tax rate under clause (ii) of first proviso to Section 54(3) of the CGST Act. It was held that the refund claims had been filed within a period of two years from the date of exports. Thus, the Court held that the refund claims ought to be adjudicated on merits. In this regard, the observation of the Court is as under: "70. In view of the above discussion, the stand of the Department is not correct. That apart, legitimate export incentives are to be granted as ....
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.... prospective unless the legislation unequivocally provides otherwise. 23. The petitioner's claim for January 2019 to March 2019 was rejected only on the ground that no eligible inputs were received during the said period but no reasoned finding in this regard has been given. The refund claim for July 2017 to December 2018 are not barred by limitation as it falls within the extended limitation period afforded by the aforesaid notification. The refund claim from January to March 2019 is also not barred by limitation under section 54. The retrospective application of the amendment would deprive the petitioner to claim refund, as this right had been vested with the petitioner. The claim of the petitioner, therefore, cannot be thrown out solely on technical grounds of delay." 81. In terms of the aforesaid judgement, the Court held that the amendment to Explanation 2(e) to Section 54 of the CGST Act cannot operate retrospectively so as to divest the vested rights of the claimant. In view thereof, the Court concluded that the refund application of the Petitioner in the said case, was not barred by limitation, as the relevant date ought to be construed differently in cases wher....
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....he Jammu and Kashmir High Court undertook a detailed analysis of the applicability of the amendment to Explanation 2(e). It was noted that right to claim refund is a vested right of the Petitioner. It was further observed that claiming refund for a period preceding the amendment cannot be curtailed by the amendment. It was held that the amended provision cannot operate retrospectively so as to take away a vested right of the Petitioner. Thus, it was observed that the amendment to Explanation 2(e) to Section 54 of the CGST Act cannot curtail the right which had already vested prior thereto. 92. This Court concurs with the view taken by the Bombay High Court and the High Court of Jammu & Kashmir. The settled legal position is that the provision that would be applicable would be the provision which existed on the date of the transaction. On the day when the transaction took place, the statute provided for a specific period of limitation. The said period cannot be curtailed on the basis of a subsequent amendment which came into existence and could not have been in the knowledge of the tax payer. Further, insofar as the refund claims of the Petitioner in W.P.(C) 17538/2022 are concer....
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....and tax has been paid at the time of export, the relevant date would be construed in terms of Explanation 2(a). In case of other kinds of exports such as deemed exports, Explanation 2(b) would apply. In respect of zero-rated supplies made to a SEZ developer or unit, the applicable provision would be Explanation 2(ba). Insofar as export of services is concerned, the relevant date would be governed by Explanation 2(c). In the case of unutilised ITC, Explanation 2(e) would be applicable. Therefore, the scheme of the Act accords different treatment to different types of exports. All exports are not treated identically. 99. Refunds in the case of unutilised ITC is a different species of refund, inasmuch as, for availing the said refund, the same must be reflected in the Electronic Credit Ledger (hereinafter, 'ECL'). For any ITC to be so reflected in the ECL, various statutory requirements are to be fulfilled, including compliances under Section 16 and 17 of the CGST Act, for the valid availment of ITC. Thereafter, such ITC has to be reflected in the ECL and remain unutilised at the end of the financial year. Thus, the filing of returns assumes crucial importance, whenever refund appl....