Application's common-portal filing date is relevant when construing limitation

The Hon'ble Gujarat High Court, in the case of Chromotolab and Biotech Solutions v. Union of India, [R/SPECIAL CIVIL APPLICATION NO. 16308 of 2020] ruled that the date of filing of the application by the assessee on common portal would be treated as date of filing of claim for refund to the satisfaction of requirement of Section 54 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and Rule 89 of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules").

Facts

The assessee is engaged in the business of trading and clearing finished excisable goods, specifically analytical instruments and consumables used primarily by pharmaceutical companies such as mass spectroscopy, standard and impurities machinery, laboratory products, force scientific columns, coleparmer, modular gas generators, etc.

Assessee delivered finished goods to pharmaceutical companies in Special Economic Zone ("SEZ") and issued tax invoices. The goods being supplied to SEZ were to be considered as a zero rated supply under Section 16 of the Integrated  Goods and Services Tax Act, 2017 ("the IGST Act"). 

The assessee filed application dated December 28, 2018 under Rule 89(1) of the CGST Rules, seeking refund of Rs. 3,48,497/- under Section 54 of the CGST Act for the supplies of finished goods for the period from August 2017 and October 2017. However, the assessee was served with the Notice seeking  an explanation as to why the refund claim shouldn't be rejected due to bar of limitation. 

Petitioner contested the Notice on the ground that the proper notice was not issued to him and was given after the period of of one year without raising any query or point out any deficiency. 

Revenue, on the other, submitted that  the application for refund is to be filed as per the procedure laid down in Circular No. 17/17/2017-GST dated November 15, 2017 ("the Circular"). Revenue argued that the Petitioner generated ARN number for the refund claim on December 20, 2018 by filing application in FORM-01A, however, the print out of the application along with the relevant documents only on October 17, 2019.  The printout of the application was submitted after the due date had passed in terms of Explanation (2) of Section 54 of the CGST Act. Therefore, the refund claim was partially rejected and the re-credit was not granted as claimed.

Revenue argued that the November 15, 2017, circular outlined the process for filing applications physically, and that the actual date of filing a refund claim would begin on that date, when the application and supporting documents were physically submitted, rather than when they were entered into the portal and acknowledged.

Issue

Whether the period of two years for filing refund claim under Section 54 of the CGST Act would be applicable from the  date of filing application on common portal or from the date of submitting physical copy of refund application uploaded on common portal?

Held

The High Court observed that Section 54 (1)  the CGST Act, provides  a mechanism wherein, a person seeking refund of tax and interest may submit an application before the expiry of two years from the following  date in the form and manner specified.
The High Court further observed that though the CGST Act does not prescribe any condition for manual submission, however the specific condition was mandated by the Circular.  prior to the insertion of Explanation (2) (ba) by the Finance Act of 2022, the relevant date in case of goods being exported out of India by land, would be the date on which such goods pass the frontier and in case the goods are being exported outside India, the date of receipt of payment in convertible foreign exchange or in Indian Rupees or issue of invoices. 

The High Court relied upon the judgments passed by the Hon'ble Supreme in the case of Commissioner of Central Exercise, Bolpur Vs. Ratan Melting & Wire Industries [Civil Application No. 4022 of 1999] and J. K. Lakshmi Cement Ltd. Vs. Commercial Tax Officer, Pali [Civil Application No. 102 of 2010] held that .that the date of filing of the application by the petitioner on common portal would be liable to be treated as date of filing claim for refund to the satisfaction of requirement of Section 54 of the CGST Act and Rule 89 of the CGST Rules. The procedure evolved in the Circular cannot operate as a delimiting condition on the applicability of statutory provisions.

Relevant Provisions

Section 54 of the CGST Act

Refund of Tax-

(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of subsection (6) of section 49, may claim such refund in such from and manner as may be prescribed. Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of subsection (6) of section 49, may claim such refund in such from and manner as may be prescribed. 

(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of two years from the last day of the quarter in which such supply was received. 

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the 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. 

(4) The application shall be accompanied by—

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and 

(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. 

(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57. 

(6) Notwithstanding anything contained in subsection(5)...... 
(7) The proper officer shall issue the order under.... 
(8) Notwithstanding anything contained in subsection (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- 
(a) .... 
(b) .... 
(c) .... 
(d) .... 
(e) .... 
(f) .... 
4(8A) The Government may disburse the refund of the State tax in such manner as may be prescribed. 

(9) Notwithstanding anything to the contrary contained... 

(10) Where any refund is due to a registered person.... 
(a) .... 
(b) .... 
(11) ..... 
(12) ..... 
(13) ..... 

(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

Explanation. -- For the purposes of this section, -- 

(1) "refund" includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under subsection (3). 

(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 inputs or input services used in such goods, -- 

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or 
(ii) if the goods are exported by land, the date on which such goods pass the frontier; or 
(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of- 

(i) receipt of payment in convertible foreign exchange, or in Indian rupees wherever permitted by the Reserve Bank of India where the supply of services had been completed prior to the receipt of such payment; or 
(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

(e) in the case of refund of unutilised 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;

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and 

(h) in any other case, the date of payment of tax.

Rule 89(3) of the CGST Rules

(3) Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed.