GST refund application is valid even for the period prior to issuance of refund policy for unregistered persons

The Hon'ble Bombay High Court in C.P.Rabindranath Menon v. Deputy Commissioner of State Tax [Writ Petition No. 5131 of 2022 dated April 21, 2023] set aside the order rejecting the refund claim filed by the unregistered person pursuant to agreement for purchase of residential flats and held that the Petitioner should be given opportunity for reconsidering their claim for refund and restored the refund application before the Deputy Commissioner of State Tax for decision.  

Facts

C.P. Rabindranath Menon ("the Petitioner") is an unregistered person who entered into an agreement for purchase of a residential flat. As per the Petitioner he was entitled for refund of taxes paid under the Central Goods and Services Tax Act, 2017 ("the CGST Act"). 

Accordingly, the Petitioner applied for refund to Revenue Department under Section 54 of the CGST Act. 

The Revenue Department rejected the prayer of the Petitioners by stating that the Petitioner is not entitled for refund of the GST in respect of such transactions.

The Petitioner filed the writ before the Hon'ble Bombay High Court and contended that the Revenue Department rejected the refund application by without complying the principle of natural justice.

The Revenue Department contended that, the CBIC has substantially changed the procedure governing refund filed by the unregistered person vide policy document issued dated December 27, 2022.

Issue

Whether the unregistered person can claim refund of GST on cancellation of purchase of flat for the period when there was no policy related to refund for unregistered person?

Held

The Bombay High Court in Writ petition No.5131 of 2022 held as under:

• Noted that, the Petitioner is a flat purchaser and unregistered person. 
• Further noted that, policy governing the application of refund by unregistered person came after the Petitioner filed the refund application.
• Opined that, an opportunity needs to be given to the Petitioner for reconsideration of their claim for refund and entitlement of refund will be decided on merits by the Deputy Commissioner of state tax, after giving adequate opportunity of hearing to the Petitioner.