Refund application cannot be rejected by the Department without recording reasons in order

The Hon'ble Madras High Court in M/S. GNC Infra LLP v. Assistant Commissioner [W.P.No.18165 & 18168 of 2021 and WMP. Nos. 19386 & 19389 of 2021, dated September 28, 2021] set aside the orders rejecting refund application, solely on the ground that reasons for rejection of refund have not been recorded in writing in accordance with Rule 92 of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules") and remanded back the matter to Revenue Department for reconsideration and directed to complete the exercise expeditiously.

Facts

These writ petitions have been filed by M/S. GNC Infra LLP ("the Petitioner") against the order passed by the Assistant Commissioner ("the Respondent") rejecting refund applications, vide order dated July 26, 2021 and July 28, 2021 ("Impugned Order"), filed under Section 54 of Central Goods and Services Tax Act, 2017 ("the CGST Act") pertaining to June, 2018 and August, 2018.

The Petitioner contended that, the Petitioner has the benefit of suo-motu order of Hon'ble Supreme Court of India in Re: Cognizance for extension of limitation [Miscellaneous Application No. 665/2021 in SMW(C) No. 3/2020, dated April 27, 2021] that extended the limitation period for the filing of cases in Courts and Tribunals w.e.f. March 14, 2021 until further orders in view of the steep rise in COVID-19 cases due to second wave of the COVID-19 virus pandemic, considering the challenges faced by the litigants on account of COVID 19 and restored the order dated March 23, 2020 which directed to extend the period of limitation for filing of cases prescribed under general or special laws with effect from March 15, 2020.

Issue

Whether the refund application filed by the Petitioner can be rejected, considering the benefit of above-mentioned suo-motu order of Hon'ble Supreme Court?

Held

The Hon'ble Madras High Court in W.P.No.18165 & 18168 of 2021 and WMP. Nos. 19386 & 19389 of 2021, dated September 28, 2021 held as under:

• Observed that, the refund applications were made beyond the two years period.
• Relied on the order of the Hon'ble Supreme Court of India in Re: Cognizance for extension of limitation (supra).
• Noted that, the Hon'ble Supreme Court took suo-motu cognizance of the situation arising out of the challenge faced by the country on account of COVID-19 Virus and resultant difficulties that could be faced by the litigants across the country and it was directed vide Order dated March 23, 2020 that the period of limitation in filing petitions/ applications/ suits/ appeals/ all other proceedings, irrespective of the period of limitation prescribed under the general or special laws, shall stand extended with effect from March 15, 2020 till further orders.
• Remanded back the matter to the Respondent for considering the refund application de novo and make an order inter alia in accordance with Rule 92 of the CGST Rules and Section 54(8)(b) of the CGST Act.
• Set aside the Impugned Order solely on the ground that reasons for rejection of refund have not been recorded in writing in accordance with Rule 92 of the CGST Rules.
• Directed the Respondent to examine the refund applications de novo and make orders afresh inter alia in accordance with Section 54 of CGST Act and Rule 92 of the CGST Rules and complete the aforementioned exercise as expeditiously as possible, within six weeks or before.