Nitrex Chemicals India Ltd Vs Assistant Commissioner Goods And Service Tax

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

1. Heard learned advocate Mr. Punit B. Juneja for the petitioner and learned advocate Mr. Utkarsh R. Sharma for the respondent.

2. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for direction to the respondent to refund the compensation cess that has gone into as an input to the goods exported in the Financial Year 2017-2018 as per the provisions of section 54 of the Central/State Goods and Service Tax Act, 2017 (For short “the GST Act”).

3. Brief facts of the case are that the petitioner was exporting Nitrocellulose to various countries across the world as per the provisions of Section 54 of the GST Act read with section 16 of the Integrated Goods and Service Tax Act,2017 (For short “the IGST Act”). The petitioner was entitled to refund of the IGST paid on the zero rated supplies in form of export which have been undertaken by the petitioner from July, 2017 onwards after coming into force of GST Act from 01.07.2017.

4. It is the case of the petitioner that application for refund of IGST was filed by the petitioner on 15.06.2020. The respondent authority did not grant the refund application from July 2017 to March 2018 on the ground that the petitioner had filed refund application beyond the relevant period as per Explanation (2) to section 54 of the GST Act. The petitioner therefore, being aggrieved has preferred this petition.

5. Learned advocate Mr. Punit Juneja for the petitioner submitted that the delay on part of the petitioner was inadvertent and therefore, the petitioner should not be deprived of its rightful claim of refund as per the provisions of the GST Act. It was further submitted that as per Circular No.06/2020 dated 03.02.2020, time period for filing of the return was extended upto 05.02.2020 and as the petitioner has filed refund application on 15.06.2020, same would fall within the relevant period and the respondent ought to have granted the refund for the period from July, 2017 to March,2018.

6. In support of his submission, reliance is placed upon the decision of Punjab and Haryana High Court in case of M/s. Proxima Steel Forge Pvt Ltd. v. Union of India and others in CWP-21975-2024 decided on 03.10.2024 wherein refund application was rejected on the ground of limitation after the appeal was allowed by the Joint Commissioner setting aside the order of rejection of the refund claim on the ground that subordinate officer could not have refused to examine the case on merits when remanded.

7. Reliance was also placed on the decision of Madras High Court in case of M/s. Lenovo (India) Pvt. ltd. Rep. By its Authorised Signatory Mr. Seiyadou Ahamadou v. the Joint Commissioner of GST (Appeals-1) (Judgment dated 06.11.2023 rendered in W.P. Nos. 23604 and 23605 of 2022) wherein it is held that reading section 54(1) of the GST Act would make it clear that assessee can make application within two years and the term used in the said section “may make application before two years from the relevant date in such form and manner as may be prescribed” which means that the assessee may make application within two years and it is not mandatory that the application has to be made within two years and in appropriate cases, refund application can be made even beyond two years.

8. It was therefore, submitted that when the petitioner has preferred an application for refund beyond the period of two years, delay in filing the application may be condoned as the petitioner is otherwise entitled to refund as per the provisions of section 54(3) of the Act.

9. Reliance was also placed on Circular No.45/19/2018-GST dated 30.05.2018 wherein clarification on refund related issues are made by the Central Board of Indirect Taxes and Customs (CBIC). Relying upon the said circular, it was submitted that the petitioner is required to file refund claim for tax period only after filing the details in Form GSTR-1. It was therefore, submitted that considering the date of filing the Form GSTR-1, the application for refund filed by the petitioner would be within period of two years. It was therefore, submitted that the petitioner is entitled to the refund as per the said circular.

10. On the other hand, learned advocate Mr. Utkarsh Sharma appearing for the respondent authority submitted that there is no dispute with regard to the fact that the petitioner had exported goods from July, 2017 to March, 2018 and application for refund was filed on 15.06.2020 and for the said period, the application for refund was beyond the prescribed beyond of years as per the provisions of section 54(1) of the Act.

11. In support of his submission, reliance was placed on the following averments made in the affidavit in reply on behalf of the respondent authorities:

“On reading of the above mentioned provisions, it is clear that section 54 (1) provides the time limit to file a refund within two years from the relevant date which is ample amount of time to file the refund applications for any given period. Honble High Court of Gujarat in its order dated 15.12.2011 in the case of IOC Ltd. Vs. UOI (SCA No. 12074/2011) while dealing the similar issue of refund in case of excise while interpreting the provisions of section 11 B of Central Excise Act, 1944 has held as under:

“We are unable to uphold the contention that such period of limitation was only procedural requirement and therefore could be extended upon showing sufficient cause for not filling the claim earlier. To begin with, the provisions of Section 11 B itself are sufficiently clear. Sub-section (1) of Section 11 E, as already noted, provides that any claiming refund of any duty of excise may make an application for refund of such duty before the expiry of one year from the relevant date. Remedy to claim refund of duty which is otherwise in law refundable therefore, comes with a period of limitation of one year. There is no indication in the said provision that such period could be extended by the competent authority on sufficient cause being shown. Secondly, we find that the Apex Court in the case of Mafatlal Industries Ltd. V. Union of India (1997) 5 SCC 536 had the occasion to deal with the question of delayed claim of refund of Customs and Central Excise. Per majority view, it was held that where refund claim is on the ground of the provisions of the Central Excise and Customs Act where under duty is levied is held to be unconstitutional, only in such cases suit or writ petition would be maintainable. Other than such cases, all refund claim must be filed and adjudicated under the Central Excise and Customs Act, as the case may be. Combined with the said decision, if we also take into account the observations of the Apex court in the case of kriloskar Pneumtic Company (supra), it would become clear that the petitioner had to file refund claim as provided under section 11 B of the Act and even this court would not be in a position to ignore the substantive provisions and the time limit

6.2 With reference to Ground B of the petition, it is submitted that the petitioner is entitled for claim of refund under the category of refund of unutilized ITC/cess used in making zero rated supplies of goods (exports)/services for export and to SEZ under section 54 (3) (i) of CGST Act, 2017 subject to the provisions of sub-section (10) of Section 54 of CSGT Act, 2017 provided that application for such refund may be filed within the expiry of two years from the relevant date as per Section 54(1) of CGST Act, 2017.

6.3 With reference to Ground C of the petition, it is submitted that the petitioner’s claim that the delay in filing of refund for the tax period from July, 2017 to March, 2020 due to nationwide lockdown announced in March 2020 due to Covid-19 pandemic cannot be sustainable as lockdown was announced in the month March, 2020 whereas the last date of filling of refund claim application for the period from July, 2017 to February, 2020 was ends on 20.03.2020 well before of lockdown. It is to mention that on 31.03.2020, keeping in view the situation arising out of COVID-19, an ordinance THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020 was promulgated by the Hon’ble President inserting section 168A in CGST Act, 2017 for granting power to the Government to extend time limit in special circumstances. Accordingly, Notification No. 35/2020-Central Tax dated 03.04.2020 was issued vide which due date for filing of refund application specified in, or prescribed or notified under GST Act, falls during the period from the 20th march, 2020 to 29th june,2020 was extended upto 30th June, 2020. Therefore, the due date for filling of refund claim for the period of March 2018 was extended upto 30.06.2020. In view of the above, the petitioner was eligible for the refund of tax period March, 2018 only. Accordingly, the eligible amount of refund for the period of March, 2018 amounting to Rs. 6,19,302/ – was sanctioned and the remaining amount amounting to Rs. 45,61,806/- was rejected on the ground of limitation.

6.4 With reference to Ground D of the petition, it is submitted that Section 54(1) of CGST Act, 2017 provides that the petitioner to file the refund application within the period of two years from the relevant date and every claim filed within the time limit prescribed in the law is considered and processed as per the Rule 89 of CGST Rules, 2017 and as per Section 54 of the CGST, Act 2017. Any refund claim which is filed beyond the time period prescribed by statute cannot be granted

6.5 With reference to Ground E of the petition, it is submitted that the CGST, Act 2017 came in effect from 01.07.2017, and it has since provided many relaxations to the petitioner regarding filing of returns, refund application etc. In this case the petitioner was given relaxation in the date of filing of refund application for the month of March, 2018 from 20.04.2020 to 30.06.2020 and due to that relaxation in filing of refund application the refund amount of Rs. 6,19,302/- became eligible, otherwise that would have also been ineligible. The Law is always working towards the welfare of the taxpayers of this country and it considers the demands of taxpayers through various GST council meetings, by way of Circulars and Notifications issued from time to time. In such matter, Hon’ble Supreme Court in the case of Collector Land Acquisition Anantnag & others vs. Ms. Katji & Others reported in 1987 (28) ELT 185 (SC) has held that when delay is within condonable limit laid down by the statute, the discretion vested in the authority to condone such delay is to be exercised following guidelines laid down in the said judgment. But when there is no such condonable limit and the claim is filed beyond time period prescribed by statue, than there is no discretion to any authority to extend the time limit.

6.6 With reference to Ground F of the petition, it is submitted that Every refund application including zero rated supplies including exports out of India have to be processed in accordance with the provisions laid down under section 54 of CGST Act, 2017 and Rule 89 of CGST Rule, 2017 and the refund application filled by the petitioner has been processed in accordance with the provisions of section 54 of CGST Act, 2017 read with Rule 89 of CGST Rules, 2017 as prescribed for the purpose.

6.7 With reference to Ground G of the petition, it is submitted that the rejected refund amount is re-credited in the credit ledger of the petitioner in respective heads i.e. CGST/SGST/IGST/Cess by way of issuing PMT-03 as per sub-rule (4) of Rule 86 of CGST Rules, 2017 and the same can be used for payment of tax by the petitioner.”

12. It was further submitted that the petitioner filed refund application for tax period from July 2017 to March, 2018 on 15.06.2020 and the last date for filing refund application for the period July, 2017 was 25.08.2019 and for the period February, 2018 was 20.03.2020 and till then national lock-down was not announced due to Covid-2019 pandemic and the petitioner had ample time to file refund application for the said period. It was submitted that as per section 54(1) of the GST Act, time limit to file refund is within two years from the relevant date and there was ample time to file refund application for the said period. Reliance was placed on the decision of this Court in case of IOC Ltd. v. UOI rendered on 15.12.2011 in Special Civil Application No.12074/2011 in support of his submission.

13. It was therefore, submitted that the petitioner is not entitled to the refund for the period from July, 2017 to March, 2018.

14. Having heard the learned advocates for the respective parties and on perusal of the material placed on record, the contention raised on behalf of the petitioner to apply the provisions of section 54(1) for extending the relevant date upto the date of filing of the return cannot be accepted.

15. Section 54(1) reads as under:

“Section 54. 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:..”

16. Relevant date is explained in Explanation to section 54 as under:

“(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…..”

17. On conjoint reading of Explanation 2 with Section 54(1), it is clear that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, has to make application before the expiry of two years from the relevant date and as per Explanation 2, relevant date means in the case of goods exported out of India is the date on which such goods are loaded either in Ship or aircraft, leaves India is the relevant date. Therefore, in the facts of the case relevant date for the goods exported by the petitioner would be from the date of shipping mentioned in the shipping bills. Therefore, period of two years is required to be calculated from the date of shipping.

18. The respondent authorities have granted the refund to the petitioner with regard to the shipping bills which are falling within the period of two years prior to the date of filing of the refund application on 26.06.2020 in respect of shipping bills from July, 2017 to March, 2018.

19. This Court in decision in case of IOC Limited (supra) while dealing with the similar issue of refund in case of excise while interpreting the provisions of section 11B of the Central Excise Act, 1944 has held as under:

“We are unable to uphold the contention that such period of limitation was only procedural requirement and therefore could be extended upon showing sufficient cause for not filing the claim earlier. To begin with, the provisions of section 11B itself are sufficiently clear. Sub-section (1) of section 11B, as already noted, provides that any person claiming refund of any duty of excise may make an application for refund of such duty before the expiry of one year from the relevant date. Remedy to claim refund of duty which is otherwise in law refundable therefore, comes with a period of limitation of one year. There is no indication in the said provision that such period could be extended by the competent authority on sufficient cause being shown.

Secondly, we find that the Apex Court in the case of Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 had the occasion to deal with the question of delayed claim of refund of customs and central excise. Per majority view, it was held that where refund claim is on the ground of the provisions of the Central Excise and Customs Act where under duty is levied is held to be unconstitutional, only in such cases suit or writ petition would be maintainable. Other than such cases, all refund claims must be filed and adjudicated under the Central Excise and Customs Act, as the case may be. Combined with the said decision, if we also take into account the observations of the Apex Court in the case of Kirloskar Pneumatic Company (supra), it would become clear that the petitioner had to file refund claim as provided under section 11B of the Act and even this Court would not be in a position to ignore the substantive provisions and the time limit prescribed therein.”

20. In view of above decision wherein decision of Hon’ble Apex Court in case of Mafatlal Industries Ltv. v. Union of India reported in (1997) 5 SCC 536 has been followed with respect to the delayed claim of refund of custom and excise wherein it is held that where the refund application is on the ground of provisions of Central Excise and Customs Act where under duty is levied is held to be unconstitutional, only in such cases suit or writ petition would be maintainable. Therefore, in facts of the case, refund claim of the petitioner was required to be filed as per the provisions of section 54(1) of the GST act only.

21. The contention raised on behalf of the petitioner that as per the provisions of section 54(3), relevant date would be the date of filing the return under the provisions of GST Act cannot be accepted in view of Explanation 2 to section 54 of the GST Act. As the petitioner has failed to file the refund claim within the prescribed period of two years from the relevant date, the respondent authority has rightly rejected such refund claim as being time barred.

22. In view of foregoing reasons, petition fail and is accordingly dismissed.