The Bombay High Court has quashed and set aside an order of the Assistant Commissioner of CGST refusing refund of GST paid by a private export company on the ground that the company's application was time barred or not filed within the limitation period prescribed under the Central Goods and Services Tax Act, 2017 (CGST) Act.

A division bench of Justices RD Dhanuka and SM Modak observed that the Supreme Court's decision from March, 2020, extending the time limit prescribed under the general or special laws, for proceedings due to the Covid-19 pandemic, would apply in the present case. 

The SC ordered the duration between March 15 2020 – October 2^, 2021 to be excluded while computing limitation. Therefore, the court directed Assistant Commissioner of CGST to re-consider the petitioner's third refund application on merits as it was filed just before the deadline on September 23, 2021.

The judge quoted from SC's order in Re: Cognizance for Extension of Limitation (Order dated 23rd March 2020), reported in 2020 SCC Online SC 343.

"To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15 th March 2020 till further order/s to be passed by this Court in present proceedings."

This order assumes significance as the GST policy wing had issued a circular interpreting the order to apply only to appeals, reviews, revisions etc., and not to original adjudication. This would come as a huge relief to several businessmen seeking refunds for various reasons from CGST.

Facts of the Case

The petitioner Saiher Supply Chain Consulting Pvt. Ltd challenged Rule 90 of GST Rules according to which refund applications filed under the GST Act must be dismissed if there is any "deficiency." There is no option to cure the defect in the existing application. Another circular dated November 18, 2019 states that the refiled application also has to be filed within the time limit for original application. 

The petitioner represented by Advocate Ishaan Patkar assisted by Advocate Jindagi Shah argued that GST officers were abusing this circular by deliberately dismissing refund applications by issuing unreasoned deficiency memos without any hearing one after the other till the claim fell outside the limitation period. 

He contended that his client filed for refund in August 2020, pertaining to transactions from 2018 and it was rejected for deficiencies. The second application was also rejected citing deficiencies. However, the third application was rejected on November 26, 2020 on the grounds that it was time barred. 

The petitioners sought to quash Rule 90 of the GST Rules as well as to quash the third rejection in view of the SC's order Re: Cognizance for Extension of Limitation (Order dated 23rd March 2020), reported in 2020 SCC Online SC 343.

Advocate Swapnil Bangur for the GST authorities said that the first two applications were filled with defects and rightly rejected while the third plea was time barred and not filed within the two year limitation period. 

Observations

At the outset, the court pointed out a second order of the Supreme Court in the same suo motu case from September 23, 2021. According to the order, the limitation period as prescribed under various acts would resume only from October 3, 2021. 

"In view of the said Order dated 23rd March 2020 and the judgment dated 23rd September 2021 passed by the Hon'ble Supreme Court, the period of limitation falling between 15th March 2020 and 2nd October 2021 stood excluded. In our view also, the period of limitation prescribed in the said Circular under Section 54(1) also stood excluded," the court held. 

It subsequently set aside the November 26, 2020 order rejecting the petitioners third application and directed the plea to be decided afresh by CGST authorities.