The Goods and Services Tax Appellate Tribunal (GSTAT), Dehradun, has directed the refund of ₹4,32,225 to a homebuyer whose flat booking was cancelled, holding that the tax authorities wrongly rejected her claim as time-barred without accounting for the COVID-related exclusion from the limitation period.
The Bench of Naresh Katyal (Judicial Member) and Amand Shah (Technical Member) set aside the adjudication and first appellate orders rejecting the refund. It directed payment of the amount forthwith, along with interest at the applicable rates calculated after the expiry of 60 days from the filing of the refund application on March 9, 2023.
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The dispute arose from Priyaja Dhondiyal’s booking of a residential flat in the “Green View Blossom” project at Sahastradhara Road, Dehradun, developed by Phoolchand Infrastructure Private Limited.
Under a tripartite agreement dated September 6, 2017, she opted for a construction-linked payment plan. She paid ₹36,01,875 towards the basic value of the flat, together with ₹2,16,112.50 each towards CGST and SGST, bringing the total GST payment to ₹4,32,225.
Following cancellation of the agreement, the developer returned ₹35,03,400. However, the GST component was not refunded because the statutory period for issuing a credit note under Section 34 of the Central Goods and Services Tax Act, 2017, had expired.
The homebuyer consequently sought recovery of the tax under the category of refund for unregistered persons.
The Assistant Commissioner, CGST Division, Dehradun, rejected the claim on March 21, 2024. The Joint Commissioner, CGST (Appeals), Dehradun, upheld that decision on April 24, 2025, prompting the appeal before GSTAT.
The homebuyer submitted that she had consistently pursued recovery of the GST amount.
She lodged a grievance on the Chief Minister’s Helpline on May 23, 2021. In September 2022, the department informed her that an inquiry had been initiated concerning the tax collected by the developer and its deposit with the government.
On January 17, 2023, the department advised her to proceed under CBIC Circular No. 188/20/2022-GST dated December 27, 2022, which prescribed the procedure for refund claims by unregistered persons in circumstances including cancellation of flat bookings.
She thereafter filed the formal refund application on March 9, 2023.
The department defended the rejection orders, maintaining that they conformed to the statutory provisions and government instructions.
The central issue was whether the refund application fell within the two-year limitation period prescribed by Section 54(1) of the CGST Act.
The Tribunal considered November 1, 2019, as the cancellation date for its limitation calculation. It also examined the developer’s communication dated March 9, 2020, concerning revocation of the agreements.
It held that the authorities had overlooked Notification No. 13/2022-Central Tax dated July 5, 2022. The notification excluded the period from March 1, 2020, to February 28, 2022, when computing limitation for refund applications under Sections 54 and 55.
Applying that exclusion, the Tribunal found that approximately four months had elapsed between cancellation in November 2019 and the beginning of the excluded period. Limitation resumed after February 28, 2022, and the refund application was filed on March 9, 2023.
On that calculation, the effective period consumed was approximately one year, four months and nine days—within the prescribed two years.
The Bench held that failure to consider the notification’s legal effect had caused manifest injustice to the homebuyer.
The Tribunal also examined the December 2022 circular governing refund applications by unregistered persons.
The circular explains that, where a long-term contract is cancelled before completion of the service, the date on which the supplier issues the cancellation letter is treated as the relevant date for determining limitation under the specified provision of Section 54.
The Bench observed that the homebuyer had already pursued her claim through the CM Helpline in May 2021, well before the circular was issued. The department had responded to that grievance and subsequently directed her to use the procedure prescribed by the circular.
It held that the circular could not be applied retrospectively in a manner that prejudiced her rights. At the same time, it found that the refund procedure prescribed by the circular covered her circumstances and was binding on departmental officers.
The Tribunal took account of her prompt pursuit of the claim, observing that an individual homebuyer might not be familiar with the technical requirements of the law.
After deciding limitation in the homebuyer’s favour, the Tribunal independently examined whether the refund was admissible on merits.
It reviewed the allotment letter, agreements, GST receipt vouchers, the developer’s ledger account, cancellation correspondence, Statement 8 and the refund application in Form GST RFD-01.
The Bench found that the developer had collected the CGST and SGST amounts from the homebuyer and deposited them with the government through its GST returns.
It further held that the information required under Statement 8 was already on record and that all substantive conditions under Rule 89(2) of the CGST Rules had been satisfied.
These findings established both that the homebuyer had borne the tax and that the amount claimed had reached the government.
The Tribunal rejected any concern regarding unjust enrichment, holding that the homebuyer was the ultimate consumer of the residential flat and had herself borne the GST burden.
It therefore allowed the appeal, set aside both rejection orders and directed the refund of ₹4,32,225 forthwith.
The Bench also awarded interest at the applicable rates, reckoned after 60 days from the refund application dated March 9, 2023.
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