The Andhra Pradesh High Court while quashing the defect memos, held that the GST refund cannot be denied on limitation when tax was paid by mistake on exempt residential renting.
The bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar set aside defect memos issued by the Central Tax authorities stating that the refund requests were “not fit for processing” due to expiry of the statutory limitation period.
The petitioner/assessee, Nspira Management Services Private Limited inter alia engaged in management of educational institutions, educational consultancy besides providing the same, also engaged in providing hostel accommodation services to students of various educational institutions.
In the process of its business, the petitioner had taken residential dwellings on rent from the respective landlords so as to provide accommodation to the students. As the landlords had been charged tax on the invoices issued by them, the petitioner has been paying tax on the renting of residential dwelling services.
It is the case of the petitioner that the services received by the petitioner from the landlords fall under Entry No.12 of the Exemption Notification No.12 of 2017 – Central Tax (Rate) dated 28.06.2017 under Heading 9963 or 9972. As already stated the petitioner paid tax to its landlords inasmuch as they had been charging tax on the invoices. In view of the Exemption Notification, the petitioner filed refund application dated 01.05.2024 seeking to refund the tax amount of Rs.11,49,32,214/- for the period July, 2017 to January, 2020.
Similarly, for the period February, 2020 to June, 2022, refund application was filed on 29.02.2024. Initially, the respondent authorities issued defect memos informing the petitioner to furnish certain details. Later, by defect memos dated 21.05.2024, it was informed to the petitioner that the refund applications are not fit for processing as the time limit of two (02) years time period for submissions of refund application is already completed.
Questioning the memos, the writ petitions were filed.
The petitioner contended that the question of eligibility of refund cannot be decided by issuance of defect memos as the same requires adjudication in accordance with the procedure contemplated under law. The department has to issue show cause notice in Form RFD-08 and allow the petitioner to file reply in Form RFD-09 and to pass a speaking order in Form RFD-06 as per the procedure contemplated under Rule 92 (3) of CGST Rules, 2017.
The department contended that as per Circular No.125/44/2019-GST, dated 18.11.2019 issued by CBIC once a deficiency memo has been issued, the refund application would not be further processed. It is further contended that as per Section 54 of CGST Act, 2017, an application claiming refund of any tax and interest has to be made within a period of two years from the relevant date in such form and manner as may be prescribed. As per Notification No.13/2022-Central Taxes, dated 05.07.2022 the period from the 1st March, 2020 to 28th February, 2022 is excluded for computation period of limitation for filing refund application under Sections 54 or 55 of the CGST Act.
The court held that the deficiency memos under challenge are set aside and the respondents are directed to consider the application of the petitioner for refund of tax without going into the question of limitation.
Case Details
Case Title: M/S. Nspira Management Services Private Limited Versus Assistant/ Deputy Commissioner Of Central Tax
Case No.: Writ Petition Nos.18287 & 14905 Of 2024
Date: 26.09.2025
Counsel For Petitioner: Pasupuleti Venkata Prasad
Counsel For Respondent: Venna Hemanth Kumar
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