In a major relief to Gillette, the Madras High Court has held that the refund claim cannot be denied citing retrospective operation of proviso to Rule 90(3) Of CGST Rules.
The bench of Justice C.Saravanan has observed that the Proviso to Rule 90(3) was inserted with effect from 18.05.2021 vide Notification No.15/2021-CT dated 18.05.2021. It was not in the statute where refund claims were originally filed or later represented. Therefore, it cannot be given retrospective effect.
Rule 90(3) of the CGST Rules, 2017 states that if a refund claim has deficiencies, the officer will notify the applicant via FORM GST RFD-03. The applicant must then submit a fresh refund application after correcting the issues. The Proviso to Rule 90(3) ensures that the time taken from the initial refund claim (FORM GST RFD-01) until the deficiency notice (FORM GST RFD-03) is issued does not count toward the two-year limit under Section 54(1) for filing a corrected refund claim.
The petitioner/assessee sought the direction to extend the benefit of proviso introduced under Rule 90(3) of the Central Goods and Services Tax (CGST) Rules, 2017 to exclude the number of days from the date of filing of refund claim to the date of issue of Deficiency Memo for the purpose of computation of limitation and also direct the Joint Commissioner of GST and Central Excise (Appeals-II) to reconsider the refund claim.
These refund claims were filed by the petitioner for refund of unutilized Input Tax Credit on the supplies under Section 16(3)(a) of the Integrated Goods and Services Tax (IGST) Act, 2017 read with Section 54 of the Central Goods and Services Tax (CGST) Act, 2017 and Rules 89 and 90 of the Central Goods and Services Tax (CGST) Rules, 2017.
The petitioner was issued with Show Cause Notices to show cause as to why the refund claims should not be rejected on the ground that they were filed beyond the period of limitation under Section 54 of CGST Act, 2017.
The computation of limitation were to be reckoned from the date of re-presentation of the refund claims on 18.10.2019 and were thus beyond the period of two years from the “relevant date” in terms of Explanation 2(a)(i) to Section 54 of the CGST Act, 2017.
The expression “relevant date” has been defined in Explanation 2 to Section 54 of CGST Act, 2017. It is submitted that as per Clause 2(e) to Explanation to Section 54 of CGST Act, 2017, in case of refund of unutilized Input Tax Credit under Clause (ii) to the 1st proviso to Sub-Section 3 to Section 54, the limitation prescribed is 2 years for filing refund claim from the end of the Financial Year.
It is, therefore, submitted that the refund claims filed by the petitioner were in time and were before the expiry of 2 years from the end of the financial year.
Even otherwise admittedly the refund claims were filed on 21.09.2018, 09.10.2018, 10.10.2018, it was prior to expiry of two years from the “relevant date” as is contemplated under Section 54(1) read with Explanation 2(a) to Section 54 of CGST Act, 2017 as it stood at the time of filing of the respective refund claims.
The petitioner submitted that petitioner would submit that Explanation 2(e) to Section 54 of CGST Act, 2017 was amended vide CGST Amendment Act, 2018 (31/2018) dated 30.08.2018 only with effect from 01.02.2019 vide Notification No.02/2019-CT dated 20.01.2019.
The department contended that the “relevant date” for the purpose of making refund claim was as per the Explanation 2(a)(i) to Section 54 of CGST Act i.e., from the date of export and thus, the refund claims ought to have been filed within two years from the date of export i.e., in 2019. The Department has reckoned the date of refund claim as 18.10.2019 being the date of refiling of the refund claims after the Deficiency Memos were issued on 12.04.2019.
The court held that the stand of the Department is not correct. That apart, legitimate export incentives are to be granted as long as there is a substantial compliance to the provision.
Case Details
Case Title: M/s.Gillette Diversified Operations Versus The Joint Commissioner of GST and Central Excise
Case No.: W.P.Nos.6524, 6527, 6531, 6537 and 6541 of 2022 and W.M.P.Nos.30903, 30908, 30910, 6611, 6630 and 6634 of 2022
Date: 05.02.2025
Counsel For Petitioner: G.Natarajan
Counsel For Respondent: S.Gurumoorthy
