Goods & Services Tax (GST) in IndiaITC cannot be denied due to late filing of the Refund Application due to technical glitches

The Delhi High Court in M/S SETHI SONS (INDIA) vs.  ASSISTANT COMMISSIONER AND ORS., [W.P.(C) 4179/2022 decided on 22.12.2023] allowed  the refund of ITC to the taxpayer, despite being filed beyond the prescribed period, due to technical glitches faced by the taxpayer.

FACTS

M/s. Sethi Sons (India) (hereinafter referred to as the “Petitioner”), in the business of import and export of goods and services. The Petitioner had exported eight consignments during July 2017 to March 2018.

The Petitioner attempted to file an application for a refund of unutilized ITC for the month of August 2017 on 14.05.2018. However, due to a technical glitch encountered on the GST portal, the Petitioner could not complete the online filing of the refund application.

 Despite multiple attempts, the petitioner was unable to complete the process and resorted to lodging a complaint on the GST portal under GST Redressal Section.

The Petitioner later filed a consolidated refund application in Form GST RFD-01 on 05.02.2020, claiming a total refund of ₹13,43,757/- (Rupees Thirteen Lakhs Forty Three Thousand Seven Hundred Fifty Seven Only). However, the claim was rejected under Section 54(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) on the ground that the refund application was filed beyond the limitation period vide Order dated 11.03.2020 (hereinafter referred to as the “Original Order”).

The Petitioner preferred an appeal against the Original Order, but was rejected by the Appellate Authority vide order dated 06.08.2021 (hereinafter referred to as the “Impugned Order”).

Hence, being aggrieved by the Impugned Order, the Petitioner has filed the present Petition.

ISSUE BEFORE THE HIGH COURT

Whether the refund application filed by the Petitioner is barred by limitation as prescribed under Section 54 of the CGST Act?

CONTENTIONS

The Petitioner contended that the Authorities had failed to consider that the applications could not be filed within the stipulated time period due to the  technical glitches faced by the Petitioner.

The Petitioner argued that in case of technical glitch, a refund cannot be denied. Moreover, the right of refund is a vested right and hence, cannot be rejected on technical grounds.  .

The Respondents argued that the Petitioner had directly filed the consolidated refund application on 05.02.2020, whereas, the complaint was filed in 2018. Therefore, the Petitioner had failed to file any application for the intertwining period. It was argued that for such issues, the Petitioner could have filed the refund application manually.

DECISION AND FINDINGS 

The Delhi High Court examined the provision of  Section 54 CGST Act. It was further observed that the refund application was to be filed electronically in accordance with the Rule 89(1) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the “CGST Rules”).

The relied on Ezzy Electricals v. State of Gujarat, [R/SCA No. 13091/2020, decided on 16.02.2022] and held that a refund application cannot be denied merely due to a technical glitch.

 of the High Court further relied upon M/S Lenovo India Pvt. Ltd. The Joint Commissioner of GST (Appeals-1) & Ors 2023 SCC OnLine Mad 7810 and held that limitation under Section 54 of CGST Act is directory and not mandatory. Hence, refund cannot be denied on account of delay.

The High Court allowed the petition and directed the Respondents to verify and process the refund claims of the Petitioner due to bonafide approach of the Petitioner.

AMLEGALS REMARKS 

The Delhi High Court allowed the refund application filed beyond the limitation period due to technical glitches faced by the taxpayer.  Moreover, when a taxpayer is diligent and has bonafide approach towards his right to refund, the refund cannot be denied on technical grounds.

Furthermore, the limitation period prescribed under Section 54 of the CGST Act is directory in nature and not mandatory in nature.

– Team AMLEGALS assisted by Mr. Agresh Sharma