Sakina Tashrifwala
Published on: October 4, 2022 at 19:29 IST
The Andhra Pradesh High Court has overturned Axis Bank’s denial of a GST refund plea and sent the case back to the initial authority.
The division bench of Justices C. Praveen Kumar and A.V. Ravindra Babu referred to a circular dated September 25, 2021, which clarified that the addition of Rule (1A) to Rule 89 establishes a time restriction of two years.
The two-year time restriction would begin on the date the regulation was implemented, not on the date GST was paid.
Axis Bank, the petitioner, is India’s third largest private bank, offering a full range of consumer and business banking services.
The petitioner bank was registered in both Andhra Pradesh and Telangana, with two separate GSTN numbers.
With the introduction of GST, the petitioner transitioned from a single centralised registration under the Service Tax system to state-specific GST registrations with separate GST for each state where it does business.
To make identifying and determining the “Location of Supplier” (LOS) and the “Place of Supply” (POS) easier, the petitioner marked all of the branches in the respective states where the services are given and paid the applicable state’s taxes.
The petitioner claimed that during the system configuration for the introduction of GST, a few Telangana State company locations were incorrectly assigned to Andhra Pradesh.
Thus, the services offered for Telangana office premises were allegedly mapped as being delivered in Andhra Pradesh rather than Telangana State.
Because of improper mapping of a few Telangana office premises to Andhra Pradesh, the petitioner bank’s source system incorrectly recognised the State of Andhra Pradesh as ‘LOS’ instead of Telangana State, for the services performed for such premises.
However, the supply location was appropriately recognised as Telangana.
Instead of CGST and SGST from the Telangana registration, the IGST was paid from the AP GST registration on services delivered by such branches in Telangana.
On 14.02.2020, the petitioner bank submitted reimbursement applications in Andhra Pradesh for IGST paid from July 2017 to August 2019.
According to the petitioner, the sum is Rs. 16,90,41,709. A Show Cause Notice was issued on August 8, 2020, asking the petitioner to explain why the refund claim should not be denied since it is time barred under Section 54.
The question was whether the petitioner’s application was precluded by limitation and if all needed papers were included with the refund applications.
According to the agency, Section 54 of the CGST Act specifies a time restriction for making a claim for reimbursement, and the application must be lodged within that time frame. The claim was brought after the statute of limitations had expired, i.e., after two years, and the authorities correctly dismissed it.
Aside from that, he would present all of the relevant documentation for filing a claim, including invoices, bills, and the information of the branches in respect of which improper payments occurred.
Except for a bald declaration that GST payments were made in the state of Andhra Pradesh when they should have been made in the state of Telangana, no documentation proof to that effect was produced.
Six of the nine claims were filed between July and December of 2017.
The reimbursement claim made in February 2020 was prohibited by limitation, and he would argue that no information has been placed in support of the other claims.
The petitioner claimed that the Ministry of Finance of the Government of India published a Circular dated September 25, 2021, relating to the “Refund of Tax” stipulated in Section 77(1) of the CGST Act and Section 19(1) of the IGST Act.
In this situation, the adjudicating authority determines that the transaction is an inter-State supply, and if ‘A’ pays IGST on the transaction on 10.5.2019, the deadline for filing a refund claim is 23.09.2023.
However, if a specific individual pays IGST on the same transaction on 10.11.2022, that is, after the issuing of Notification No.35/2021, the deadline for submitting it is 09.11.2024.
The court ruled that the department’s whole counter was exclusively in regard to Section 54 of the CGST Act.
The Circular released by the Ministry of Finance in September 2021 could not have been considered by the authorities who passed the order since it had not been issued by the date of the order.