LI Network
Published on: November 23, 2023 at 14:35 IST
In a recent ruling, the Madras High Court has determined that the prescribed two-year limitation for filing a Goods and Services Tax (GST) refund application is directory and not mandatory.
Justice Krishnan Ramasamy, presiding over the case of M/s. Lenovo (India) Pvt. Ltd. versus JCIT, highlighted that Section 54(1) of the Central Goods and Services Tax Act (CGST Act) allows the assessee to “make application before two years from the relevant date in such form and manner as may be prescribed.”
The court interpreted this provision to signify that while the application can be made within two years, it is not obligatory to strictly adhere to this timeframe. In specific situations, the court emphasized, refund applications could be entertained even beyond the stipulated two-year period.
The time limit, as per Section 54(1), is characterized as directory and not mandatory. Consequently, the court asserted that the legitimate claim for a refund by the assessee cannot be denied solely on the basis of filing the application beyond the two-year limit, particularly in appropriate cases.
The petitioner in this case, Lenovo (India) Pvt. Ltd., a company engaged in the manufacturing and importing of computers, had applied for a refund of Integrated Goods and Services Tax (IGST) paid, in accordance with Section 16 of the Integrated Goods and Services Tax Act, 2017.
The petitioner’s applications were partially rejected by the tax department, a decision upheld by the Appellate Authority.
Lenovo (India) Pvt. Ltd. contended that their applications for refund were valid, citing their status as a Domestic Tariff Unit (DTA Unit) supplying goods and services to Special Economic Zone (SEZ) units during the relevant months.
The rejection, according to the petitioner, was based on an erroneous consideration of the date of endorsement in Statement-4, and the delay in filing the Revised Statement-4 was deemed time-barred by the department.
The court, while setting aside the findings of the tax department, reasoned that rejection on the grounds of incomplete or inappropriate endorsement was not tenable.
It clarified that the question of filing a claim after two years does not automatically invalidate the claim, and Rule 90(3) of the CGST Act even allows for a fresh application in suitable cases, extending the scope for refund applications beyond the prescribed limitation.
The case was presented by Raghavan Ramabadran for the petitioner and Hemalatha for the respondent. The court’s decision was rendered in W.P.Nos.23604, 23605, and 23607 of 2022.
