Assistant Commissioner of Central Taxes Vs Merck Life Science Private Limited (Karnataka High Court)
The Hon’ble Karnataka High Court held that: (i) time limit under section 54 is mandatory and not directory; (ii) however; the High court under Article 226 of the Constitution of India has power to condone delay; (iii) the state cannot unjustly enrich itself when tax was paid twice in terms of Article 265 of the Constitution; (v) refers to Supreme Court decision in Salonah Tea; (vi) in the facts of the present case; the delay was rightly condoned and directs the revenue to process the refund claim in 60 days.
The petitioner is exporting services to foreign principal. It paid IGST on such services. Later; it realised it was an “intermediary” and hence; it paid local tax (CGST + SGST). It filed claim for refund of IGST paid under mistake of law. Refund was rejected as time barred. Hence; writ petition came to be filed. The Ld. Single Judge allowed the writ petition: (i) holding refund ought to be granted; (ii) time limit under section 54 is directory and not mandatory. Hence; intra court appeal by the Revenue.
The Hon’ble Karnataka High Court held that: (i) time limit under section 54 is mandatory and not directory; (ii) however; the High court under Article 226 of the Constitution of India has power to condone delay; (iii) the state cannot unjustly enrich itself when tax was paid twice in terms of Article 265 of the Constitution; (v) refers to Supreme Court decision in Salonah Tea; (vi) in the facts of the present case; the delay was rightly condoned and directs the revenue to process the refund claim in 60 days.
