Belated refund applications can be filled legally in light of SC order’s on extension of period of limitation
Vide sou motu order dated 23.03.2020, Hon’ble Apex court of India extended the period of limitation for ‘CERTAIN’ proceedings w.e.f. 15th March 2020 till further orders. The sunset clause to this sine die order was brought vide the order dated 08.03.2021 and the open ended extension was capped till 14.03.2021 with certain relaxations for smooth implementation thereof. Now again considering the second wave, Hon’ble Apex court on 27.04.2021 has restored its original order wherein the period of limitation has been extended till further orders. Additionally, certain clarification is also provided vide the latest order.
Views are split on the topic, whether or not refund applications shall stand benefited from the order. Sharply there are two school of thoughts which are deciphering the applicability of the said order. The first hallows the said judgement as a full packaged health kit which would help to cure everyone suffering from any injury. The second however, appears to interpret the order very cautiously and neatly to conclude that the said order is a rare elixir to cure specific injuries that too of specific inpatients only. In our opinion, SC order is applicable on refund applications as well and the same is discuss in length in this article.
In order to arrive at a sound conclusion, it is important to understand the objective sort to be achieved by the order, the legal scope of the terms used in the order and the interpretation is in conformity with Article 14 : Right to equality.
Objective of the order
The operating portion of the order can be split into three parts viz.
A) The circumstances that lead to such order: The circumstances are so catastrophic that they have affected every individual assessee in India or infact every person on the globe itself.
B) The relief offered by the order: The relief offered, has included in its ambit every procedure that could possibly be undertaken at any stage of litigation i.e. appeal, suit and application. Apart from these broad headings, the relief also includes a residual heading of “all other proceeding” to spread the ambit further wide open.
C) The spectrum of relief offered: Most importantly the spectrum of relief is so herculean that it covers even the non-condonable proceedings, that too under both general and special laws. At this juncture it is important to recall the judgement in case of Glaxo Smith Kline Consumer Health Care Ltd. (2020 (36) G.S.T.L. 305 (S.C.), wherein Hon’ble Apex court had categorically held that courts cannot entertain writ petitions beyond the condonable period (except in cases of violation of natural justice or noncompliance of statutory requirement). Despite such judgement, Apex court granted the wide extension on even non condonable proceedings. This indeed hints that the approach adopted by Apex court, appears to be the one of ‘granting maximum relief’.
Liberal or conservative, undisputedly either of the interpretations must satisfy to have a liaising thread connecting all the three parts of the order. Any logical interpretation of the order should not orphan the alpha and omega of the order. Thus, referring the three parts in unison the true essence of order would clearly direct towards the single objective of ‘mass benefit to overcome catastrophic situation’.
Terms used in the order
Now let’s dissect the moot portions of the order. The top two grey areas in the order are the terms, “litigants” and “all other proceedings”. In case of “litigants”, it is being advocated that the cautious use of term “litigant” is reducing the scope of relief only to those assessees who are already in the disputed stage of litigation. Implying, initiation of prospective litigation from one party is not covered by the term “litigant” like, ‘filing of refund application’. The litigation in such case is yet to begin and it is merely at the stage of institution of refund proceedings. Further, it is argued that the term “all other proceedings” does not include GST proceedings as Section 162 of CGST Act, prohibits jurisdiction of civil court on any matter related to GST except for Appeals to court. Refund ‘application’ (and not appeal) in specific is argued not to be a judicial proceeding in light of section 162. These might appear canny arguments on the face, but do such interpretations satisfy the overall objective of the order ? Apparently not. This can be better understood with an example.
Say XYZ company is into 100% exports of certain goods. It frequently files its refund applications. However, owing to disturbances of COVID pandemic it failed to file certain refund application within time and also missed the deadline to file one appeal against certain refund rejection order for earlier period. Now, the same company will be in the shoes of “Applicant” for missed refund applications and “litigants” in case of missed appeal as per the above interpretations. Also filing of refund application won’t be a judicial proceeding but filing an appeal would. Thus, although the company faced exactly same difficulties (as concerned in the order) in both cases, it shall be benefited by the order only in one case but in other it won’t. This apparently appears to be discriminative approach to irrationally categories the beneficial sector. The same logic would stand in case of different assesses. If such interpretation is accepted then it would be destructive to the very objective sought to be achieved vide the order, which appears to be of mass relief.
Now, let us refer the meaning of terms “Litigants” and “proceedings”.
Litigant: Litigant is a party to a law suit; one engaged in litigation; usually spoken of active parties, not of nominal ones. -Black’s Law Dictionary
Suit: In its comprehensive sense the word ‘suit’ is understood to apply to any proceeding in a court of justice by which an individual pursues that remedy which the law affords. The modes of proceedings may be various but that if a right is litigated between parties in a court of justice the proceeding by which the decision of the Court is sought may be a suit. -SC [Pandurang R. Mandlik V. Shantibai R. Ghatge. 1989 AIR 2240]
Proceeding: “Proceedings” alone is a very comprehensive term and generally speaking means a prescribed course of action for enforcing a legal right. Shorter Oxford Dictionary defines it as “carrying on of an action at law, a legal action or process, any act done by authority of a court of law; any step taken in a cause by either party”. It indicates a prescribed mode in which judicial business is conducted
– Babu Lal Vs. Hazari lal Kishori Lal and Others 1982 (AIR) 818,
Proceeding: ‘Proceedings’ has may shades of meaning. In its sphere of legal activity, it may embrace entire process from instituting or carrying or action at law beginning with the institution of an action to an action to its culmination in judgment. Such legal action may constitute enforcement of private right, imposition of taxes, or for punishing a person for illegal commission of offences, as defined under various laws.- Gujarat HC [Harish C. Raskapoor and others v. Jaferbhai Mohamedhai Chhatpar] 1987
On perusal of the above interpretations of the terms, it can be observed that “Litigant” includes the party that is instituting a suit. Suit in itself is any remedy that can be enforced in court of law to exercise one’s right and filing a refund application is definitely a right. “Proceeding” on other hand is very wide term which should include ‘instituting refund application’ as well. Above meanings coupled with the objective of the order, should not leave any reservation for refund applications to be covered by the order.
Article 14 : Right to equality
If still any reservation exists, Article 14 might come to rescue for cover the refund application by the said order. Present order has been issued by Supreme court under Article 142 that allows Supreme Court to pass such decree or make such order as is necessary for doing complete justice in any cause or matter. It is thus important that any interpretation of order does not violate Article 14 Right to Equality.
The principle underlying the guarantee of Article 14 Right to Equality, is that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation, and there should be no discrimination between persons having substantially the same circumstances. Palpable arbitrariness in categorising the sector of beneficiary has been held as discriminating by courts and violation of Article 14
In case of Budhan Choudhry Vs. State of Bihar [AIR 1955 SC 191], a Constitution Bench of seven Judges of SC explained the true meaning and scope of Article 14 as follows:
“In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely,
(i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and
(ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question…. It is also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.”
Thus, refund application cannot be rationally distinguished from any other legal proceedings which have been awarded with the extensions in period of limitation. However, the issues which require self assessment and do not warrant any adjudication order to be passed by any authority, can be distinguished from the above class. Thus, the order does not appear to cover GST return filing, tax payment dates, etc. (Rational for refund application shall equally apply to revocation applications too.)
The latest order of Apex court dated 27-04-2021 also falls in line with the above liberal interpretation. The order has cautiously used the term ‘litigant-public’ instead of ‘litigant’ alone. The order has explicitly provided its applicability on quasi-judicial proceedings too. Further, it has been clarified that order is applicable for any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits and termination of proceedings.
In light of Article 142 read with Article 14 and keeping in line the object sort to be achieved with the order all in unison, obstruction of refund application from the applicability of order appears to be discriminative interpretation shrinking the remedy to ad-hoc smaller group. In Author’s opinion refund application is rightly covered by the order and period of limitation for the same stands extended.
(Views expressed are strictly personal. In case of any query, author can be reached at [email protected])