Messrs Aculife Health Care Pvt. Ltd. & Anr. Vs Union of India & Ors. (Gujarat High Court)
Conclusion: Since GST on of salary or payment of the bond amount in the event of an employee leaving employment before the minimum agreed period was not taxable as per Circular No.178/10/2022-GST dated 03.08.2022, therefore, assessee-company was entitled to claim refund of GST on the amount of notice pay recovery which was deposited by assessee and the calculation of period of two years would be from the date from which assessee were informed by the Government through the aforesaid Circular.
Held: During July, 2017 to July, 2022, assessee-company had deposited a total sum of Rs.45,14,300/- as tax on notice pay recovery, in lieu of various employees who left the employment. This amount of tax had been deposited by assessee from its own pockets and the GST on the amount of notice pay recovery was deposited by assessee as and when such recovery was made. The amount deposited as GST, or any part thereof, had not been recovered by assessee Company from any of the employees leaving the employment. The Union Government issued a Circular No.178/10/2022-GST dated 03.08.2022, and clarified that such amount and such recovery was not chargeable to GST. The Government clarified that forfeiture of salary or payment of the bond amount in the event of an employee leaving employment before the minimum agreed period was not taxable. Hence, the amount of Rs.45,14,300/- deposited by assessee as GST were therefore, not “tax”. Assessee filed a refund claim for Rs.13,91,114/- deposited as GST for the period of July 2017 to August 2018 and filed another refund claim of Rs.31,23,186/- deposited as GST during the period of September 2018 to July 2022. On these refund claims, notices proposing to reject the claims were issued by Jurisdictional Deputy Commissioner, where two orders were passed by the Respondent pertaining to the above referred two refund claims, after show cause notices and conducting adjudication. Accordingly, he rejected the first claim of Rs.13,91,114/- entirely as time-barred, but allowed the second claim to the extent of Rs.29,24,012/- and rejected the remaining claim of Rs.1,99,174/- as time-barred. Assessee company therefore filed two appeals before the Appellate Authority contending that the amount recovered as tax had to be returned to the assessee. Appellate Authority held that the claims were barred by limitation of two years provided under Section 54 of the CGST Act, and therefore, the rejection of the claims on the ground of limitation in lodging the refund claims was proper. Thus, the State has collected a total sum of Rs.45,14,300/- as tax and returned a sum of Rs.29,24,012/- but a sum of Rs. 15,90,288/-collected as tax was retained and the refund thereof was refused only on the ground of the same being time-barred. It was held that since the aforesaid Circular came out on 03.08.2022, it had to be said that assessee could not have had the opportunity of filing of the refund claims in respect of the GST deposited by assessee company, till such date. Therefore, the period of two years, for filing a claim, within the meaning of Section 54 had to be computed from the date of the Circular i.e. from 03.08.2022. In that view of the matter, the refund claims dated 05.11.2022 and 07.11.2022, for whatever period of tax de-posited, could not be said to be time barred. In other words, the calculation of period of two years would not be from September, 2018 as wrongly held by the authorities below, but from 03.08.2022, i.e the date from which assessee were informed by the Government through the aforesaid Circular, that assessee need not pay tax on the transaction in question, which was clarified not to be a “Service” under the CGST Act.
