Section 54(3) of CGST Act 2017 provides refund of unutilised input tax credit. As per section 54(3), refund of unutilised input tax credit shall be allowed in the following two cases only: –

(i) zero rated supplies made without payment of tax;+

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Section 54(1) of CGST Act 2017 provides the time limit of two years from the relevant date within which refund can be filed by registered taxable person. The relevant statutory text of section 54(1) is reproduced as follows: –

Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:

Clause (a), (c) and (e) to explanation (2) to section 54(14) defines the ‘relevant date’ in the following manner: –

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, ––

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of––

(i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;

In view of above existing legal provisions, refund of unutilised input tax credit attributable to zero rated supplies and inverted duty structure can be filed within two years from the end of Financial year in which such claim for refund arises. Hence as per existing provisions, refund of accumulated Input Tax Credit for Financial year 2017-18 can be filed upto 31 March 2020.

Clause (e) to explanation (2) to section 54(14) of CGST Act 2017 has been proposed to be amended by section 23 of CGST (Amendment) Act 2018 in the following manner which will be effective from 1 Feb 2019: –

(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;

The impact of above change can be summarised as follows: –

Type of Refund Time Limit for filing Refund Claim as per existing law Time Limit for filing Refund Claim as per amended law i.e. w.e.f. 1 Feb 2019
Accumulated ITC pertaining to export of goods or supply of goods to SEZ unit/developer Higher of the following two i.e. (a) or (b): –

(a) Two year from the relevant date. The relevant date as per mode of export is as follows: –

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) Two year from the end of Financial Year in which claim for such accumulated credit arises

Two year from the relevant date. The relevant date as per mode of export is as follows: –

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

 

Accumulated ITC pertaining to export of services or supply of services to SEZ unit/developer Higher of the following two i.e. (a) or (b): –

(a) Two year from the relevant date. The relevant date in case of supply of services is determined in the following manner: –

(i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

as the case may be

(b) Two year from the end of Financial Year in which claim for such accumulated credit arises

(i) Two year from the receipt of payment in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India, where the supply of services had been completed prior to the receipt of such payment; or

(ii)  Two year from the issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

as the case may be

Accumulated ITC due to inverted duty structure Two year from the end of Financial Year in which claim for such accumulated credit arises Two year from the due date for furnishing of return under section 39 for the period in which such claim for refund arises

Now the question arises whether the change in time limit for filing refund claim would also apply to refund claim filed on or after 1 Feb 2019 pertaining to period before 1 Feb 2019. In this article, an attempt has been made to analyse said legal issue.

To analyse the said legal question, in view of author, one need to answer the following question of law: –

Whether change in time limit for filing refund claim really retrospective in nature merely because it relates to past action?

In this regard, reliance is placed upon the judgment of Hon’ble Tribunal in the case of WNS GLOBAL SERVICES (P) LTD. 2008 (10) S.T.R. 273 (Tri. – Mumbai) wherein Hon’ble Tribunal held the following: –

A statute cannot be treated retrospective merely because it relates to the past action. A statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transaction already past alone is called a retrospective legislation.

The above judgment of Hon’ble Tribunal has been upheld by the Hon’ble Bombay High Court as reported in WNS GLOBAL SERVICE (P) LTD. 2011 (22) S.T.R. 609 (Bom.). In view of author, the change in time limit for filing refund claim cannot be said to take away or impair vested right under existing law. The changes only reduce the time limit for filing refund claim. As per amended provisions, a registered person still has time limit to file refund claim pertaining to July 17. Thus, the above change in time limit for filing refund claim cannot be said to be retrospective merely because it is related to past action. Hence, in view of author, the said time limit will apply to each refund filed on or after 1 Feb 2019 evenif the refund pertains to period prior to 1 Feb 2019.

Further, reliance is also placed upon judgment of Hon’ble Tribunal’s Larger bench order in the case of CELLULOSE PRODUCTS OF INDIA LTD. 1993 (64) E.L.T. 65 (Tribunal) wherein the issue before the Hon’ble Tribunal was as follows: –

(i) The appellant was issued a Show Cause Notice regarding classification of product. The adjudicating authority (Assistant collector) agreed with the contention of the appellant and passed order in original dated 16 June 1983 in favour of appellant.

(ii) The Collector of Central Excise, Ahmedabad, subsequently, issued a direction on 27 Sep 1984 under Sec. 35E(2) of the Central Excises & Salt Act, 1944, to the Assistant Collector to apply before the Collector of Central Excise (Appeals) for reviewing the order of the Assistant Collector.

(iii) Section 35(3) of Central Excises & Salt Act, 1944 provides time limit for giving direction under section 35(2) of Central Excise Act. As on date of passing of order by adjudicating authority, the time limit under section 35(3) of Central Excise Act was two years from the date when adjudication order passed.

(iv) Finance Bill 1984 proposed the changes in section 35(3) of Central Excise Act by amending the time limit from 2 years to one year. The said Finance Bill came into effect from 11 May 1984.

With above facts, the Hon’ble Tribunal held that time limit for giving direction in the instant case would be governed by amended section.

The Hon’ble Tribunal while pronouncing the above order observed the principles of statutory interpretations as culled out by the two eminent jurists, namely, S/Shri G.P. Singh and F.A.R. Bennion in their books “PRINCIPLES of STATUTORY INTERPRETATION” and “STATUTORY INTERPRETATION” respectively: –

(i) Statutes of limitation are regarded as procedural and the law of limitation which applies to a suit is the law in force at the date of the institution of the suit irrespective of the date of accrual of the cause of action

(ii) Every procedural law is retrospective in operation. The reasons are that the general rule that a statute is prima facie prospective and that no retrospective effect is to be given to it unless by express words or necessary implication it appears that this was the intention of the Legislature does not apply to a statute concerned with matters of procedure. A procedural law is to be given retrospective effect in the absence of a clear indication that it was not the intention of the Legislature

(iii) Retroactive operation of a statute is looked upon with disfavour if it takes away or impairs vested rights under existing laws and is, therefore, considered unjust or oppressive. But this reason does not apply in the case of a procedural law.

(iv) There is a distinction between a right and pursuing a remedy against an infringement of, or threat to, a right. The existence and the nature of a right are governed by what is known as substantive law and pursuing the remedy, by what is known as adjective law. All procedural law, such as that contained in the Codes of Procedure, the Limitation Act, the Court Fees Act, the Suits Valuation Act, etc. is adjective law. The law of limitation is concerned with pursuing the remedy and not with the existence or nature of the right or even of the remedy.

In view of the above legal pronouncements, following inferences can be drawn: –

(i) Time limit for filing refund claim is procedural in nature.

(ii) The amended section 54 of CGST Act 2017 does not take away or impairs vested rights under existing laws but only shortens the time period for filing refund claim.

(iii) A registered person still has sufficient time period in respect of refund claim pertaining to period July 17.

(iv) Every refund claim filed on or after 1 Feb 2019 will be governed by amended section 54 of CGST Act 2017 evenif the refund claim pertains to period prior to 1 Feb 2019.

In view of the above legal provisions, it is advised to all registered person to ensure that their refund claim is filed within the amended time limit as provided under section 54 of CGST Act 2017 to avoid any dispute with the department in future.

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5 Comments

  1. vinod says:

    Refund claim filed regarding Accumulated ITC due to inverted duty structure for the period April-19 to Mar-20 on 03.06.2021.can this refund time bar? or otherwise

  2. Somesh says:

    You have wrongly interpreted the amended substituted clause (e) of sub section 14 of section 54 of as per amended cgst act 2018.
    The relevant date for unutilised ITC should be the date of end of FY period, which is applicable as per existing CGST Act 2017.
    Otherwise, explain the situation mentioned below

    Purchase month april 18
    Export occur in sep 18
    FIRC comes in 1 dec 18
    Now date of filing of refund is 30 nov 2020
    Now tell me wt will be the refund period for ITC unutilised, weather it will be from april 18 or from Dec 18?
    Now as per ur

  3. HEMANT AGARWAL says:

    Sir I can apply for GST export refund of 2017-18 now because of some paper was miss I have not submitted that so now it will acceptable

  4. Virat says:

    Sir,
    Can’t we say that the amended act is applicable to the refund claims arise after Feb-19 and not for refund claims filed after Feb-19?

  5. Rahul Garg says:

    What if Nil Refund File within time limit as per amended law and later on refund claim after time limit as per Circular 110/29/2019 dated 03 Oct 2019. Bcz for July 2017 Time limit is 20 Aug 2019 while Circular itself issued after that date?

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