GST Refund Application U/S 54 Beyond Relevant Date Liable for Rejection

Cherish India Exports Vs Assistant Commissioner of State Tax and Others (Andhra Pradesh High Court)

Andhra Pradesh High Court held that application for refund of unutilised input tax credit under section 54 of the Central Goods and Services Tax Act [CGST Act] is to be filed within 2 years from relevant date i.e. date on which vessels carrying goods is exported. Here, since application filed beyond relevant date is liable to be rejected.

Facts- The petitioner, who is involved in the export of rough granite, is also registered under the Central Goods and Services Tax Act, 2017.

The petitioner had exported certain rough granite blocks, during the period January, 2022 to March, Subsequently, he moved an application for refund of an amount of Rs.11,26,953/-, dated 21.03.2024. This application is said to have been made under Section 54 of the CGST Act. The 1^st respondent rejected this application, by an order, dated 03.04.2024, on the ground that, the application is filed beyond time.

Aggrieved by the said order, the petitioner has approached this Court, by way of the present Writ Petition.

Conclusion- Section 54 (1) of the CGST Act stipulates that the person who is entitled to refund of tax, can make an application for refund of such tax, within two years from the relevant date. The term “relevant date” was also defined in the explanation set out in Section 54 (14). The relevant date, which would arise in the present case, would be the date on which the vessel, carrying granite blocks, is exported by the petitioner. This is because the granite blocks, which had been exported by the petitioner, were zero rated goods and consequently, the relevant date would be explanation 2 (a) (i) to Section 54 (14) of the CGST Act.

Held that the application filed by the petitioner, on 21.03.2024, is beyond the last date of 09.03.2024, within which the application should have been made. In the circumstances, this Writ Petition is dismissed.

FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT

The petitioner, who is involved in the export of rough granite, is also registered under the Central Goods and Services Tax Act, 2017 (here-in-after referred to as “the CGST Act”).

2. The petitioner had exported certain rough granite blocks, during the period January, 2022 to March, Subsequently, he moved an application for refund of an amount of Rs.11,26,953/-, dated 21.03.2024. This application is said to have been made under Section 54 of the CGST Act. The 1^st respondent rejected this application, by an order, dated 03.04.2024, on the ground that, the application is filed beyond time.

3. Aggrieved by the said order, the petitioner has approached this Court, by way of the present Writ Petition.

4. There is no dispute as to the eligibility of the petitioner for payment of the refund. The only issue, before us, is whether the claim, for refund of the amount, was within the time or Section 54 (1), 54 (3) & 54(14) of the CGST Act is relevant and is extracted below:

“54. Refund of tax

(1 ) 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:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under Section 39 in such manner as may be prescribed.

(2) —–

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than––

(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:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

(4) —–

(5) —–

(6) —–

(7) —–

(8) —–

(9) —–

(10) —–

(11) —–

(12) —–

(13) —–

(14) Notwithstanding anything contained in this section, no refund under sub- section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

Explanation.—For the purposes of this section,–

(1) ―refund ”includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit as provided under sub-section (3).

(2) ―relevant date” means –

(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;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

¹[(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies;]

(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 ¹[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) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

²[(e) in the case of refund of unutilized 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;]

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.

5. The case of the petitioner is that granite blocks were loaded on to the ship, on 22.02.2022 and the ship had left the shores of India on 09.03.2022. The petitioner contends that the starting point of limitation, of two years, contained in Section 54 (1) of the CGST Act, would be the end of the tax period, within which the payment of tax, which is sought to be refunded, was done. In the present case, that period would be March, 2022 and consequently, an application for refund could be moved upto the end of March, 2024. As the refund application was made on 21.03.2024, the application is in time.

6. On the other hand, it is the case of the respondents that an application has to be made within two years from the relevant date. The term “relevant date” has been defined in the explanation set out in Section 54 (14) of the CGST Act to mean the date on which the vessel, carrying the zero rated goods, leaves the shores of India, e., dated 09.03.2022 and consequently, an application for refund could have been made only on or before 09.03.2024. As the application was made on 21.03.2024, the application is beyond time and cannot be processed.

7. Section 54 (1) of the CGST Act stipulates that the person who is entitled to refund of tax, can make an application for refund of such tax, within two years from the relevant date. The term “relevant date” was also defined in the explanation set out in Section 54 (14). The relevant date, which would arise in the present case, would be the date on which the vessel, carrying granite blocks, is exported by the petitioner. This is because the granite blocks, which had been exported by the petitioner, were zero rated goods and consequently, the relevant date would be explanation 2 (a) (i) to Section 54 (14) of the CGST Act.

8. The learned counsel for the petitioner contends that Section 54 stipulates that the refund of tax on granite blocks can be made at the end of the tax period, which would mean that the two year period, stipulated under Section 54 (1) should be taken to be two years from the end of the tax period.

9. This Court is unable to accept such a contention. A cogent reading of Section 54 (1) and Section 54 (3) would make the scheme of the Act clear. The right to claim refund, under Section 54 (3), starts from the end of the tax period in which the refund arises. Under Section 54 (1) a dealer is entitled to claim refund of excess taxes within a period of two years from the relevant date. This would be the outer limit, within which the dealer is entitled to make a claim for refund. Thus, the starting point from when the dealer can make such a request is set out in Section 54 (3), which stipulates that a claim for refund of unutilized input tax credit can be made at the end of tax period and such claim is permissible till the end of two years from the relevant date. In the circumstances, it would have to be held that the application filed by the petitioner, on 21.03.2024, is beyond the last date of 09.03.2024, within which the application should have been made.

10. In the circumstances, this Writ Petition is dismissed. There shall be no order as to costs.

As a sequel, interlocutory applications pending, if any shall stand closed