Facts of the Case
The application of the Petitioner for refund of GST paid on regd agreement to sale of property was rejected under the provisions of GST circular, on the ground that the refund claim application was not filed electronically, which was made mandatory from 26th September 2019 onwards.
Petitioners challenged the impugned order. Their main contention is that their claim of refund is within the prescribed time period allowed (before expiry of Two years from the end of relevant date), and that they have borne the incidence of GST Tax as ultimate consumer.
The Petitioners have entered into a registered agreement to sale with Respondent no. 5 on 10th May,2018 and resultant incidence of GST was paid by Respondent no. 5. Subsequently as an agreement to terminate the registered agreement to sale was reached between them, Respondent no. 5 recovered the amount of GST from the petitioners, but Deed of Cancellation was not entered. On 09th March,2021 a draft of deed of cancellation was drafted between them, however the petitioners could not execute registration of deed of cancellation. Respondent no. 5 had not claimed any refund of tax paid by him as time for applying for refund was already expired.
On 04th September 2020 petitioners submitted an application for refund of GST paid in prescribed form no GST-RFD-01-A and enclosed all the particulars and evidences in support. On 6th January,2021 petitioner no 1 received letter from Respondent no 2 enquiring as to whether Respondent no 5 has claimed refund of the GST. On same day Petitioner replied by an e-mail to Respondent no 2, denying any claim for refund by Respondent no 5.
On 18th February,2021 Respondent no 2 rejected application of refund made by the petitioners citing the reason of not filing online application in compliance with the circular no 125/44/2019-GST dated 18th November, 2019.
Counsel for petitioner with reference to Rule 97A of the CGST Rules 2017 submitted that electronic filing of an application for refund on the common portal under chapter X includes reference to manual filing of the refund application. Also counsel of court assisted counsel of petitioner with an unreported judgement of Division bench of Hon. High Court of Bombay dated 30th November,2021 delivered in writ petition no 7861 of 2021, Laxmi Organic Industries Ltd. Vs Union of India & others in favour of rule no 97A. Division bench clarified that circular no 125/44/2019-GST dated 18th November, 2019 shall be applicable only to application filed electronically on the common portal but will not be applicable to an application filed manually.
Counsel for Petitioners further submit that, petitioners not being a registered person under CGST Act, have no access to file online application on common portal.
Court Held
Considering the facts as recorded, Hon. court kept the issue of whether or not petitioners are entitled for refund of GST paid by Respondent no 5, open to be decided by the Respondent’s/department. Respondent no 2’s impugned order dated 18th February, 2021 was quashed and set aside.
Respondent no 3 was directed to decide the manual application for refund within 8 weeks from the date of communication of this order. To further communicate order of decision made by Respondent no 3 to the petitioner within 1 week of Respondent’s/department’s decision. To release amount of refund within 2 weeks of Respondent’s/department’s decision, if Petitioners application is allowed. Else otherwise, granted petitioner liberty to initiate appropriate proceedings.
Analysis of the Judgement
Circulars cannot override the provisions of Act or Rules made thereunder, they should not be contrary to Act or Rules. Circulars are to be followed as guidelines as far as they are applicable to each case, any deviation from the procedures shall not deny benefits allowed to taxpayers .Therefore, in this case Court has ordered Department to check the claim of eligibility and pass order within 1 weeks of the Order.
Title: C.P. Ravindranath Menon vs. Union of India
Court: Bombay High Court
Citation: 2022 (2) GSTPanacea 77 HC Bombay
Dated: 14-February-2022
CA Abhishek Raja Ram
Comment: