Whether GST authorities can reject the refund application if filed manually instead of electronically.

No, a recent court case concerning the complexities of claiming Goods and Services Tax (GST) refunds. The petitioner, a company that acquired a business undertaking, faced difficulties when trying to claim accumulated Input Tax Credit (ITC) for the financial years 2017-2018, 2018-2019, and 2020-2021.

The Grounds for Rejection

The company encountered three main obstacles in claiming their GST refund:

1. Incorrect Application Form: The authorities rejected their application because it wasn't filed using the designated form (RFD-01).
2. Late Registration: Since the company registered for GST in October 2020, the authorities argued they weren't eligible to claim refunds for prior periods.
3. Manual Application: The company claimed their new GST registration prevented them from filing electronically, but the authorities insisted on online applications.

The Petitioner's Argument

The company contested these rejections based on the following points:

• They informed the authorities about their late registration due to a business acquisition.
• They attempted to file electronically but were unable to due to their recent registration.
• Rule 97A of the Central Goods and Services Tax Rules allows for manual applications.

Argument Against Electronic Filing Requirement

The petitioner argued that their inability to file the applications electronically should not lead to rejection. They referenced Rule 97A of the Central Goods and Services Tax Rules, which permits manual filing of applications. This rule was overlooked by the 5th respondent, who instead relied on a circular dated 18.11.2019 mandating electronic filing.

Judicial Precedents Supporting the Petitioner

The courts have previously addressed similar issues. The Bombay High Court in Laxmi Organic Industries Ltd. vs. Union of India & others and the Gujarat High Court in M/s Ayana Pharma Ltd. vs. Union of India have both upheld that Rule 97A prevails over departmental circulars and allows manual filing of refund applications. These judgments support the petitioner's stance that manual applications should be considered valid.

Addressing the Registration Ground

Regarding the second ground, the respondent argued that the petitioner was not a registered person during the relevant period and thus ineligible for a refund under Section 54(3). However, Section 54(1) allows any person to apply for a tax refund, not just registered individuals. Additionally, Rule 41, dealing with credit transfer on amalgamation or merger of businesses, should have been considered by the 5th respondent.

Court's Ruling

The court sided with the petitioner, highlighting these key takeaways:

• A departmental circular (125/44/2019-GST) cannot supersede a rule established by a competent authority.
• Rule 97A permits manual filing of GST refund applications.
• The company's late registration doesn't disqualify them from claiming ITC for the relevant periods (referring to Section 54(1) of the GST Act).

GST Case Law AMN Life Pvt. Ltd. Versus Union of India

Citation-2024 TAXONATION 1290 (HIMACHAL PRADESH)

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