2023(09)LCX0381

La-Gajjar Machineries Private Limited

Versus

Union of India

R/SPECIAL CIVIL APPLICATION NO. 15782 of 2021 decided on 27-09-2023

2023:GUJHC:67165-DB

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 15782 of 2021

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE BIREN VAISHNAV

and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA

M/S. LA-GAJJAR MACHINERIES PRIVATE LIMITED
Versus
UNION OF INDIA & ORS.

Appearance:
MR HARDIK P MODH(5344) for the Petitioner(s) No. 1
for the Respondent(s) No. 1,2,3,4
MR DHAVAL D VYAS(3225) for the Respondent(s) No. 3
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 2,4

CORAM:    HONOURABLE MR. JUSTICE BIREN VAISHNAV
                    and
                   HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 27/09/2023

ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

[1] Rule returnable forthwith. Learned advocate Mr. Parth Divyeshvar waives service of notice of Rule for the respondent No.1 and learned advocate Mr. Dhaval Vyas waives service of notice of Rule for the respondent No.3.

[2] By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“12A. This Hon’ble Court may be pleased to decalre tht para No.12 to Circular No.125/44/2019-GST dated 18.11.2019 so far as it relates to directing to file the rectified refund claim within a period of 2 years of the relevant date as defined in Explanation after sub-section 14 of Section 54 of the CGST Act is ultra vires to Section 54 of the CGST Act, 2017;

B. this Hon’ble Court may be pleased to issue a writ of certiorari or writ in the nature or any other appropriate writ, calling upon for the records of the petitioner’s case and after going into legality and proprietary thereafter quash and set aside the said Order-in-Appeal No.AHM-EXCUS-001-APP-JC-020/2020-21 dated 09.11.2020 passed by respondent No.4 and consequently to allow the refund of unutilized ITC claimed under Inverted Duty Structure in terms of Section 54(3) of the CGST Act for the period December 2017 along with interest in terms of provisions of CGST Act, 2017;

C. this Hon’ble Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, direction or order, directing the respondents, its officers and or their servants and subordinates to allow the refund of unutilized ITC claimed under Inverted Duty Structure in terms of Section 54(3) of the CGST Act for the period December 2017 along with interest in terms of provisions of CGST Act 2017;

D. Pending hearing and final disposal of the present petition, this Hon’ble Court may be pleased to direct the respondents, to sanction the refund of unutilized amount of ITC claim in terms of Section 54(3) of CGST Act, 2017 for the period December 2017 alongwith interest with such terms and conditions as deemed fit and necessary in the interest of justice;

E. grant ad-interim relief in terms of the prayers above;

F. grant costs of the petition and orders thereon;”

[3] The facts, in nutshell, are as under:

[3.1] The petitioner is engaged in the business of manufacturing and supply of pump and pump sets and is registered under the provisions of the Goods and Service Tax Regime vide GSTIN24AAACL3246N1ZG. The petitioner receives inputs and input services which are chargeable to GST at the rate of 18% and 28%.Since the rate of tax on output supply is lesser than the rate of tax on input and input services, there is a huge amount of accumulated Input Tax Credit (ITC) in the hand of the petitioner. Accordingly, the petitioner has claimed refund of unutilized ITC under Clause 2 of the First proviso to Section 54(3) under the scheme of inverted duty structure.

[3.2] The petitioner filed refund application for accumulated ITC of Rs.1.22 Crores on account of inverted duty structure vide Form RFD-01 on 16th December 2019 for the period December 2017 along with relevant documents as annexures.

[3.3] Thereafter, the respondent No.3 issued deficiency memo in Form RFD-03 on 27th December 2019 as per Rule 90(3) of the CGST Rules by alleging that supporting documents were not attached to the refund application with a remark that Statement-1A filled online was incomplete.

[3.4] Since the deficiency memo was issued by the respondent No.3 against the original refund application, the petitioner had to file a fresh refund application in terms of Rule 90(3) of the CGST Rules and accordingly, the petitioner filed a fresh refund application vide Form RFD-01 on 27th January 2020 for an amount of Rs.1.19 Crores.

[3.5] The respondent No.3 again issued second deficiency memo in Form RFD-03 on 11th February 2020 with the same remark as made in the original refund application alleging that supporting documents were not attached with the refund application with remark of “invoice(s) not shown in GSTR-2A but ITC is claimed in Annexure-B as eligible are not uploaded”.

[3.6] Since the deficiency memo was again issued by the respondent No.3 against the rectified refund application, the petitioner filed second refund application with the same Annexures as mentioned in the rectified refund application vide Form RFD-01 on 13th February 2020 seeking refund of Rs.1.19 Crores.

[3.7] Thereafter, the respondent No.3 accepted the second rectified refund application and an acknowledgement in Form RFD-02 dated 14th February 2020 was issued with remarks “documents as per circular 125/44/2019-GST dated 18.11.2019 are uploaded. Accordingly, RFD-02 issued as per Rule 90, 91 and 95 of the CGST Rules, 2017”.

[3.8] Thereafter, the respondent No.3 issued show cause notice vide Form RFD-08 dated 18th February 2020 alleging that the second rectified refund application should be rejected on the ground that there is a delay in filing the refund application.

[3.9] The petitioner filed reply to the show cause notice stating that due date should be considered as per the date of filing original refund application and the delay was due to the deficiency memos issued by the respondent No.3 and the claim was already lodged by them vide their original refund application dated 16th December 2019 which was well within the time limit as mentioned in Section 54 of the CGST Act.

[3.10] Thereafter, the respondent No.3, without considering the reply filed by the petitioner, rejected the refund application dated 13th February 2020 vide Form RFD-06 dated 11th March 2020 for the reason that “the claimant’s contention is not acceptable. The claim is time barred as per Section 54 of the CGST Act 2017 read with Notification No.02/2019-Central Tax dated 29th January 2019”.

[3.11] Being aggrieved by the aforesaid rejection order dated 11th March 2020 passed by the respondent No.3, the petitioner filed appeal before the respondent No.4 mainly on the ground that due date should be considered as per the date of filing of original refund application dated 16th December 2019, which was well within the time limit as per Section 54 of the CGST Act.

[3.12] Thereafter, the respondent No.4, vide Order-in-Appeal No.AHM-EXCUS-001-APP-JC-020/2020-21 dated 9th November 2020 rejected the appeal filed by the petitioner upholding the order passed by the adjudicating authority by placing reliance on the circular No.125/44/2019-GST dated 18th November 2019. In the circular, it is clarified that the refund claim after correction of deficiency is treated as a fresh refund application and therefore, such rectified refund application should have to be submitted within a period of two years of the relevant date as defined in Explanation after sub-section (14) of Section 54 of the CGST Act. The respondent No.4 also placed reliance on the provision of Section 54 of the CGST Act with Rule 90 of the CGST Rules for upholding the order of the adjudicating authority.

[4] The relevant extract of Section 54 of the CGST Act – subsections (1), (3), (4), (7) are as under:

“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.

* * *

(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) The application shall be accompanied by—

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person:

Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.

* * *

(7) The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects.

[5] Rule 90 of the CGST Rules, 2017 reads as under:

“90. Acknowledgement.- (1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing.

(2) The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within a period of fifteen days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of sub-rule (2), (3) and (4)of rule 89, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in subsection (7) of section 54 shall be counted from such date of filing.

(3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD03 through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies.

(4) Where deficiencies have been communicated in FORM GST RFD-03 under the State Goods and Service Tax Rules, 2017, the same shall also deemed to have been communicated under this rule along with the deficiencies communicated under sub-rule (3).”

[6] Vide Notification No.15/2021-Central Tax dated 18th May 2021, the following proviso was inserted after sub-Rule (3) of the Rule 90 of the CGST Rules. The amendment is reproduced as under:

Provided that the time period, from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORM GST RFD-03 by the proper officer, shall be excluded from the period of two years as specified under sub-section (1) of Section 54, in respect of any such fresh refund claim filed by the applicant after rectification of the deficiencies,”

[7] Learned advocate Mr. Hardik Modh for the petitioner submitted that the respondent No.4 has committed an error in rejecting the rectified refund claim of the petitioner on the ground of limitation by placing reliance on the definition of “relevant date” defined under Explanation after Section 54(14) of the CGST Act without considering that the petitioner filed original refund claim of unutilized ITC for the month of December 2017 on 16th December 2019, which was within the time limit of two years, as prescribed in definition of “relevant date”.

[7.1] Reliance was placed on Rule 90(3) of the CGST Rules, 2017, which provides that the applicant should file a fresh refund application after rectification of deficiency, if any, pointed out by the GST authorities upon filing of the refund claim. Accordingly, the petitioner filed first rectified refund claim on 27th January 2020 after rectification of deficiency, as pointed out through the deficiency memo dated 27th December 2019 and the second rectified refund claim was filed on 13th February 2020 after pointing out second deficiency memo dated 11th February 2020.

[7.2] It was submitted that Rule 90(3) merely provides to file a fresh application after rectification of mistake, it does not mean that time limit provided under Explanation to Section 54 of the CGST Act is again applicable to such refund claim, more particularly, while filing the refund claim, for the first time, the petitioner has filed the same within the relevant date and subsequent filing of the rectified application cannot be said as a separate proceeding, but it was a continuation of the original refund claim application only.

[7.3] It was, therefore, submitted that the intention of the legislature for invocation of limitation period provided in Section 54 of the CGST Act as well as the procedure for filing a fresh refund claim under Rule 90 of the CGST Rules cannot be made the refund claim redundant, if the assessee files the refund claim on the last date on completion of two years, the claim would always be barred by limitation if the deficiency memo is issued. Reliance was placed on the decision of the Hon’ble Delhi High Court in the case of National Internet Exchange of India vs. Union of India reported in (2023) 9 Centax 405 (Del.), wherein in similar facts, the Hon’ble Delhi High Court, after considering the effect of sub-rule (2), (3) and (4) of Rule 89 of the CGST Rules as well as sub-rule (5) of Rule 90 of the CGST Rules held that in terms of Section 54(1) of the CGST Act, an application is required to be made in the prescribed form and manner within two years from the relevant date and once the petitioner has complied with the said requirements, the period of limitation would stop running notwithstanding that the proper officer required further document or material to satisfy himself that the refund claim was due to the petitioner.

[7.4] It was, therefore, submitted by learned advocate Mr. Modh that as the petitioner has filed refund claim within the prescribed time limit laid down under Section 54 of the CGST Act, subsequent rectified refund claim along with required documents or prescribed format on directions of the respondent after a period of limitation, as provided in the statute, cannot invalidate the claim on the ground of making claim beyond the period of relevant date. It was submitted that Rule 90(3) of the CGST Rules is only a procedural aspect to mandate the applicant to file the refund application after removal of deficiency.

[7.5] It was submitted that Circular No.125/44/2019-GST dated 18th November 2019 provides procedure for granting refund after issuance of the deficiency memo and Clause 10 thereof is contrary to Section 54(1) of the CGST Act by treating such rectified application as fresh refund application to be submitted within two years from the relevant date is not sustainable, because in such situation, the Explanation defining “relevant date” would become redundant.

[7.6] It was submitted that the impugned circular cannot go beyond the provisions of Section 168(1) of the CGST Act, which provides that the Board may, if it considers necessary or expedient to do so for the purpose of uniformity in the implementation of the Act and issue such orders, instructions, or directions to the Central Tax Officers as it may deem fit and therefore, the impugned circular can be issued for implementation of the Act and not for laying down the procedure curtailing the time period mentioned in the provisions of the Act.

[7.7] Learned advocate Mr. Modh submitted that in the alternative, in the facts of the case, the original refund claim is filed within the limitation in terms of Section 54 of the CGST Act and the time consumed from filing of the refund claim in Form GST RFD-01 till the date of communication of the deficiency in Form GST RFD-03 by the proper officer may be excluded from computing the period of two years then there is no delay in filing the refund claim because the date of filing of original refund claim was 16th December 2019 whereas time limit for filing the refund claim for the period of December 2017 of unutilized amount of Input Tax Credit under Section 54(3), i.e. two years from the relevant date expired on 22nd January 2020 since due date of filing of the return for the month of December was 22nd January 2018. The date of first deficiency pointed out was 27th December 2019 and therefore, 11 days are to be excluded from 16th December 2019 to 27th December 2019. The date of second deficiency pointed out was 11th February 2020, therefore, 15 days are to be excluded from date of filing first rectified refund claim on 27th January 2020 to 11th February 2020 and the petitioner has filed the second rectified application on 13th February 2020. It was, therefore, submitted that in all, 26 (11 + 15) days are required to be excluded from the period of limitation of two years by adding 26 days to last date of 22nd January 2020, therefore, time to file refund claim would be available upto 27th February 2020, however, the second rectified application was filed by the petitioner on 13th February 2020, hence, the refund claim was lodged within a period of limitation.

[7.8] For making above submissions, reliance was placed on the Notification No.15/2021 dated 18th May 2021, whereby proviso to Rule 90(3) of the CGST Rules is introduced for exclusion of interim time period from the date of issuance of defect memo upto the date of filing the rectified refund application for calculating two years from the relevant date by resolving the issue of refund applications. It was, therefore, submitted that the amendment has clarified the intention of the legislature that rectified the refund application is an extension of the original refund application only and both of them are part of the same proceedings. It was submitted that in view of Notification No.15/2021, the petitioner is entitled to the benefit of the same and therefore, the said Notification is required to be applied retrospectively though it has been introduced with effect from 1st February 2019.

[7.9] Reliance was placed on the decision of the Hon’ble Bombay High Court in the case of Vaibhav Steel Corporation vs. Additional Commissioner of Sales Tax (VAT) and others [MANU/MH/2595/2013], wherein the Hon’ble Bombay High Court, in similar facts, under the provisions of the Maharashtra VAT Act, 2002, has held that the right which was an existing right on the date of amendment on April 2021, 2011 could not have been taken away without express terms or necessary intendment in the Amending Act. It was, therefore, held that the petitioner was entitled to claim refund within the limitation period of three years which was curtailed by amended Section 51(7) of the MVAT Act, 2002 reducing the period of limitation from three years to 18 months. As the refund application was made in August 2012, the respondents authorities could not have rejected the same as the amendment was not on the statute with effect from 31st March 2013.

[8] On the other hand, learned advocate Mr. Parth Divyeshvar for the respondent No.1 and learned advocate Mr. Dhaval Vyas for the respondent No.2 vehemently submitted that the petitioner is not entitled to the refund claim in view of the Rule 90(3) of the CGST Rules, which provides for filing a fresh refund application after issuance of deficiency memo in Form GST RFD-03. Reliance was placed on the Circular No.125/44/2019-GST dated 18th November 2019 prescribing the modalities of disbursement of refund and Clauses 9 to 12 thereof provides for deficiency memos and clause 12, in particular, clarifies that since a refund application filed after correction of deficiency is treated as a fresh refund application, such a rectified refund application, submitted after correction of deficiencies, shall also have to be submitted within two years of the relevant date, as defined in the Explanation after sub-section (14) of Section 54 of the CGST Act. It was submitted that Notification No.15/2021 would not be applicable as the same is prospective in nature.

[8.1] Reliance was placed on the following averments made in the affidavit-in-reply filed on behalf of the respondents Nos.1, 2, 3 and 4:

“4. The captioned petition is preferred challenging para 12 of Circular No.125/44/2019-GST dated 18.11.2019 so far as it relates, directing to file the rectified refund claim within a period of 2 years or the relevant date as defined under the explanation after sub-section 14 of Section 54 of the CGST Act as ultra-vires Section 54 of the CGST Act, 2017 and consequently the refund of unutilized ITC claimed under Inverted Duty Structure in terms of Section 54(3) of the CGST Act, 2017.

5. Pertinently, the petitioner had filed the refund claim for the month of December 2017 only on 16.12.2019. In furtherance thereto, the adjudicating authority issued a deficiency memo to the petitioner on 27.12.2019 under the provisions of Rule 90(3)of the CGST Rules, 2017 with the remarks “Supporting documents not attached. Statement -IA is filled online is incomplete”. In pursuance thereof, the petitioner filed a revised refund application on 27.1.2020, for which yet again deficiency memo was issued by the authority on 11.2.2020 with the remarks “Invoice(s) not shown in GSTR-2A but ITC is claimed in Annexure-B as eligible are not uploaded.”

6. The petitioner once again filed a refund application on 13.2.2020. In pursuance thereof, a show cause notice dated 18.2.2020 was issued. The application came to be rejected by the adjudicating authority vide order dated 11.3.2020 whilst holding that the refund claim was time barred in view of Section 54 of the CGST Act, 2017 read with Notification No.02/2019-Central Tax dated 29.1.2019, which was upheld vide order in appeal dated 9.11.2020.

7. Thus, from the aforesaid, it emerges that the petitioner had preferred the refund applications prior to 18.05.2021 i.e. the date on which Notification No.15/2021-Central Tax was published and CGST (Fourth Amendment) Rules, 2021 were introduced. Further. para 1(2) of the CGST (Fourth Amendment) Rules. 2021, stipulates that:

"The said rules shall come into force on the date of their publication in the Official Gazette.”

Thus, the intention of the legislature is clear that benefit to be accorded, if any by virtue of the said Notification would apply from the date of its publication and not anterior thereto with a retrospective effect. Hence, Circular no. 125/44/2019-GST dated 18.11.2019 was very much in effect before the publication of the said Notification.

8. It is emphatically denied that there exists a discrepancy in terms of Rule 90 of the CGST Rules. 2017 and Circular No. 125/44/2019-GST dated 18.11.2019. In the humble submission the refund applications were adjudicated on the basis of the position of law prevailing at the relevant time. It is also denied that the said Circular is ultra-vires to Section 54 of the CGST Act, 2017.”

[8.2] Referring the above averments, it was submitted that the petitioner is not entitled to the refund, as, admittedly, the refund claim application filed by the petitioner is beyond the relevant date as per the Explanation to Section 54 of the CGST Act, 2017 and therefore, this petition is liable to be dismissed.

[9] Having heard the learned advocates for the respective parties and considering the facts and the provisions of law, which are reproduced hereinabove, short question which arises for consideration is whether the petitioner is entitled to get the refund by considering the period of limitation as explained in the definition of “relevant date” as per the Explanation after subsection (14) of Section 54 of the CGST Act to be considered from the date of filing of the original refund application or from the date of filing of the rectified refund application after receipt of the deficiency memo from the respondents authorities.

[10] Such question is considered by the Hon’ble Delhi High Court in the case of National Internet Exchange of India (supra), wherein after considering the provisions of Section 54 of the CGST Act and the Rule 90 of the CGST Rules, it was held as under:

“18. It is apparent from the above that once an application is complete in terms of Sub-rule (2), (3) and (4) of Rule 89 of the CGST Rules, the same is necessarily required to be accepted.

19. An application can be rejected as deficient only where any deficiencies are noted. The contextual reading of Sub-rule (3) with Sub-rule (2) of Rule 90 of the CGST Rules, indicates that the deficiencies referred to in Sub-rule (2) of Rule 90 of the CGST Rules are those that render an application incomplete in terms of Sub-rules (2), (3) and (4) of Rule 89 as stipulated in Sub-rule (2) of Rule 90. Thus, if an application is complete in terms of Sub-rule (2), (3) and (4) of Rule 89 of the CGST Rules, the same cannot be rejected, relegating the taxpayer to file afresh. In any view of the matter, the period of processing the said application under Sub-section (7) of Section 54 of the CGST Act, is required to be counted from the said date.

20. However, notwithstanding the fact that the application for refund is complete inasmuch as it is accompanied by the documents as specified in Sub-rule (2) of Rule 89 of the CGST Rules, the proper officer may withhold the processing of refund, if he is not completely satisfied that the same is refundable to the taxpayer. In such circumstances, where the proper officer requires to further verify the claim or is unable to process it on account of discrepancies noticed by him, he is required to issue notice in Form GST RFD-08 in terms of Sub-rule (5) of Rule 90 of the CGST Rules.

* * *

22. It is clear from the deficiencies as mentioned that the proper officer had noticed certain discrepancies in the documents. In addition, he also required the petitioner to provide certain documents in order to verify its claims for refund. It is also apparent that some of the documents demanded were not relevant as the petitioner’s claim was for refund of IGST and not unutilised ITC. 2

3. The nature of the deficiencies as set out in deficiency memo no.2 clearly indicate that the application filed by the petitioner was not incomplete in terms of Rule 89(2) of the CGST Rules. Sub-rules (3) and (4) of Rule 89 of the CGST Rules are not applicable in the facts of the present case. The petitioner had, in terms of Clause (c) of Sub-rule (2) of Rule 89 of the CGST Rules, submitted a statement containing the number and date of invoices and the relevant Bank Realisation Certificates/Foreign Inward Remittance Certificates. It was also accompanied by the necessary declaration as specified.

24. In view of the above, the application for refund filed by the petitioner on 31.10.2019 could not be ignored or disregarded.

25. As noted above, in terms of Section 54(1) of the CGST Act, an application is required to be made in the prescribed form and manner before two years from the relevant date. It is clear that the petitioner had complied with the said requirement inasmuch as it had filed an application for refund on 31.10.2019 in the “form and manner” as prescribed in the CGST Act and the CGST Rules. Thus, in terms of Section 54(1) of the CGST Act, the period of limitation would stop running notwithstanding that the proper officer required further documents or material to satisfy himself that the refund claimed was due to the petitioner.

26. This Court in an earlier decision in Bharat Sanchar Nigam Limited v. Union of India & Ors.: 2023:DHC:2482-DB and in similar circumstances held as under:

“28. We are of the view that Rule 90(3) cannot be applied in the manner as sought to be done by the Adjudicating Authority. Merely because certain other documents or clarifications are sought by way of issuing a Deficiency Memo, the same will not render the application filed by a taxpayer as non est.

29. If the application filed is not deficient in material particulars, it cannot be treated as non est. If it is accompanied by the “documentary evidences” as mentioned in Rule 89(2) of the Rules, it cannot be ignored for the purposes of limitation. The limitation would necessarily stop on filing the said application. This is not to say that the information disclosed may not warrant further clarification, however, that by itself cannot lead to the conclusion that the application is required to be treated as non est for the purposes of Section 54 of the CGST Act. It is erroneous to assume that the application, which is accompanied by the documents as specified under Rule 89(2) of the Rules, is required to be treated as complete only after the taxpayer furnishes the clarification of further documents as may be required by the proper officer and that too from the date such clarification is issued.””

[11] In view of Notification No.15/2021 dated 18th May 2021, wherein the proviso is added in Rule 90(3) of the CGST Rules, reads as under:

Provided that the time period, from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORM GST RFD-03 by the proper officer, shall be excluded from the period of two years as specified under sub-section (1) of Section 54, in respect of any such fresh refund claim filed by the applicant after rectification of the deficiencies,”

It is therefore clear that time period from the date of filing of the refund claim in Form GST RFD-01 till the date of communication of the deficiency in the Form of GST RFD-03 by the proper officer is required to be excluded from the period of two years, as specified in respect of any such fresh refund claim filed by the applicant after rectification of the deficiency. The insertion of proviso to Rule 90(3) of the CGST Rules is therefore clarificatory in consonance with the objective of Section 54(1) of the CGST Act. In our opinion, the same would be applicable in the facts of the case also where the rectified refund application filed by the petitioner is within the period of limitation after applying the above provision and shall fall within two years after excluding the period from the date of fling of the refund claim in Form GST RFD-01 till the date of communication in Form GST RFD-03, which is calculated by the petitioner as 26 days as under:

The refund claim of the petitioner pertains to December 2017, due date of filing return would be 22nd January 2018, two years period of limitation therefore would be over on 22nd January 2020. By adding 26 days as above, last date of filing refund would be 27th February 2020 whereas the petitioner filed second rectified refund claim on 13th February 2020.

[12] Therefore, applying the Circular No.15/2021 also, the refund claim of the petitioner cannot be rejected and the reliance placed by the respondent on Clause 12 of Circular No.125/44/2019-GST dated 18th November 2019 would not be applicable.

[13] Considering the facts of the case where the first deficiency memo dated 27th December 2019 is only for not attaching supportive documents by the petitioner and the first rectified refund application was filed on 27th January 2020 along with requisite documents, as required by the respondents authorities. Thereafter, the second deficiency memo dated 11th February 2020 was issued with the same reasons for providing documents with the remarks “invoice(s) not shown in GSTR-2A but ITC is claimed in Annexure-B, for that eligible documents are not uploaded”. The petitioner filed second rectified application on 13th February 2020. Thus, the last date for filing the refund application upto December 2019 was extended upto 22nd January 2020 and considering the period of two years, the limitation period of relevant date would be over on 22nd January 2020 and considering 26 days of issuance of deficiency memo by the respondents authorities and adding the limitation for filing rectification application would therefore extend upto 17th February 2020 (22.01.2020 + 26 days = 17.02.2020). But the petitioner has filed the second rectified application on 13th February 2020 and applying the Notification No.15/2021, refund claim of the petitioner would be within the period of limitation. Therefore, as held by the Hon’ble Bombay High Court in the case of National Internet Exchange of India (supra), in terms of Section 54(1) of the CGST Act, the period of limitation would stop running notwithstanding that the proper officer required further documents or material to satisfy himself that the refund claimed was due to the petitioner. The Notification No.15/2021 dated 18th May 2021 is issued so that Rule 90(3) of the CGST Rules operates in accordance with the provisions of Section 54(1) of the CGST Act and therefore, the same is required to be applied to the facts of the case also.

[14] In view of the foregoing discussion, this petition succeeds. The impugned order dated 9th November 2020 passed by the respondent No.4 – The Joint Commissioner (Appeals) confirming the order dated 11th March 2020 passed by the Deputy Commissioner, Central GST, Division-I, Ahmedabad-South rejecting the application for refund filed by the petitioner on the ground of limitation is hereby quashed and set aside. The refund application filed by the petitioner in Form GST RFD-01 dated 16th December 2019 is restored for consideration of the proper officer a fresh on merits. The respondent-proper officer shall consider the refund application on merits and complete the entire exercise in accordance with law within a period of 12 weeks from the date of receipt of the copy of this order. Rule is made absolute to the aforesaid extent. No order as to costs.

(BIREN VAISHNAV, J)

(BHARGAV D. KARIA, J)