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The Bombay High Court has quashed an order by the GST authorities which had rejected the refund claim of an assessee because it was filed after two years, a time limit set by the rules.

A division bench of Justices RD Dhanuka and SM Modak observed that the Supreme Court's decision from March, 2020, extending the time limit prescribed under the general or special laws, for proceedings due to the Covid-19 pandemic, would apply in the present situation.

However, the high court did not go into the validity of the circular and the question of striking it down.

The Petitioner, Saiher Supply Chain Consulting filed the first refund application for the period July 2018 to September 2018 on 21st August 2020 online on the GST portal. The said application however was rejected by the Respondent, Assistant Commissioner of GST on the ground that there were certain deficiencies in the said application.

Thereafter, the Company filed second refund application on 8th September 2020. The Asst. Commissioner rejected the said second refund application by pointing out deficiency by Order dated 23rd September 2020.

The Company thereafter filed third refund application on 30th September 2020. The Asst. Commissioner however rejected the said third refund application by Order on the ground that the said application was time barred.

Subsequently, the petitioner filed this Writ Petition inter-alia praying for restoration of the third refund application and for various other reliefs.

Aggrieved petitioner went to the Bombay high court, seeking to declare a said rule of limiting the refund within two years as ultra vires the Constitution.

The petitioner also sought quashing and setting aside the rejection order and direction to restore the third refund application of the petitioner.

The High Court observed that it was not in dispute that the first and second refund applications were rejected on the ground of certain deficiencies in those applications.

However, the third refund application was required to be filed within two years in accordance with the GST rules.

It was further pointed out that the Order passed by the Supreme Court on 23rd March 2020 in Re Cognizance for Extension of Limitation in Suo Motu Writ Petition (Civil) No. 3 of 2020 which stated,

“To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court.”

The division bench of High Court held that the Respondent was also bound by the said Order dated 23rd March 2020 and the Order dated 23rd September 2021 and was required to exclude the period of limitation falling during the said period.

Since,the period of limitation for filing the third refund application fell between the said period 15th March 2020 and 2nd October 2021, the said period stood excluded. Thereby, third refund application filed by the Petitioner thus was within the period of limitation prescribed under the said Circular dated 18th November 2019 read with Section 54(1) of the Central Goods and Services Act, 2017.

Finally, the Bench observed that the impugned Order passed by the Respondent was contrary to the Order passed by the Supreme Court and thus requited to be quashed and set-aside.

[Case Title - Saiher Supply Chain Consulting Pvt Ltd v. Union of India and Anr.]