GST UPDATE 106 ON VALIDITY OF MANUAL FILLING IN GST ERA

Government had introduced GST regime with an intention to simplify tax laws and reduce the compliances faced by the taxpayers. Consequently, compliances were digitalized including filing of refund applications online. However, at times, the intended benefit is diluted in procedural irregularities. Recently, one case was reported wherein the matter travelled upto Hon’ble Bombay High Court in the case of LAXMI ORGANIC INDUSTRIES LTD. V/S UNION OF INDIA (WRIT PETITION NO. 7861 OF 2021) wherein refund claim was denied on the grounds that it was filed manually which is not permissible in GST era. The analysis of the judgment is the subject matter of our today’s update. This issue involved in the case is regarding validity of manual filing of refund claim rather than electronic filing on the GST portal. In the given case, assessee failed to upload “Statement 5B” along with refund application on the portal. Hence, a manual application of refund was filed. However, it was returned back by the department without processing the refund claims. As per the impugned order, refund application is required to be filed online in form GST RFD 01, w.e.f. 26th September 2019 which is also supported by Circular No. 125/44/2019-GST dated 18th November 2019. The petitioner requested to issue Writ of Certiorari seeking relief for processing of refund application filed manually. The petitioner invited attention to Rule 97A of CGST Rules, 2017 which starts with “Non-Obstante” clause and validates manual filing of any application, intimation, reply or declaration which is otherwise required to be filed electronically on GST portal. The Hon’ble High Court allowed the petition by concluding that the refund application can be filed manually or electronically and the department has to process the said refund within stipulated time period. The High Court held that departmental officers cannot ignore the provisions contained in Rule 97A of CGST Rules, 2017 in the garb of clarification issued for electronic filing of various applications. It was held that the revenue authorities do not have liberty to elect and apply any laws or instructions as per their sweet will and rather they are required to adhere to the provisions of law. It is often observed that clarifications issued are taken as tool to deny the substantial benefit available to the assessees. In the present case also, the clarification issued for electronic filing of various applications was relied upon for non-acceptance of manual refund application filed by the assessee. However, the provision contained in Rule 97A supported the contention of the assessee regarding manual filing of refund application to be at par with online applications. It is settled principle of law that clarifications issued by Board are binding on the revenue authorities but assessees are not bound by it and may challenge its validity, particularly when it is contrary to the provision contained in statutory rules. Reliance may be placed on the Apex Court decision in the case of COMMISSIONER OF C.EX., BOLPUR VS RATAN MELTING & WIRE INDUSTRIES [2008 (231) E.L.T. 22 (S.C.)] wherein it was held that a circular which is contrary to the statutory provisions has no existence in law. If the contention of the departmental authorities is accepted that manual filing of refund application is not at all possible, it will defeat the very basic purpose of Rule 97A which is not proper. Thus, digitization is a step initiated by the department with an intention to bring uniformity and reduce paper work for the convenience of assessees but in exceptional circumstances of technical glitches, manual filing should also be acceptable. Another example of this proposition is allowing manual filing of TRAN-1 by various High Courts due to technical glitches faced by the assessees. Hence, the substantial benefit cannot be denied on account of procedural or technical infractions in compliance of law.

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GST UPDATE 106 ON VALIDITY OF MANUAL FILLING IN GST ERA

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