GST update No 307 on limitation for refund of tax paid under wrong head

It is well known fact that getting refund sanctioned from the Government is a matter of grave concern for the taxpayers since the departmental authorities are reluctant to sanction the refunds. It is observed that the assessees have to knock the doors of court in order to get their refund claims. Recently, one such case was reported before Andhra Pradesh High Court in the case of AXIS BANK LIMITED V/S UNION OF INDIA. The decision imparted in this case is subject matter of discussion of our present update.
The petitioner is the third largest bank and provides an entire spectrum of the financial services. The bank is registered in Andhra Pradesh as well as in Telangana with two different GSTIN. For the ease of determining the location of supply (LOS) and place of supply (POS), the branches were tagged to the respective states from where the services are provided. However, during this process, few business premises located in Telangana State were erroneously tagged as Andhra Pradesh and hence, LOS was also wrongly identified. However, POS was correctly identified as Telangana and IGST was paid instead of CGST and SGST. This incorrect mapping was identified by the bank in year 2019 and to rectify the same, the petitioner suo-motto deposited relevant CGST and SGST and reported the same in DRC-03. Further, in respect of IGST paid, refund was demanded. However, a show cause notice was issued to the petitioner wherein the refund application was rejected being time barred and details of excess tax payment were not reflected as per Section 54 of CGST Act, 2017. The aggrieved petitioner filed an appeal before Commissioner (Appeals) which was rejected. Therefore, this writ petition is filed due to non-constitution of GST Tribunal.
The Counsel of petitioner relied on the Circular dated 25.09.2021and statedthat the authorities erred in rejecting the claim as time barred.
The Counsel of respondent argued that the refund claim should be filed as per the procedure prescribed under the provisions of the Act. Since the impugned claim came to be made beyond the period of limitation i.e. 2 years, the refund is rightly rejected. Further, it was argued that all the documents required for making claim were incorrect. It was argued that except making bald statements of GST payments, no documentary evidence existed. Therefore, it was argued that there is no merit in the present case and hence, the same is liable to be dismissed.
The Court stated that the issue under consideration is whether the application made by the petitioner is barred by limitation and whether all the documents as required are filed along with the said refund application? Refence in this case was drawn to Circular dated 25.09.2021 regarding refund of tax. Further the word “subsequently held” was interpreted. It was stated that from Circular No. 162/18/2021-GST and Column No.3 of 4.3, if tax is paid in correct head before issuance of Notification No. 35/2021-Central Tax dated 24.09.2021, the last date of filing of refund would be 23.09.23 (2 years from date of notification). Further, in case IGST is paid on same transaction on 10.11.2022 i.e. after issuance of notification, the last date of filing would be 09.11.2024. Placing reliance on the same, the petitioner seeks remand of the matter. In the present case, the order was passed as on 23.11.2020 and circular was issued as on 25.09.2021 regarding clarification of date for claiming refund. Furthermore, the authority who passed the impugned order could not consider the Circular since the same was not issued by the date of impugned order. Since in the present case, the refund application was not coupled with adequate documents, the same is remanded back in light of the above stated Circular.
The above favourable decision is a silver lining in the clouds for the trade and industry. The moot question still unanswered in the minds of taxpayers is to what extent will this tug of war continue between the taxpayers and tax officers regarding denial of refund on the grounds of limitation when there is clear cut clarification issued by the CBIC. It is high time that the pro-revenuepractices should be curbed at the earliest possible by the revenue authorities as it will continue to increase the miseries of the government as well as the taxpayers.

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GST update No 307 on limitation for refund of tax paid under wrong head

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