The court held that a refund application filed within the statutory period cannot be rejected on grounds of limitation, and the applicant must be afforded an opportunity to be heard before any rejection.

JUDGMENT :

Tashi Rabstan – CJ(A)

1. The petitioner through the medium of present writ petition is seeking to quash deficiency memo (Form-GST-RFD-03) bearing reference No.Z00110200180922 dated 15.10.2020 issued by Assistant Commissioner, Goods and Services Tax, respondent No.2 herein, under Section 54 of Central Goods and Services Tax Act, 2017, whereby the application for refund of GST paid by the petitioner concern has been rejected on the ground of limitation. The petitioner is also seeking a direction to the respondents to process and release the GST refund of petitioner.

2. The facts, as projected in the writ petition, are that the petitioner is a partnership concern engaged in the business of manufacturing of garments under the name and style of M/s Hallmark and is registered under the Central Goods and Services Tax Act, 2017. It is averred that the petitioner concern also transact outside the State by selling the products manufactured by it and every sale made outside the state falls under the category of outward supply and the output tax is charged. In the event of return of the goods, if any, the tax in the shape of GST already deposited, is adjusted in the Tax Liability of the subsequent months. Further, in case on the date of filing of the final return, if any excess deposit of tax is there, a refund of the tax paid-in-excess is claimed.

3. The case of the petitioner concern is that during the months of January, February, March and July, 2018 the goods returned by the customers exceeded the outward supply though the output tax on those returned goods had already been charged by the J&K Goods and Services Tax Department. Since the tax in the shape of GST had already been deposited on those returned goods, the same was to be adjusted as Tax Liability in the subsequent months. However, the same was not done in respect of those returned goods. Since there was excess deposit of tax by the petitioner concern, therefore, on the date of filing of the final return a refund of the tax paid-in-excess was to be claimed. In the present case, the petitioner concern filed the final GST return on 20.09.2018.

4. The further case of petitioner is that in terms of Section 54 of the Goods and Services Act, 2017, the limitation to file the refund application is two years from the relevant date. The petitioner concern under Rule 89 of Goods and Service Tax Rules, 2017 filed the application under proper format to respondent No.2 for refund of the tax paid-in-advance on 08.09.2020, i.e., within the period of limitation of two years with all requisite documents. The refund calculated was at Rs.2,91,650/-.

5. It is averred that respondent No.2 on 23.09.2020 issued a deficiency memo (Form-GST-RFD-03) under Rule 90(3) thereby demanding supporting documents and advised the petitioner to file fresh refund application after rectification of the deficiencies. Pursuant to the deficiency memo dated 23.09.2020, the petitioner concern filed a fresh refund application to respondent No.2 on 28.09.2020. However, respondent No.2 issued deficiency memo (Form-GST-RFD-03) bearing reference No.Z00110200180922 dated 15.10.2020, whereby the application for refund of GST of the petitioner concern came rejected under Section 54 of Central Goods and Services Tax Act, 2017, i.e., on the ground of limitation. Hence, the present petition.

6. Learned counsel appearing for petitioner concern argued that when respondent No.2 had himself permitted the petitioner concern on 23.09.2020 to file fresh application for refund of GST, he ought to have not rejected the same on the ground of limitation. He further argued that the deficiency memo issued on 15.10.2020 had been issued beyond the statutory period as permissible under law.

7. Objections have been filed on behalf of respondents. It is averred that as per RFD-01 available on GST portal, the refund application came to be filed by the petitioner concern after two years from the relevant date, therefore, the same was barred by limi