In a recent case, the Delhi High Court quashed rejection of refund application of intra state supply services without considering the circular relating to the limitation. Therefore the division bench observed that the refund applications filed by the petitioner are covered by the circular dated 25.09.2021 and were within limitation.
In this case the Appellate Authority has erred in not considering the circular dated 25.09.2021, whereby the period of limitation was enhanced. Hence the aggrieved by the petitioner Dmi Alternatives Private Limited filed the writ petition.
During the adjudication counsel for the petitioner submitted that the Petitioner while filing the monthly statement of outward supply in Form GSTR-1 for the month of November 2017, declared the total taxable value for intra-State supply of services erroneously under the head of interState supply under the Integrated Goods and Service Tax ( IGST ) instead of intra-State supply under the Central Goods and Service Tax ( CGST ) and State Goods and Service Tax ( SGST ).
Petitioner corrected the error and deposited the correct CGST and SGST amount thereby leading to a double deposit of tax, once under the head of IGST and second cumulatively under the head of CGST and SGST.
Petitioner thereafter filed an application seeking refund however, by order the said application was rejected. When the petitioner filed an appeal before the Appellate Authority, however, the Appellate Authority held that the said application seeking refund was belated and as such dismissed the appeal solely on the ground of delay in filing an application seeking refund.
It was observed by the court that the petitioner had paid tax under the wrong head on 20.12.2017 and paid tax under the correct head on 19.08.2019. In terms of the clarification issued by circular dated 25.09.2021, petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head i.e. before expiry of two years from 19.08.2019.
The circular also makes it clear that payments made under the incorrect head prior to the circular’s issuance would be eligible for a two-year extension starting on the date of the circular. This suggests that any refund request submitted by September 23, 2023, at the latest, for taxes paid under the incorrect head before September 24, 2021, will be taken into consideration on schedule.
In the aforementioned matter, the petitioner initially filed for a refund on May 11, 2020. That application was denied on June 29, 2020, and the appeal against the aforementioned order was similarly dismissed on June 30, 2021—that is, before the circular dated September 25, 2021—which provided clarification.
Following the circular’s release, the petitioner filed a second application on July 14, 2022, which was denied by the original ruling that was contested before the Appellate Authority and is now under appeal before us.
After analyzing the facts and arguments of both parties, a division bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja held that both the refund applications filed by the petitioner are covered by the circular dated 25.09.2021 and were within limitation.
Hence the bench quashed rejection of refund application of intra state supply services without considering the circular relating to the limitation.
Mr. Sunil Agarwal, Mr. Shivansh B. Pandya, Mr. Utkarsh Tiwari, Mr. Ashutosh Mohan Rastogi and Mr. Dhruv Seth, Advocates appeared for the petitioner and Mr. Arnav Kumar, Senior Standing Counsel with Ms. Aranya Sahay, Advocates appeared for the respondent.
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