In a recent decision the Madras High Court observed that the relevant date for computation of period of limitation for filing refund application under Section 54 of the Central Goods and Service Tax Act, 2017 (CGST Act) is the date of receipt of payment in convertible foreign exchange.
The petitioner is a Business Process Outsourcing company, which exports services under a letter of undertaking, without payment of IGST, and avails of refund of unutilised Input Tax Credit (ITC) under Section 16(3) of the Integrated Goods and Services Tax Act, 2017 read with Section 54 of the Central Goods and Services Tax Act, 2017.
During the period running from April 2018 to March 2019, the petitioner exported services of the aggregate value of Rs.10,12,26,441/- to overseas recipients. Upon issuing invoices, payments were received under Foreign Inward Remittance Certificates (FIRC). Thereafter, the petitioner filed a refund application in respect of unutilised ITC under Section 54 of the CGST Act on 04.09.2020.
The petitioner was called upon to show cause as to why a sum of Rs.9,22,424/- towards wrong ITC claim and a sum of Rs.28,050/- under the head ‘Other’ should not be disallowed. The petitioner replied to the notice on 08.10.2020 and stated that it was unable to function normally on account of the COVID-19 pandemic.
The appellate authority concluded that the export turnover for the period running from April 2018 to August 2018 cannot be considered because the same is time barred. Consequently, only the export turnover from September 2018 to March 2019 was considered in the appellate order. The present appeal arose in the said facts and circumstances.
The counsel for the petitioner submitted that the period impacted by the COVID-19 pandemic was excluded from the limitation period for filing a refund application under Section 54 of the CGST Act by a notification issued on 05.07.2022 under notification No.13/2022-C.T. By virtue of such notification, it was submitted that the limitation period was required to be computed by excluding the period running from 01.03.2020 to 28.02.2022. If computed by permitting the benefit of the above notification, the counsel submitted that the claim for refund is within time.
A Single Bench of Justice Senthil Kumar Ramamoorthy observed that “The relevant date is the date of receipt of payment in convertible foreign exchange, as per Explanation (2) to sub-section (14) of Section 54. Even as regards FIRCs issued in April 2018, if the benefit of the above notification is extended to the petitioner, the refund application dated 04.09.2020 would be within the two year period, which is to be computed from the relevant date, as per sub-section (1) of Section 54 of the CGST Act.”
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