GST Refund Claim for Jan-Mar 2019 Not Barred by Amended Limitation u/s 54: J&K&L HC [Read Order]
The J&K&L High Court ruled that the GST Section 54 amendment applies prospectively from February 2019, so refund claims for January to March 2019 are not barred by limitation.
In a recent decision, the Jammu & Kashmir and Ladakh High Court said that refund claims under Section 54 of the GST Act for the period from January to March 2019 are not blocked by time limits. The court ruled that the change to Section 54 applies only from February 2019 onwards, not to earlier periods.
Bharat Oil Traders, the petitioner is a partnership business that refills and sells edible oil and ghee. The firm applied for refunds from July 2017 to March 2019 under Section 54(3)(ii) of the GST Act, claiming back the built-up input tax credit because of the inverted duty structure.
Section 54(1) of the GST Act provides that “any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.”
The explanation to Section 54 defined “relevant date” differently before and after the amendment. Up to 31 January 2019, it meant “the end of the financial year in which such claim for refund arises.” With effect from 1 February 2019, it was substituted to mean “the due date for furnishing of return under section 39 for the period in which such claim for refund arises.”
The petitioner’s counsel argued that the change to Section 54, which started on 1 February 2019, works only for the future, not backwards. They said for refund claims from before the change, the old definition of relevant date still applies. The counsel also said the refund application filed on 2 February 2021 was on time, because the Supreme Court had left out the period from 1 March 2020 to 28 February 2022 from counting time limits due to the COVID-19 pandemic, and Notification No. 13/2022 dated 5 July 2022 also allowed this.
The respondent’s counsel argued that all refund claims filed on or after 1 February 2019 come under the new rules of Section 54, even for earlier periods. They said claims for July 2017 to January 2018 were too late, while those from February 2018 onwards were acceptable due to the extension. The counsel also stated that the refund for January to March 2019 was rejected because the firm had not received any eligible inputs during that period.
The Division Bench comprising Justice SindhuSharma and Justice Shahzad Ajeem observed that the amendment to Section 54 cannot operate retrospectively to take away vested rights. The court explained that the right to claim refund for periods prior to the amendment had already accrued, and such rights could not be curtailed by a subsequent amendment unless expressly provided.
The court pointed out that the refund claim for January to March 2019 was not barred by limitation, and the rejection on the ground of ineligible inputs was not supported by a reasoned finding.
The court held that refund claims for July 2017 to December 2018 and January to March 2019 were within limitation as they fell within the extended period provided by the Supreme Court’s orders and Notification No. 13/2022. The court further explained that denying refund solely on technical grounds of delay would defeat the purpose of the law.
The impugned appellate order dated 30 September 2022 was set aside and the matter was remanded to the Appellate Authority for fresh determination in accordance with law. The writ petition was allowed.
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