Refund claim not to be rejected when refund application filed under wrong category

The Madras High Court has ruled that a refund claim should not be rejected simply because it was filed under the wrong category. In a case involving Engineers India Ltd., the court found that the refund application, even if placed under 'Any Others', should be considered on its merits. The court emphasised that Section 54(1) of the CGST Act is broad enough to cover any valid refund claim made within two years.

The Hon'ble Madras High Court in the case of Engineers India Ltd. v. Assistant Commissioner (Central Tax) [W.P. No. 26927 of 2021 dated February 07, 2024] set aside the Impugned Order and held that, the refund claim should not be rejected on the ground that the refund application was filed under wrong category. 

Facts

Engineers India Ltd. ("the Petitioner") is a company engaged in providing design, engineering, procurement, supply and related services with respect of large construction projects. As per Section 13 of the Tamil Nadu Value Added Tax Act, 2006 ("the TNVAT Act"), the employer was required to deduct TDS at the time of making payment to contractors including the Petitioner and the contractor was entitled to adjust the TDS amount against the tax liability under the TNVAT Act. The Petitioner, after the implementation of GST, asserted that, he is eligible to claim transitional TDS credit. However, the tax was deposited under protest by the Petitioner, as the subject matter was pending before the Hon'ble High Court. Later, the High Court allowed the writ petitions filed before the Hon'ble Madras High Court wherein it was held that, the Petitioner is entitled to claim transition of credit of TDS under the TNVAT Act. However, the refund application filed by the Petitioner was rejected vide Order dated September 9, 2021 ("the Impugned Order") on the ground that claim for refund was made under the wrong category i.e. "Any Others".

Aggrieved by the Impugned Order, the Petitioner filed a writ petition before the Hon'ble High Court contending that, the aforesaid category for refund is not stated in Circular No. 125/44/2019-GST dated November 18, 2019 ("the Circular"). 

Issue

Whether refund claim should be rejected when refund application is filed under wrong category?

Held

The Hon'ble Madras High Court in the case of W.P. No. 26927 of 2021 held as under:

• Noted that, refund claim cannot be rejected on the ground that refund claim does not fall within the specific categories enumerated in the Circular.  
• Further Noted that, Section 54(1) of the Central Goods and Services Tax Act, 2017 is wide enough to include any kind of refund of tax or interest if the claim is made within two years from the relevant date. 
• Opined that, the Impugned Order was issued without stating any adequate reason for rejection of refund claim, thereby, the writ petition was disposed of. 
• Held that, the Impugned Order is quashed and the matter is remanded back for reconsideration. 

Relevant extract of the Circular

"3. With effect from September 26, 2019, the applications for the following types of refunds shall be filed in FORM GST RFD 01 on the common portal and the same shall be processed electronically:

a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
b. Refund of tax paid on export of services with payment of tax;
c. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
d. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
e. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
f. Refund to supplier of tax paid on deemed export supplies;
g. Refund to recipient of tax paid on deemed export supplies;
h. Refund of excess balance in the electronic cash ledger;
i. Refund of excess payment of tax;
j. Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;
k. Refund on account of assessment/provisional assessment/appeal/any other order;
l. Refund on account of "any other" ground or reason."