Upheld the provisions w.r.t claiming of refund of unutilized ITC

The Hon’ble Rajasthan High Court in M/S Triveny Electrodes & ors. v. Union of India, Through Secretary, Finance Department, Government of India, New Delhi & ors. [D.B. Civil Writ Petition No. 2137/2022 dated January 20, 2022] upheld the provisions w.r.t claiming of refund of unutilized Input Tax Credit ("ITC") and asked the department to pass final order after taking into account the reply of the assessee.

Facts

M/S Triveny Electrodes & ors. ("the Petitioner") had challenged the vires of Section 54 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") as ultra vires to the constitution. The petitioner had claimed refund of the accumulated credit in the ledger account. The Union of India, Through Secretary, Finance Department, Government of India, New Delhi & ors. ("the Assessing Officer" or "Competent Authority") communicated the Petitioner and rejected the claim stating that it is time barred.

The competent authority however before passing such order issued a show cause notice to the Petitioner which was to be replied within 15 days. Following which the Petitioner also filed a reply raising concern that refund was not claimed after the expiry of the limitation period and the final order is pending.

Subsequently, the Petitioner also filed the present writ and contended that the relaxations related to COVID would apply to the provisions related to time limit contained in the statutes for refund.

Issue

Whether Section 54 of the CGST Act is ultra vires the Constitution of India?

Held

The Hon’ble Rajasthan High Court in D.B. Civil Writ Petition No. 2137/2022 dated January 20, 2022] held as under:

• Noted that in the case of Union of India and others v. VKC Footsteps India Pvt. Ltd. [Civil Appeal No 4810 of 2021 dated September 13, 2021]the Hon’ble Supreme Court has upheld the vires of the statutory provisions Section 54 of the CGST Act.
• Refused to go into the questing in the petition and stated that the Assistant Commissioner must conclude the Petitioner’s refund claim keeping in mind the reply filed by the Petitioner against the show cause notice.
• Further, stated that the Petitioner has the right to file reply raising additional grounds in support of the refund claims within a week from the date of this order.

Relevant Provision

Section 54 of the CGST Act

"54. Refund of tax

(1) 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:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.

Explanation.-For the purposes of this section,- -

(2) "relevant date" means-

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,- -

 (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of- -

(i) receipt of payment in convertible foreign exchange ²[or in Indian rupees wherever permitted by the Reserve Bank of India], where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax."