GST Refund Limitation Must Exclude COVID Period Under Section 54: Andhra Pradesh High Court

The Andhra Pradesh High Court on 11 March held that while computing the limitation period under Section 54 of the CGST Act, 2017, the benefit of exclusion of time during the COVID-19 period must be granted. Section 54 governs the process for claiming refunds of tax, interest, or any other amount paid under GST.

A Division Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar set aside the rejection of a GST refund application filed by McWane India Private Limited on the ground of limitation and remanded the matter to the authority for reconsideration. The Bench directed:

“...the order of rejection of refund, dated 16.08.2024, is set aside and the matter is remanded back to the 3rd respondent to consider the application of the petitioner, in accordance with law and without going into the question of limitation.”

The petitioner, engaged in the business of iron goods and export of services, had filed a refund application for Input Tax Credit on 9 February 2024. The application was initially returned due to certain deficiencies, which were later rectified, and the application was re-filed on 13 March 2024.

However, the Assistant Commissioner rejected the refund application by order dated 16 August 2024 on the ground that it had been filed beyond the prescribed two-year limitation period under Section 54 of the CGST Act.

Challenging the rejection, the petitioner contended that the period from 15 March 2020 to 28 February 2022 ought to be excluded in view of the Supreme Court's decision in In Re: Cognizance for Extension of Limitation and CBIC Notification No. 13/2022. It further argued that the original application had been filed within time and that the delay in re-filing after rectification of deficiencies was protected under Rule 90(3) of the CGST Rules, as amended by Notification No. 15/2021.

Accepting the petitioner's submissions, the Bench held that once the COVID period is excluded, the limitation period would commence only from 28 February 2022, making the last date for filing the refund application 27 February 2024.

The Court further noted that the time taken between the original filing and the communication of deficiencies must also be excluded. Upon such exclusion, the re-filed application dated 13 March 2024 would fall within the prescribed limitation period.

Referring to Rule 90(3) of the CGST Rules, 2017, the Bench observed:

“This sub-rule excludes the time between the dates of filing of the refund claim and the date of communication of the deficiencies. The 3rd respondent, in the impugned rejection order, dated 16.08.2024, had excluded 25 days on account of this sub-rule. Once the said period of 25 days is taken into account, the filing of the application would have to be treated within time, inasmuch as the application was filed on 13.03.2024, while the last date, after excluding the 25 days, from 27.02.2024 would be 24.03.2024.”

Accordingly, the High Court held that the refund application had been filed within the prescribed limitation period and allowed the writ petition.

For Petitioner: Moguluru Ishwarya