GST Law Does Not Bar More Than One Refund Application, Especially In Case Of Inadvertent Lapse: Bombay HC

The Bombay High Court has recently held that a GST refund claim cannot be rejected merely because the taxpayer had earlier filed another refund application for a broader tax period, where the later claim was filed within the limitation period and there is no statutory bar against such a claim.

Referring to Section 54(1) of the Central Goods and Services Tax Act, which governs refund claims, the Court said:

“Section 54 does not provide any bar for a party to maintain more than one application, and more particularly, in a case where there is an inadvertent mistake or lapse.”

A Division Bench of Justice G.S. Kulkarni and Justice Aarti Sathe was dealing with a plea by Valmet Flow Control Pvt. Ltd., whose second refund application for Rs.1.10 crore was rejected after tax authorities held that it had already filed and obtained refund under an earlier application covering July 2022 to September 2022.

The company said one invoice had been inadvertently left out from the earlier refund claim and that it later filed a separate application for that omitted claim within the two-year limitation period prescribed under Section 54(1) of the CGST Act.

The Assistant Commissioner rejected the claim, holding that once a refund application for the broader tax period had already been filed and sanctioned, a second application for a period falling within that same span was not maintainable. The authority relied on CBIC circulars and instructions.

Rejecting that approach, the Court held that in the absence of any statutory prohibition, the second application was maintainable.

“the application being within the time frame as prescribed under sub-section (1) of Section 54, and in the absence of any specific bar for a second application, technicalities of the nature as observed in the impugned order could not have defeated the petitioner's right to maintain the second refund application for a decision on its merits. In matters of such application which are on specific refund application, for distinct periods, there is no question of reading any principles of res judicata or principles analogous thereto. This would defeat the object of the provisions, by creating an illusory bar. In any event, a too technical view cannot be taken to defeat the requirement of justice..”

The petitioner relied on the Gujarat High Court's ruling in Shree Renuka Sugars Ltd., where relief was granted in respect of a left-out refund claim arising from an arithmetical error.

Referring to its earlier ruling in Rika Global Impex Ltd., the Bombay High Court observed that for the sake of uniformity, views taken by other High Courts on identical questions involving central legislation, particularly where such decisions have attained finality, ought ordinarily to be followed.

Accordingly, the court quashed the rejection order and restored the refund application to the Assistant Commissioner for fresh consideration on merits in accordance with law. The petitioner's claim for statutory interest was expressly kept open.

For Petitioner: Advocate Ram Heda, instructed by Priyanka Shukla for Petitioner.

For Respondents: Advocate Siddharth Chandrashekhar along with Niyati Mankad along with Priyanka Singh for Respondent Nos.1 to 3.