GST and Refund of Unutilised Input Tax Credit (ITC) : Law on Time Limit of 2 years under S.54

GST and Refund of unutilised Input Tax Credit (ITC) : Law on Time Limit of 2 years under S.54

In an important case it was held that "a plain reading of Sub-section (1) of Section 54 of the CGST Act, 2017 indicates that any person who is claiming a refund of tax or interest, if any, paid on the amount is entitled to make an application before the expiry of two years from the relevant date and in such form and manner as may be prescribed. The term “relevant date” has been defined in Explanation (2) to Section 54 of the CGST Act."

In terms of Rule 89(1) of Central Goods & Services Rules, 2017 any person claiming refund of tax was required to make an application electronically in FORM GST RFD-01 along with the requisite documents.

By Notification No. 55/2107-CT dated 15.11.2017, Rule 97A was introduced in the CGST Rules specifying that any reference to electronic filing of an application would also include manual filing. However, it is material to note that Rule 97A of the CGST Rules was introduced after the petitioner had exported some of its consignments.

It is also material to note that there were technical glitches in the electronic system of the GST authorities and taxpayers across the board were facing difficulties in electronic filing of returns. 

If the taxpayer has made a bona fide attempt to make an application but was prevented to do so on account of technical glitches or for any reason attributable to GST authorities, its claim for refund cannot be denied on account of delay.

Technical Glitches 

It was noted that there is no dispute that the petitioner had attempted to upload its application for refund but could not do so on account of technical glitches. Court held that it is difficult to accept that the petitioner’s legitimate right to seek refund could be foreclosed on account of such technical glitches. 

Case : Sethi Sons v. Assistant Commissioner [2023] GCtR 2537 (Delhi)