Tax and GST : Legal Principles of Refund of Tax and Interest under CGST Act, 2017

Tax and GST : Legal Principles of Refund of Tax and Interest under CGST Act, 2017

In a recent Judgment legal issues of refund of tax was discussed. It was held that "the expression ‘relevant date’ is required to be construed with reference to the category under which the refund claim falls. In cases involving simple export of goods, and tax has been paid at the time of export, the relevant date would be construed in terms of Explanation 2(a). In case of other kinds of exports such as deemed exports, Explanation 2(b) would apply. In respect of zero-rated supplies made to a SEZ developer or unit, the applicable provision would be Explanation 2(ba). Insofar as export of services is concerned, the relevant date would be governed by Explanation 2(c). In the case of unutilised ITC, Explanation 2(e) would be applicable. Therefore, the scheme of the CGST Act, 2017 accords different treatment to different types of exports. All exports are not treated identically."

The period within which the refund of any tax and interest under the CGST Act, 2017 is to be sought, has been prescribed under Section 54. The said provision comprises various sub-sections and Explanations, which requires interpretation in the present petitions.

Aspects of S.54 (1) of CGST Act, 2017

As per Section 54(1) of the CGST Act, 2017 an application for refund is required to be made before the expiry of two years, which is to be computed from the relevant date. Section 54(1) of the CGST Act stipulates three aspects: (i) That refunds of any tax and interest can be claimed by tax payers; (ii) The same ought to be claimed within two years; (iii) That the two year period is to be calculated from the relevant date

The amounts for which the refund can be claimed includes tax and interest. Under Explanation (1) to Section 54 of the CGST Act, the term ‘refund’ has been defined.

Limitation Period for Claiming Refund

Coming to the second aspect, i.e., the limitation period within which refund can be claimed, the general rule is that refund applications have to be made prior to the expiry of two years from the relevant date. The expression relevant date is defined in Explanation (2)(a) to (h) to Section 54 of the CGST Act. The provision stipulates distinct relevant dates depending upon the nature of transaction, including supplies, exports, etc.

Determination of Relevant Date For Refund

It is evident that the determination of relevant date under Section 54 of the CGST Act, 2017 is not uniform - the same depends upon the nature of the transaction and the category of the refund claimed. The statutory scheme highlighted provides a comprehensive framework for indentifying the relevant date in diverse transactions, including exports, deemed exports, services, unutilised ITC etc.

Consequently, in each case, the applicable clause of Explanation 2 must be carefully applied, in light of the nature of the transaction in question. 

Case : Kanika Exports v. Union of India [2026] GCtR 347 (Delhi)