GST Update

Desk of CA. Praveen Sharma – 912 Series (CAPS)

Karnataka High Court in the case of Celebrity Structures India Private Limited

The petitioner approached the High Court seeking a refund of ?14.24 lakh, contending that the refund application was filed within the prescribed time and was wrongly rejected as time-barred by the GST authorities.

Although the department initially proposed to credit the refund amount to the electronic credit ledger, which was accepted by the petitioner, a part of the refund was subsequently rejected solely on the ground of limitation.

The rectification application filed by the petitioner against the partial rejection was also dismissed, which led the petitioner to challenge both rejection orders before the High Court.

The Court observed that the only reason for rejecting the refund was limitation, whereas the fact that excess tax was paid was never disputed by the department.

Relying on earlier High Court decisions, the Court reiterated that refund provisions relating to wrongly paid tax are procedural in nature and cannot override substantive rights of the taxpayer.

The Court held that retention of tax wrongly collected is impermissible and violates constitutional principles, and therefore the refund claim could not be treated as time-barred.

Accordingly, the impugned orders were set aside, the refund claim was held to be within time, and the matter was remanded to the proper officer to pass fresh orders in accordance with law within three months.

LINK:  CA. Praveen Sharma on Linkedin

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