The Gujarat High Court while directing the GST Refund worth Rs. 40 lakhs, has held that the Limitation provisions under section 54 do not apply where the amount is erroneously deposited voluntarily.
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed the petitioner has deposited voluntarily the amount of Rs. 40,00,000, the same would not be covered by the provisions of Section 54 of the GST Act and the same is required to be refunded by the respondent authorities as the same could not have been rejected on the ground of limitation under Section 54(1) of the GST Act. However, the petitioner will not be entitled to any interest on such an amount as the same was deposited voluntarily by mistake and therefore, the respondents to refund the amount of Rs. 40,00,000 deposited by the petitioner.
The petitioner/assessee is engaged in the business of manufacturing various types of textile machinery and equipment. Petitioner is registered under the provisions of the Central/State Goods and Services Tax Act, 2017, after coming into force of the GST Act.
The petitioner for manufacturing the goods, various types of textile machinery and equipment was procuring various inputs, raw materials, capital goods including the supplies by way of import during the period from May 2019 to March 2020.
The petitioner imported various inputs and material by filing 33 Bills of Entry which were cleared from the ports of imports to the factory premises of the petitioners on payment of import duties leviable including the integrated tax which is admissible as Input Tax Credit (ITC). Accordingly, the petitioner availed the ITC of the said amount on the basis of the Bills of Entry and challans.
However, it appears that due to some wrong impression created on the petitioner’s part that an excess credit of Rs.40,00,000 was availed regarding the tax paid on imported goods, which the petitioner paid on account of the mismatch between the figures of ITC relatable to integrated tax paid on imports, which was auto populated in Form of GSTR-2A and monthly returns filed in Form GSTR-3B returns.
On account of some mismatch of some error in the system resulted in the impression that excess credit of Rs. 40,00,000 was reflected in GSTR-2A return. The petitioner therefore deposited Rs. 40,00,000 on 13.11.2020 in Form DRC-03 believing bonafide that credit of Rs.40,00,000 was erroneously availed in excess of what was legally admissible.
No communication or letter was issued by the respondent authorities acknowledging the deposit of Rs.40,00,000 as voluntary payment and such payment is still shown on GST portal as “pending for action by Tax Officer”.
In the month of January-February, 2024, the Range Superintendent of the respondent authorities conducted verification and formal auditing of the records of the petitioner. During the scrutiny, it was found that there is discrepancy about Rs. 40,00,000 which was deposited vide Form DRC-03 but there was apparently no such tax liability which was required to be discharged within the financial year 2019-2020.
Therefore, a notice in form of GST ASMT-10 dated 23.2.2024 was uploaded on the portal calling upon the petitioner to clarify about the payment of Rs.40,00,000 through DRC- 03 along with other issues. The petitioner provided a clarification on 20.3.2024 stating that there was an excess payment of Rs.40,00,000 by DRC-03 by mistake and filed an application for refund in Form GST RFD-01 on 30.3.2024 stating that the petitioner has paid excess GST by mistake. The department also accepted the reply of the petitioner and closed the matter by passing an order in Form GST ASMT-12.
The department issued a notice for rejection of the refund claim calling upon the petitioner as to why the refund claim should not be rejected on the ground of limitation as the same was filed after two years from the date of payment as per the provisions of Section 54(1) of the GST Act.
The petitioner did not file any reply in writing. However, the representative of the petitioner had a personal meeting with the jurisdictional GST officer to whom the explanation was tendered orally with regard to the circumstances resulting in refund claim.
The court held that when the petitioner has deposited voluntarily the amount of Rs. 40,00,000, the same would not be covered by the provisions of Section 54 of the GST Act and the same is required to be refunded by the respondent authorities as the same could not have been rejected on the ground of limitation under Section 54(1) of the GST Act. However, the petitioner will not be entitled to any interest on such an amount as the same was deposited voluntarily by mistake and therefore, the respondents to refund the amount of Rs. 40,00,000 deposited by the petitioner.
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Case Details
Case Title: Messrs Aalidhra Texcraft Engineers & Anr. Versus Union Of India & Ors.
Case No.: R/Special Civil Application No. 14554 of 2024
Date: 12/12/2024
Counsel For Petitioner: Amal Paresh Dave
Counsel For Respondent: Nidhi T Vyas
