As per Section 54 of the CGST Act, 2017, an application for claiming refund of tax or un-utilised input tax credit on account of export can be made before the expiry of two years from the relevant date. Relevant date is normally date of payment of tax or date of export goods or date of receipt of foreign currency in case of export of services.

There are incidences where companies could not file refund within two years may be because of non-availability of documents or not aware about provisions or pandemic situation. There might also be cases where refund claims are rejected merely on the ground of time bar.

Now, the good news is that the Hon’ble Supreme Court has given opportunity to file refund claim for the last four years.  The Hon’ble Supreme Court in its Suo Moto Writ Petition Order dated 10^th January 2022 held that period from 15^th March 2020 to 28^th February 2022 shall stand excluded for the purposes of limitation. Relevant extract of the Hon’ble Supreme Court order for the extension of limitation period for various petitions / applications / suits / appeals / all other quasi proceedings is reproduced below for your ready reference:

1. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021, and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings.

2. Consequently, the balance period of limitation remaining as of 03.10.2021, if any, shall become available with effect from 01.03.2022.

3. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022.

4. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, the longer period shall apply.

Further, the Hon’ble Bombay High Court in the case of M/s Saiher Supply Chain Consulting Pvt. Ltd .vs. UOI wherein it is held that the Covid-19 limitation suspension orders of the Hon’ble Supreme Court apply to limitation for refund application under Section 54 of GST Act. The relevant text is reproduced below for your ready reference:

Held: The third refund application was required to be filed within two years in accordance with the Circular No. 20/16/04/18-GST dated 18^th November 2019, under Section 54(1) of the Central Goods and Services Tax Act, 2017 – The limitation period fell between 15th March 2020 and 2nd October 2021, which period was excluded by the Supreme Court [Cognizance for Extension of Limitation – [ 2020-TIOL-77-SC-MISC-LB ] & – 2021-TIOL-246-SC-MISC-LB ] in all such proceedings irrespective of the limitation prescribed under the general law or Special Law whether condonable or not till further Order/s to be passed by the Hon’ble Supreme Court in those proceedings – Respondent No. 2 is also bound by the said Order dated 23rd March 2020 [2020-TIOL-77-SC-MISC-LB] and the Order dated 23rd September 2021 [2021-TIOL-246-SC-MISC-LB ] and is required to exclude the period of limitation falling during the said period – Since the period of limitation for filing the third refund application fell between the said period 15th March 2020 and 2^nd October 2021, the said period stood excluded – The third refund application filed by the Petitioner thus was within the period of limitation prescribed under the said Circular dated 18th November 2019 read with Section 54(1) of the Central Goods and Services Act, 2017 – The impugned Order passed by the Respondent No. 2 is contrary to the Order passed by the Supreme Court and thus deserves to be quashed and set-aside – Respondent No. 2 is directed to consider the said third refund application dated 30th September 2020 on its own merits and in accordance with law expeditiously – Bench has not gone into the validity of the Circular and the Rule 90(3) – Petition is allowed: High Court

Furthermore, reliance can also be placed on a very recent decision of the Hon’ble Allahabad High Court in the case of M/s Gamma Gaana Limited vs. Union of India dated 3^rd March 2022 wherein it was held that the refund application of the petitioner could not have been rejected by the respondent officer merely on the ground of delay, ignoring the afore quoted order of Hon’ble Supreme Court and thus, the impugned order cannot be sustained and is hereby quashed. The relevant text is reproduced below for your ready reference:

Held – On the facts in the present case, the refund application of the petitioner cannot be rejected solely on grounds of delay, particularly in ignorance of the directions of the Supreme Court vide its order dated 10.01.2022, wherein it was held that in cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022 – It was also held that in the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply – Considering such observations, the order rejecting the refund claimed by the petitioner, merits being quashed: HC

So now it is crystal clear that companies can file refund claims under GST for the last four years. Calculation can be explained with the help of below example:

Let’s assume that the company wanted to file refund for the month of August 2018 which was otherwise time barred in July 2020. Considering this scenario and order of the Hon’ble Supreme Court, and for calculating two years limitation period, period from 15^th March 2020 to 28^th February 2022 shall be excluded. Accordingly, two years shall be calculated in the below manner:

1. Nineteen months (mid of September 2018 to mid of March 2020) – to be considered for calculating limitation period;
2. Two years (mid of March 2020 to February 2022) – to be excluded for calculating limitation period;
3. Five months (March 2022 to July 2022) – to be considered for calculating limitation period.

Thus, in the present example, the due date for refund claim will be July 2022 and not July 2020.

WAY FORWARD

Companies may re-consider claims which are not filed on account of time bar and apply fresh. There might be instances where refund claims related to export of goods / services were filed in the past but rejected merely on the ground of time bar but now because of order of the Hon’ble Supreme Court, such refund claims come within the time limit. Now the question is once refund claim is filed for a particular period and if the same is rejected, then subsequently, refund under the same category for the same period cannot be filed. In such cases, companies may file refund not under export category but under the category of “excess payment” or “other”.

Hope you find it useful. Any suggestion or view are most welcome.