Axis Bank Limited vs. The Union Of INDIA

Held

The Court noted that Section 54 of the CGST Act, 2017, indeed prescribes a two-year period of limitation for refund applications. However, it also acknowledged the issuance of Circular No. 162/18/2021-GST dated 25.09.2021, which clarified the refund of tax paid under Section 77(1) of the CGST Act and Section 19(1) of the IGST Act. The Circular, particularly paragraph 4.2, provided that for payments made before the notification of Rule 89(1A) of the CGST Rules, 2017 (dated 24.09.2021), the refund application could be filed within two years from the date of issuance of that notification (i.e., until 23.09.2023). The Court observed that the impugned order was passed on 23.11.2020, prior to the issuance of this clarifying circular. The revenue's counter was based solely on Section 54, without considering the subsequent circular. Therefore, the Court found it appropriate to remand the matter back to the Assistant Commissioner, Central Tax (the third respondent), to re-examine the refund application in light of Circular No. 162/18/2021-GST dated 25.09.2021, particularly concerning the applicability of the circular and the period of limitation, and then pass orders in accordance with the law. The issue of whether all necessary documents were filed was implicitly to be considered during this re-examination.

Facts

The petitioner, a private bank, had multiple GST registrations in Andhra Pradesh (AP) and Telangana (TL). Due to system configuration errors at GST implementation, some business premises in Telangana were erroneously tagged to AP. This led to IGST being paid from the AP registration for services rendered from Telangana branches, instead of CGST + SGST from the TL registration. The petitioner identified this error in 2019 and suo motu deposited the correct CGST + SGST in Telangana for July 2017 to August 2019. Consequently, tax was paid twice for the same services. The petitioner filed refund applications for the IGST paid in AP on February 14, 2020, amounting to Rs. 16,90,41,709. A show cause notice was issued, and the refund was rejected as time-barred under Section 54. Appeals to the Additional Commissioner (Appeals) were also dismissed. The petitioner filed a writ petition challenging these orders.

Key Issues

1. Whether the petitioner's refund application is barred by limitation under Section 54 of the CGST Act, 2017, considering the issuance of Circular No. 162/18/2021-GST dated 25.09.2021? (Question of law) 2. Whether all the necessary documents were filed along with the refund applications? (Question of mixed law and fact) Petitioner's arguments: The petitioner contended that the authorities erred in rejecting the claim as time-barred, relying on Circular No. 162/18/2021-GST dated 25.09.2021, which provided clarification on the refund of tax paid under the wrong head. They argued that the application was not barred by limitation as per the circular. Revenue's arguments: The revenue argued that Section 54 of the CGST Act prescribes a two-year limitation period for refund claims, and the petitioner's application was made beyond this period. They also contended that the petitioner failed to provide documentary evidence to support their claim of incorrect payments, making only a bald statement. The revenue argued that six out of nine claims pertained to July-December 2017, making the February 2020 refund claim time-barred, and that no material was placed for other claims.