M/S Lupin LTD vs. The Union Of INDIA

Held

The Court disposed of the Writ Petition by directing the Petitioner to make a fresh application for refund claim, enclosing necessary supporting documents, in terms of Circular No. 125/44/2019-GST dated November 18, 2019. This fresh application is to be filed within three weeks from the date of the order. The authorities are then directed to dispose of this fresh application on merits and in accordance with law as early as possible, preferably within three weeks thereafter. The Court did not decide on the merits of the original refund claim or the procedural arguments raised by both parties, opting for a consent-based resolution to allow the Petitioner to pursue their claim under the prevailing guidelines.

Facts

The Petitioner, engaged in manufacturing and export of pharmaceuticals, migrated to the GST regime and registered under CGST. The Petitioner supplied goods to an SEZ unit on payment of IGST, which is considered a zero-rated supply. The Petitioner was entitled to a refund of IGST paid on these supplies under Section 54 of the CGST Act. Due to the non-availability of the electronic refund module, a temporary mechanism required filing refund applications physically. The Petitioner filed refund applications for February 2019 to August 2019 manually on August 21, 2019. However, in February 2020, the Department refused to accept physical documents, citing a CBIC Circular dated November 18, 2019, which mandated electronic filing from September 26, 2019. Subsequently, the Petitioner was informed on July 21, 2020, that their refund claims were rejected for non-submission of supporting documents. The Petitioner filed a writ petition seeking to quash the rejection orders and direct the sanctioning of the refund.

Key Issues

1. Whether the Petitioner's refund claim, filed manually on August 21, 2019, for tax periods February 2019 to August 2019, is liable for rejection solely on the ground of non-submission of physical copies, especially when the electronic refund module was not fully functional at the time of filing. Petitioner's contention: The Petitioner argued that they filed the refund applications manually on August 21, 2019, due to the non-availability of the electronic refund module. They relied on the temporary mechanism devised for initiating refund processes. The Petitioner contended that the rejection order was issued without proper notice or opportunity for a hearing, violating principles of natural justice. Revenue's contention: The Revenue contended that the Petitioner failed to submit physical copies of the refund application along with supporting documents, which is a prerequisite for processing the refund. They cited the CBIC Circular dated November 18, 2019, mandating electronic filing from September 26, 2019. The Revenue argued that since no physical documents were submitted, the question of issuing a notice or providing a personal hearing did not arise, and thus, there was no violation of natural justice.