M/S Sai Steel vs. The State Of Bihar

Held

The Court held that the impugned order rejecting the refund application is bad in law. It found that the relevant date for counting the period of limitation for a refund claim under Section 77 of the CGST Act, 2017, read with Section 19 of the IGST Act and Circular No. 162/18/2021-GST, is the date when the petitioner deposited the tax under the IGST Act, which was March 4, 2023. The respondent authority erred in counting the two-year period from January 2018. The Court reasoned that allowing the respondent's view would render Section 77 and the clarificatory circular redundant. It followed the Jharkhand High Court's decision in Gajraj Vahan (P.) Ltd., which held that the circular extended the limitation for refunds in cases of wrong tax deposit. Consequently, the impugned order was set aside, and the petitioner was held entitled to the refund of excess SGST and CGST paid, along with interest at 6% per annum from three months after the refund application date until payment. Costs of Rs. 10,000/- were also awarded.

Facts

The petitioner, M/s Sai Steel, filed a writ application challenging an order dated May 6, 2024, passed by the Joint Commissioner of State Tax (Respondent No. 6). This order rejected the petitioner's refund application for excess tax paid, amounting to Rs. 5,08,194.00 (Rs. 2,54,097.00 CGST and Rs. 2,54,097.00 SGST) for January 2018 (Financial Year 2017-18). The rejection was based on the ground of limitation under Section 54 of the BGST/CGST Act, 2017. The petitioner had initially treated certain transactions as intra-State and paid CGST/SGST. Following an audit, it was observed that these were inter-State transactions, and the petitioner paid the short-paid IGST of Rs. 5,08,195/- on March 4, 2023, via DRC-03. The refund application was filed on January 17, 2024.

Key Issues

1. Whether the refund application filed by the petitioner for excess tax paid is barred by limitation under Section 54 of the BGST/CGST Act, 2017, considering the provisions of Section 77 of the BGST/CGST Act, 2017, read with sub-rule (1A) of Rule 89 of the BGST/CGST Rules, 2017, and Circular No. 162/18/2021-GST. (Question of law) Petitioner's arguments: The petitioner contended that the refund claim arises from payment of tax under the wrong head, governed by Section 77 of the Act, which does not prescribe a period of limitation. The payment of tax under the correct head (IGST) was made on March 4, 2023, and the refund application was filed on January 17, 2024, which is within two years from the date of payment as per sub-rule (1A) of Rule 89. They relied on Circular No. 162/18/2021-GST and the Jharkhand High Court judgment in Gajraj Vahan (P.) Ltd. vs. State of Jharkhand. Revenue's arguments: The judgment records no specific arguments from the revenue respondents.