M/S Global Health LTD vs. Union Of INDIA And Ors

Held

The Court allowed the petition, setting aside the impugned orders. The Court followed the Delhi High Court's judgment in BSNL vs. Union of India, which held that Rule 90(3) of the CGST Rules cannot be applied in a manner that renders an application non est merely because deficiencies were communicated. The Court reasoned that if an application is filed with documentary evidence as per Rule 89(2), it cannot be ignored for limitation purposes. The limitation period stops upon the filing of the initial application. Therefore, the petitioner's second refund application, filed after rectifying deficiencies in the initial application dated 18.10.2019 (filed within two years of the GSTR-3B), could not be rejected on the ground of limitation. The matter was remanded back to the Adjudicating Authority to consider the refund afresh in light of the Court's observations. The challenge to the validity of Rule 90(3) was not pressed by the petitioner at the outset, but the Court's reasoning implicitly addressed its application.

Facts

The petitioner, M/s Global Health Ltd., mistakenly paid excess SGST of Rs. 16,60,114/- under reverse charge mechanism while filing GSTR-3B for September 2017 on 20.10.2017. They filed a refund application on 18.10.2019. A deficiency memo was issued on 01.11.2019 under Rule 90(3) of CGST Rules. The petitioner filed a second application on 05.11.2019 after rectifying deficiencies. The Assistant Commissioner rejected the refund application on 03.01.2020, deeming it time-barred. The appeal against this order was also rejected on 21.03.2022. The petitioner challenged these orders and the validity of Rule 90(3) of CGST Rules.

Key Issues

1. Whether Rule 90(3) of the Central Goods and Services Tax Rules, 2017, which requires filing a fresh refund application upon receiving a deficiency memo, is ultra vires Article 14 of the Constitution of India, as argued by the petitioner? 2. Whether the second refund application filed by the petitioner on 05.11.2019, after rectifying deficiencies in the initial application dated 18.10.2019, was time-barred, as held by the respondents? Petitioner's arguments: The petitioner contended that Rule 90(3) is ultra vires Article 14. They argued that the initial refund application was filed within the two-year limitation period under Section 54 of the CGST Act. They relied on the Delhi High Court's decision in BSNL vs. Union of India, which held that a deficiency memo does not render an application non est and that the limitation stops on the filing of the initial application. Respondents' arguments: The respondents argued that the deficiency memo issued on 01.11.2019, after the initial application, necessitated a fresh application. They relied on a circular dated 18.11.2019, which states that a rectified refund application submitted after correction of deficiencies must be within the two-year period of limitation. Therefore, the second application filed on 05.11.2019 was time-barred.