Ms Gajraj Vahan Private Limited Reprr Through Its Director Bhanu Prakash Jalan Alias Bhanu Jalan vs. The State Of Jharkhand

Held

The Court held that the petitioner's case was indeed one of payment of tax under the wrong head, which is covered by Section 77 of the CGST Act, 2017. The Court noted that a Circular No. 162/18/2021-GST dated September 25, 2021, issued by the CBIC, along with the insertion of Sub-Rule (1A) to Rule 89 of the CGST Rules, 2017, provided a benevolent provision for the extension of limitation for refunds in cases of wrong deposit. This sub-rule allows a person claiming refund under Section 77 to file an application within two years from the date of payment of tax on the inter-State supply, or two years from the date the sub-rule came into force for payments made before its commencement. The Court found this circular and rule to be applicable and extended the benefit to the petitioner. Consequently, the rejection order (Annexure-7) was quashed. The petitioner was granted liberty to file a fresh refund application within thirty days, which the respondents were directed to consider in light of the latest circular within thirty days thereafter.

Facts

The petitioner, M/s Gajraj Vahan Private Limited, filed a writ petition challenging the rejection of its refund application by the respondent authorities. The refund was sought for tax paid under the wrong head. The authorities rejected the claim on the ground of limitation, citing Section 54 of the CGST Act, 2017. The petitioner contended that its case falls under Section 77 of the Act, which deals with tax paid on a transaction considered intra-State but subsequently held to be inter-State, and that Section 77 does not prescribe a period of limitation. The disputed period for excess tax paid was August 2017 to March 2018. The rejection order was dated April 23, 2020.

Key Issues

1. Whether the refund application of the petitioner, which was rejected on the ground of limitation under Section 54 of the CGST Act, 2017, should have been considered under Section 77 of the CGST Act, 2017, which allegedly does not prescribe a period of limitation for such claims? Petitioner's arguments: The petitioner argued that the tax was paid under the wrong head, and its case is governed by Section 77 of the CGST Act, 2017. They contended that Section 77 does not prescribe any period of limitation for filing refund claims. They relied on the fact that the payment was made inadvertently under the wrong head. Revenue/State's arguments: The judgment does not record any specific arguments made by the respondents. However, their action of rejecting the refund on grounds of limitation under Section 54 indicates their stance that the claim was time-barred.