Ms Esl Steel Limited Through Its Dy General Manager Accounts Rajesh Kumar Pandey vs. Principal Commissioner Central Goods And Service Tax And Central Excise

Facts

ESL Steel Limited (the petitioner) filed a writ petition challenging the rejection order dated 01.07.2021 passed by the Deputy Commissioner, CGST & CX, Bokaro (Respondent No. 3). The rejection order concerned a refund application filed on 28.05.2021 for compensation cess paid for the period May 2018 to July 2018, amounting to Rs. 53,13,706/-. The petitioner sought a direction to allow the refund, arguing it was rejected ex-parte and contrary to Supreme Court orders extending limitation periods due to COVID-19. The refund application was filed after a previous composite application for April-October 2018 received a defective memo. The respondent revenue authority contended the refund application was time-barred, citing a CBIC circular.

Held

The Court held that the refund application was not time-barred. It found that the proceedings for refund under the CGST Act and Rules are quasi-judicial in nature, requiring a show-cause notice before rejection and an opportunity to be heard. Therefore, these proceedings are covered by the Supreme Court's orders in Suo Motu Writ Petition (Civil) No. 3/2020, which extended the period of limitation for all judicial or quasi-judicial proceedings. The Court noted that the Supreme Court's order dated 27.04.2021, in particular, restored the extension of limitation till further orders due to the COVID-19 pandemic. The Court concurred with the views of various High Courts (Madras, Bombay, Allahabad) that the Apex Court's orders govern refund applications under the GST Act. Consequently, the CBIC Circular dated 20.07.2021, which attempted to narrow down the scope of the Supreme Court's order, was held to be ineffective in this regard. The rejection order dated 01.07.2021 was set aside, and the matter was remanded to the Respondent No. 3 for a fresh decision after giving due opportunity of hearing. The Court explicitly stated it made no comments on the merits of the case.

Key Issues

1. Whether the refund application filed by the petitioner on 28.05.2021 for the tax period May 2018 to July 2018 was barred by limitation under Section 54(1) of the CGST Act, 2017? 2. Whether the period of limitation prescribed under Section 54(1) of the CGST Act, 2017, stood extended in view of the orders passed by the Supreme Court in Suo Motu Writ Petition (Civil) No. 3/2020 and subsequent orders? Petitioner's arguments: The petitioner argued that the refund application was filed within time because the period of limitation was extended by the Supreme Court's orders in Suo Motu Writ Petition (Civil) No. 3/2020, specifically the orders dated 23.03.2020 and 27.04.2021, which extended the limitation for all judicial and quasi-judicial proceedings. They contended that the rejection order was passed ex-parte without considering their reply and was contrary to these Supreme Court directions. They relied on various High Court judgments (Madras, Bombay, Allahabad) that held the Supreme Court's orders applicable to refund applications under GST. Respondents' arguments: The respondents argued that the refund application was time-barred. They relied on CBIC Circular No. 157/13/2021-GST dated 20.07.2021, which they contended stated that the Supreme Court's timeline extension was applicable only to appeals and revision/rectification proceedings, not to other GST proceedings like refund applications.