C.P Ravindranath Menon And Anr vs. Union Of INDIA And Ors

Facts

The Petitioners, C.P. Ravindranath Menon and Sindhu Ravindranath Menon, challenged an order dated February 18, 2021, passed by the Deputy Commissioner of GST & Central Excise (Respondent No. 3). The order rejected their refund claim application on the grounds that it was not filed electronically, which was mandatory from September 26, 2019, as per Circular No. 125/44/2019-GST. The Petitioners had entered into an Agreement for Sale with Respondent No. 5, Godrej Redevelopers (Mumbai) Pvt. Ltd., on May 10, 2018. Respondent No. 5 paid GST amounting to Rs. 18,26,412/- on this agreement. The agreement was terminated as a loan was not sanctioned, but a formal Deed of Cancellation was not executed. The Petitioners filed a refund application on September 4, 2020, for the GST paid by Respondent No. 5, claiming they were the ultimate consumers. Respondent No. 5 confirmed it had not sought any refund for this amount.

Held

The Court held that the impugned order dated February 18, 2021, passed by Respondent No. 3, rejecting the refund application solely on the ground of manual filing, was contrary to Rule 97A of the CGST Rules and the principles laid down by this Court in Laxmi Organic Industries Ltd. vs. Union of India. The Court reasoned that Rule 97A explicitly allows for manual filing of applications for processes prescribed in Chapter X, despite provisions for electronic filing. The Court emphasized that the Circular dated November 18, 2019, would only apply to applications filed electronically and could not override the statutory rule. The Court noted that the Petitioner could not have filed the application electronically as they were not registered under the CGST Act. The Court quashed and set aside the impugned order and restored the refund application to the file of Respondent No. 3. Respondent No. 3 was directed to consider the application on its merits, without being influenced by the impugned order. Importantly, the Court explicitly kept open the issue of whether the Petitioner is at all entitled to apply for a refund of the GST paid by Respondent No. 5.

Key Issues

1. Whether the Petitioner, who is not registered under the CGST Act, is entitled to claim a refund of GST paid by Respondent No. 5 on an Agreement for Sale, which was collected from the Petitioner, under Section 54 of the CGST Act and Rule 89 of the CGST Rules? 2. Whether the rejection of the refund application solely on the ground of manual filing, instead of electronic filing, is valid, considering Rule 97A of the CGST Rules and the judgment in Laxmi Organic Industries Ltd. vs. Union of India? Petitioner's Arguments: - The Petitioner is entitled to claim a refund under Section 54(1) of the CGST Act as any person claiming refund of tax paid on their behalf. - Explanation (ii) to Rule 89(ii) of the CGST Rules deems the incidence of tax passed on to the ultimate consumer, making the Petitioner eligible. - Rule 97A of the CGST Rules permits manual filing of applications, and the impugned order is contrary to this rule and the judgment in Laxmi Organic Industries Ltd. Revenue's Arguments: - The Petitioner is not entitled to claim a refund because the application was not filed electronically, as mandated by the Circular dated November 18, 2019. - The impugned order rejecting the application on the ground of manual filing is justified.