M/S Hallmark Th Vimal Sachdeva Jammu. vs. Jammu And Kashmir Goods And Services Tax Deptt And Another.

Facts

The petitioner, M/s Hallmark, filed a writ petition seeking to quash a deficiency memo (Form-GST-RFD-03) dated 15.10.2020, issued by the Assistant Commissioner, Goods and Services Tax. This memo rejected the petitioner's GST refund application of Rs. 2,91,650/- on grounds of limitation. The petitioner claimed excess tax deposit for January, February, March, and July 2018 due to goods returned by customers. They filed their final GST return on 20.09.2018 and an initial refund application on 08.09.2020, within the two-year limitation period under Section 54 of the CGST Act. A deficiency memo dated 23.09.2020 was issued, asking for rectification. The petitioner filed a fresh application on 28.09.2020, which was then rejected by the impugned memo dated 15.10.2020 as time-barred.

Held

The Court held that the refund application was not barred by limitation. It reasoned that Rule 90(3) of the CGST Rules, 2017, which allows for communication of deficiencies and requires filing a fresh application, cannot be interpreted to render the original application non est for limitation purposes. The limitation period stops upon the filing of the initial application, provided it is accompanied by the requisite documentary evidence as per Rule 89(2). Merely seeking clarifications or further documents does not invalidate the initial filing date. The Court also found that the rejection of the refund claim was invalid because the petitioner was not afforded an opportunity of being heard, which is mandated by Rule 92(3) of the CGST Rules, 2017, despite the respondents' reliance on Circular No.125/44/2019-GST. The Court noted the respondents' objections were evasive and failed to controvert the petitioner's claim effectively. The Court quashed the deficiency memo and directed the respondents to process and release the GST refund along with interest at 7% per annum from the date it fell due. The respondents were also directed to pay costs of Rs. 30,000/- to the petitioner.

Key Issues

1. Whether the refund application filed by the petitioner on 28.09.2020, after receiving a deficiency memo on 23.09.2020, was barred by limitation under Section 54 of the CGST Act, 2017, considering the initial application was filed on 08.09.2020. - Petitioner's argument: Since the Assistant Commissioner permitted filing a fresh application on 23.09.2020, rejecting it on limitation grounds was incorrect. The deficiency memo itself was issued beyond the statutory period. - Revenue's argument: The refund application was filed after two years from the relevant date, making it barred by limitation as per Section 54 of the CGST Act. Paragraph 9 of Circular No.125/44/2019-GST does not mandate personal hearings for deficiency memos. 2. Whether the rejection of the refund claim without affording an opportunity of being heard to the petitioner was valid, in light of Rule 92(3) of the CGST Rules, 2017. - Petitioner's argument: No opportunity of being heard was given, which violates Rule 92(3). - Revenue's argument: Circular No.125/44/2019-GST stated no personal hearing was required.