UP GST Act | Refund Cannot Be Withheld Merely Because Physical Application U/S 54 Was Filed: Allahabad High Court
The Allahabad High Court recently directed the GST Department to refund the amount based on physical application for refund under Section 54 of the UP Goods and Service Tax Act, 2017 read with Rule 97-A of the UP GST Rules, 2017. The Court further held that the Department is liable to pay interest on the refund withheld in terms of Section 56 of the Act.Petitioner was transporting...
The Allahabad High Court recently directed the GST Department to refund the amount based on physical application for refund under Section 54 of the UP Goods and Service Tax Act, 2017 read with Rule 97-A of the UP GST Rules, 2017. The Court further held that the Department is liable to pay interest on the refund withheld in terms of Section 56 of the Act.
Petitioner was transporting certain quantities of 'beedi' from West Bengal to Haryana, passing through the State of U.P. The truck containing goods was detained in the State of UP on the allegation of improper documentation.
Consequently, the goods were seized and an order under Section 20 (Application of provisions of Central Goods and Services Tax Act) of the IGST Act read with Section 129(3) of the UP GST Act, 2017 was passed. A demand of tax and equal penalty, amounting to Rs. 47,32,040/- was demanded from the petitioner.
Before the Petitioner could approach the First Appellate Authority, the bank guarantee of the aforesaid amount was encashed by the Department. Thereafter, First Appellate Authority ruled in favour of the Petitioner and directed that the amount be refunded to the Petitioner. This order was never challenged by the State.
Counsel for Petitioner contended that due to technical glitches, an application for refund could not be filed on the portal, however, a physical application was filed within the statutory period of 60 days. Reliance was placed on the decision of a coordinate bench of the Allahabad High Court in Savista Global Solutions Pvt. Ltd. Vs. Union of India & 5 Ors., wherein the Court had observed that so long as Rule 97-A of the UP GST Rules, 2017 existed, an assessee could file a physical application.
Further, relying on a coordinate bench of Allahabad High Court in M/S Alok Traders Vs. Commissioner Commercial Taxes & 2 Ors., it was argued that the Department is liable to pay interest on the amount for the delay caused.
Counsel for Revenue, however, opposed the contentions of the ground that the primary scheme of the Act is to file online applications. Petitioner had failed to do so, despite repeated reminders, it was stated.
A bench comprising Justices Saumitra Dayal Singh and Vinod Diwakar observed that since the order of the First Appellate Authority was not challenged, it had attained finality. The state cannot retain the amount by way of right.
The Court held that by virtue of Section 54 ( Refund of Tax) of the Act, the Petitioner was required to move an application, in the manner prescribed, for a refund and the same was to be disposed of by the Authority within 60 days (Section 54(7) of the Act). Failure to process the refund within 60 days from the receipt of any such application, would attract an interest no exceeding 6% till the date the refund is paid.
Further, the Court noted that by virtue of Rule 97-A of the UP GST Rules, 2017, the procedure of filing applications as prescribed under the Rules, 2017, including applications filed manually. Since an application for refund was moved by the Petitioner within time, the Petitioner was liable to be refunded along with interest, held the Court.
Placing reliance on the decision of a coordinate bench of the Allahabad High Court in Savista Global Solutions Pvt. Ltd. Vs. Union of India & 5 Ors., the Court held
“In the first place, there is no contrary opinion existing and perhaps none may arise as the language of the statute as it stands admits of no doubt. As to the filing of physical/offline application on 02.04.2019, there is no doubt raised by the revenue. Therefore, that application had been filed within the statutory period of two years from the date when the refund became due i.e., upon the first appeal order dated 09.03.2018 being passed. Therefore, the revenue authorities were obligated in law to deal with that application in terms of Section 54(7) of the Act, within a period of 60 days. Failing that, the revenue further became exposed to discharge interest liability on the delay in making the refund at the statutory rate from the end of 60 days from 02.06.2019.”
Accordingly, the writ petition was allowed.
Case Title: M/S Desai Brothers Limited Ratanpur vs. State Of U.P. And 3 Others 2023 LiveLaw (AB) 259 [WRIT TAX No. - 954 of 2019]
Case Citation: 2023 LiveLaw (AB) 259
Counsel for Petitioner: Shubham Agrawal, Pooja Talwar
Counsel for Respondent: Ankur Agarwal