Delhi High Court Directs Dept. To Consider ITC Refund In Light Of CBIC Circular Extending Benefit Of Exclusion Period

The Delhi High Court has directed the department to consider refunding the input tax credit (ITC) in light of the circular issued by the Central Board of Indirect Taxes and Customs (CBIC) extending the benefit of the exclusion period.

The bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja has observed that the benefit of exclusion of the period from March 1, 2020, to February 28, 2022, has been made available subsequent to the order rejecting the application for refund. The court remanded the matter to the respondent department to consider the petitioner's application afresh in light of the circular dated July 5, 2022.

The petitioner/assessee has challenged the order dated July 27, 2022, passed by the respondent department rejecting the application filed by the petitioner seeking a refund of accumulated input tax credit. The petitioner had filed the application on April 12, 2022, seeking a refund of the ITC relating to tax periods from July 2020 to December 2020.

The department issued a Show Cause Notice dated May 23, 2022, proposing to reject the application on the ground that it was filed belatedly. The petitioner did not respond to the Show Cause Notice. The department rejected the application solely on the ground that the petitioner had not responded to the Show Cause Notice.

After the rejection order was passed, the Central Board of Indirect Taxes and Customs issued a Notification dated 05.07.2022 in line with the orders passed by the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 In Re : Cognizance for Extension of Limitation. In terms of the circular, the Board directed that the period from March 1, 2020, to February 28, 2022, be excluded for purposes of computing the period of limitation, inter alia, for applications filed under Section 54 of the Central Goods and Services Tax Act, 2017. By virtue of the circular, the petitioner's application for refund would be within the period of limitation.

The court, while disposing of the petition of the assessee, directed the department to process the petitioner's application for refund as expeditiously as possible and, in any event, within a period of eight weeks.

Counsel For Petitioner: Himanshu Koyarh

Counsel For Respondent: Rajeev Aggarwal

Case Title: M/S Bharti Enterprises Versus Commissioner, Value Added Tax, Department Of Trade And Taxes & Ors.

Citation: 2024 LiveLaw (Del) 161

Case No.: W.P.(C)-10244/2023

Click Here To Read The Order