Case: M/s Delhi Metro Rail Corporation Limited vs. The Additional Commissioner, Central Goods and Services Tax Appeals and Others [W.P. (C) 6793/2023 dated September 18, 2023]
The Hon’ble court held that the limitation period of two years under Section 54(1) of the CGST Act for filing an application for refund of tax, cannot be invoked when Revenue Department collected the tax without any authority of law.
Facts
- The DMRC was engaged by Surat Municipal Corporation (SMC) for preparation of a project report for the purpose of development of Metro Rail Project. On 11.08.2017, DMRC raised an invoice of an amount of ₹19,04,520/- for the services rendered. The invoiced amount included GST of ₹2,90,520/- computed at the rate of 18%.
- SMC paid an amount of ₹16,14,000/- against the said invoice but did not pay the amount of GST as included. In order to ensure that there is no failure in complying with its statutory provisions, the DMRC deposited a sum of ₹2,90,520/- with the GST Authorities for the month of August, 2017 (under Form GSTR-3B).
- Thereafter, the DMRC was informed by SMC that in terms of Notification no.12/2017 – Central Tax (Rate) dated 28.06.2017 issued by the Ministry of Finance, the services billed under the invoice dated 11.08.2017, were not chargeable to GST.
- Thereafter on 02.05.2022, the DMRC filed an application for refund in Form GST RFD-01 before the department for the period of August, 2017. However, the said application was rejected by an order dated 04.07.2022 on the grounds that the application for refund was filed after expiry of two years from the relevant date.
- The DMRC through their counsel submitted the decision of the Supreme Court in State of Madhya Pradesh & Anr. v. Bhailal Bhai: AIR 1964 SC 1006, to support its contention that payment made under a mistake of law is required to be refunded. They also relied on the judgement passed by the Gujarat High Court, in M/s Cosmol Energy Private Limited v. State of Gujarat: R/Special Civil Application No. 11905/2020, decided on 22.12.2020, wherein the Court accepted the aforesaid view, and directed refund of the GST paid under a mistake notwithstanding that the application for refund was made after expiry of a period of two years.
- The DMRC is, essentially, aggrieved by denial of its claim for the refund of ₹2,90,520/- as deposited by it by mistake. Its refund claim was rejected on the ground that the application for refund was filed beyond the period of two years as stipulated under Section 54(1) of the CGST Act, 2017.
Held
- The period of limitation for applying for a refund as prescribed under Section 54 of the CGST Act, would not apply where GST is not chargeable, and it is established that the amount has been deposited under a mistake of law.
- In view of the above, the court sets aside the impugned order dated 24.02.2023 as well as the refund rejection order dated 04.07.2022 and directed the department to process the DMRC’s claim for refund of ₹2,90,520/-