QUESTION
A is engaged in export of Fresh vegetable and fruits, in terms of Sec 16 of IGST Act covered under zero rated supply. He is eligible for ITC as well as Refund of such ITC in terms of Sec 16(2)/(3) of IGST act read with Sec 54 of CGST Act. Due to some technical reason or unawareness of GST law after its implementation he has not claim / filed refund of ITC against zero rated supply on items (goods and service) used in export of fresh fruits and vegetable for the FY 2017-18 and 2018-19. Question 1. Can he file or eligible for refund claim for such FY 2017-18 and 2018-19?. 2. Limitation of Two year legally valid under GST law? 3. Section 54(3) of CGST Act Override the Section 54(1)? 4. suggest any other Legal stands or wayout in this case? 5. if refund claim time barred then ITC availed by him or accumulated is also ineligible or lapsed?, because he has not any other taxable supply only engage in pure export business?
ANSWER
FACTS OF THE CASE:
A is engaged in export of Fresh vegetable and fruits, in terms of Sec 16 of IGST
Act cover under zero rated supply. He is eligible for ITC as well Refund of such
ITC in terms of Sec 16(2)/(3) of IGST act read with Sec 54 of CGST Act. Due to
some technical reason or unawareness of GST law after its implementation he has
not claimed / filed a refund of ITC against zero rated supply on items (goods
and service) used in export of fresh fruits and vegetables for the FY 2017-18
and 2018-19. Questions:
1. Can he file or eligible for refund claim for such FY 2017-18 and 2018-19?.
2. Limitation of Two year legally valid under GST law?
3. Section 54(3) of CGST Act Override the Section 54(1)?
4. Any Legal stands or wayout in this case?
5. If refund claim time barred, then ITC availed by him or accumulated is also
ineligible or lapsed, because he has not any other taxable supply only engaged
in pure export business?
LAW APPLICABLE: Section 54 of CGST
Act, 2017
Section 54: Refund of tax
(1) Any person claiming refund of any tax and interest, if any, paid on such
tax or any other amount paid by him, may make an application before the expiry
of two years from the relevant date in such form and manner as may be
prescribed:
Provided that a registered person, claiming refund of any balance in the
electronic cash ledger in accordance with the provisions of sub-section (6) of
section 49, may claim such refund in the return furnished under section 39 in
such manner as may be prescribed.
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(3) Subject to the provisions of sub-section (10), a registered person may
claim refund of any unutilised input tax credit at the end of any tax period:
Provided that no refund of unutilised input tax credit shall be allowed in cases
other than
(i) zero rated supplies made without payment of tax;
(ii) 'where the credit has accumulated on account of rate of tax on inputs being
higher than the rate of tax on output supplies (other than nil rated or fully
exempt supplies), except supplies of goods or services or both as may be
notified by the Government on the recommendations of the Council:
Provided further that no refund of unutilised input tax credit shall be allowed
in cases where the goods exported out of India are subjected to export duty:
Provided also that no refund of input tax credit shall be allowed, if the
supplier of goods or services or both avails of drawback in respect of central
tax or claims refund of the integrated tax paid on such supplies.
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(10) Where any refund is due under sub-section (3) to a registered person who
has defaulted in furnishing any return or who is required to pay any tax,
interest or penalty, which has not been stayed by any court, Tribunal or
Appellate Authority by the specified date, the proper officer may
(a) withhold payment of refund due until the said person has furnished the
return or paid the tax, interest or penalty, as the case may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or any other
amount which the taxable person is liable to pay but which remains unpaid under
this Act or under the existing law.
Explanation.
For the purposes of this
sub-section, the expression 'specified date' shall mean the last date for filing
an appeal under this Act.
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REPLY:
Our point wise reply is as follows:
1. The limitation period given in Section 54 of CGST Act, 2017 for filing of
refund claim will apply as follows:
Section 54: Refund of tax.
(1) Any person claiming refund of any tax and interest, if any, paid on such tax
or any other amount paid by him, may make an application before the expiry of
two years from the relevant date in such form and manner as may be prescribed:
Provided that a registered person, claiming refund of any balance in the
electronic cash ledger in accordance with the provisions of sub-section (6) of
section 49, may claim such refund in the return furnished under section 39 in
such manner as may be prescribed.
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2. The limitation period is valid because it is also fixed for demand. So if the limitation period is honored for demand then it should also be honored for refund considering the principle of justice.
3. Section 54(1) should be read with section 54(3). Section 54(3) contains some conditions related to fulfillment of conditions given in sub-section (10) of section 54. It does not mean that it is by passing sub-section (1) of section 54.
4. If you are going for any legal fight and challenge the provision of law, there is very least possibility that you will get success and the cost of litigation is going to be very high. We do not think that any authority below the high court will buy your argument. So if you have any alternative remedy to utilize ITC, then go for the same.
5. The ITC accumulated will remain with the registered person year after year if the GST number is not surrendered. Even if the business is transferred the ITC will be transferred to the transferee. (Reply dt. 20/09/2021)