The Calcutta High Court in the case of Suraj Mangar v. Assistant Commissioner of West Bengal State Tax, vide M. A. T. No. 104 of 2024 + IA No: CAN 1 of 2024 Arising out of W. P. A. No. 1905 of 2023 dated 30.07.2025, held that 60-day time limit under Section 54(7) is mandatory in nature. The word “shall” used in the section is to be given its natural meaning, especially when the statute does not provide any power to extend the period. Refund orders passed beyond this statutory period are non est in law.

Facts of the case: The petitioner/appellant, engaged in export of goods, had filed an application for refund of unutilized Input Tax Credit (ITC) on account of zero-rated supplies under Section 54.  The refund application was filed under Section 54 of the WBGST Act read with Rule 89, claiming refund of tax paid on zero-rated supplies.

As per the statutory mandate under Section 54(7), the proper officer was required to issue an order either sanctioning or rejecting the refund within 60 days. However, the refund was rejected after a delay of more than 230 days from the date of application. well beyond the prescribed 60-day period.

The grounds cited in the refund rejection order were Goods had not been delivered to the foreign buyer; Foreign buyer had not made full payment and Certain post-export documents were allegedly missing or unsatisfactory.

The petitioner challenged this rejection order on the ground that it was barred by limitation and thus non est in law.

Issue: Whether the refund rejection order passed under Section 54 of the WB GST Act, 2017, beyond the statutory timeline of 60 days and without adherence to mandatory procedural safeguards, is legally valid.

Held that: The Calcutta High Court Division Bench allowed the appeal, setting aside the order of the learned Single Judge and held that the time limit prescribed under Section 54(7) is mandatory and not merely directory. The word “shall” used in the section is to be given its natural meaning, especially when the statute does not provide any power to extend the period.

Once the refund application is filed in proper form and complete in all respects, the proper officer must pass the refund sanction/rejection order within 60 days from the date of receipt of the application. An order passed beyond the 60-day limit is barred by limitation and thus without jurisdiction.

Further, the Court held that the reasoning that the foreign buyer did not receive the goods or make full payment is not relevant under GST law. Once the exporter furnishes all prescribed documents under Rule 89(2), including shipping bill, EGM, FIRC, etc., and the export is complete under Customs Act, refund cannot be denied on post-export commercial disputes.

Therefore, the rejection order having been issued beyond the permissible period, is non est in law, and the appellant is entitled to a fresh adjudication in accordance with law. The impugned orders passed by the refund sanctioning authority and the appellate authority were set aside.

To read the complete judgment 2025 Taxo.online 1698