‘Relevant Date' for the purpose of claiming refund would be the date when tax is paid under the correct head of tax 

Facts of the Case:- In this case, the petitioner while filing the monthly statement of outward supply in Form GSTR-1 for the month of November 2017, declared the total taxable value for intra-State supply of services erroneously under the head of inter-State supply under the Integrated Goods and Service Tax (IGST) instead of intra-State supply under the Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST). The petitioner had paid tax under the wrong head on 20.12.2017.  Subsequently, the petitioner realized this mistake and corrected the error and deposited the correct CGST and SGST amount thereby leading to a double deposit of tax, once under the head of IGST and second cumulatively under the head of CGST and SGST. The tax was paid on 19.08.2019. under the correct head. 

The refund application was filed on 11.05.2020, which was denied by the department solely on the ground of delay in filing an application seeking refund.  The Department has taken the date of payment of tax under the wrong head, as the relevant date.

Petitioner's Submission:- The Petitioner placed reference of the Circular No. 162/18/2021-GST dated 25.09.2021,wherein it was clarified that “Relevant Date” would be the date when tax is paid under the correct head. After clarifying the said position, the circular stipulates that in cases where taxpayer had made payment under the correct head before the issuance of the subject Notification No. 35 of 2021 dated 24.09.2021, the refund application could be filed before expiry of two years from the date of the issuance of the said Notification i.e. from 24.09.2021.

Held:- The High Court noted that petitioner had paid tax under the wrong head on 20.12.2017 and paid tax under the correct head on 19.08.2019. Further, petitioner filed the first application seeking refund on 11.05.2020, which was rejected on 29.06.2020 and the appeal against the said order was also dismissed on 30.06.2021 i.e. prior to the issuance of the clarification by the circular dated 25.09.2021.

The Court In terms of the aforementioned clarification issued by circular dated 25.09.2021, petitioner could have filed an application before expiry of two years from the date of payment of tax under the correct head i.e. before expiry of two years from 19.08.2019. However, the circular further clarifies that in cases where payment was made under the correct head prior to issuance of the circular, a further period of two years would be available from the date of circular, which implies that any application seeking refund filed on or before 23.09.2023 in respect of taxes paid under the correct head prior to 24.09.2021 would be considered within time.

The Court held that both the refund applications filed by the petitioner  are covered by the circular dated 25.09.2021 and were within limitation. The Department had committed an error in not noticing the said circular and rejecting the appeal holding that the application was beyond time. Accordingly, said order is not sustainable and is set aside. 

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