The Hon’ble High Court of Allahabad vide its order dated 10.08.2023 in M/s Desai Brothers Limited Ratanpur Vs. State of U.P. and 3 Others in Writ Tax No. – 954 of 2019, held that in terms of Section 54, the assessee is required to file the refund within two years from the date when it became due.  Further, by virtue of Section 54(7), the claim ought to have been dealt with and disposed within 60 days of its receipt and in case of delay, the revenue would be liable to pay interest @ 6% from the end of period of 60 days under Section 56.  So far as the filing of physical/offline application, there is no doubt raised by the revenue and moreover, there is no contrary opinion existing and perhaps none may arise as the language of the statute as it stands admits of no doubt.  Thus, the Hon’ble Court directed the respondents to pay the amount of refund claim with statutory interest.

The Petitioner filed the writ petition before the Hon’ble High Court seeking directions to the Assistant Commissioner (Incharge), Muzzafarnagar to grant refund of Rs. 47,32,040/- recovered from the petitioner on 15.03.2018, upon encashment of the bank guarantee furnished by the petitioner to secure its interest qua the penalty order dated 09.03.2018.

Facts of the Case: –

• The Petitioner is an ex-UP dealer and was transporting certain quantities of ‘beedi' from West Bengal to Haryana, using the State of U.P. as a transit State. On 22.02.2018, the aforesaid consignment of goods loaded on the truck was detained by respondent no. 3 on the allegation of improper documentation giving rise to further allegation of smuggling of those goods inside the State of U.P.
• Consequently, the goods were seized and a seizure order was passed, which resulted in passing of further order under Section 20 of the IGST Act read with Section 129(3) of the UP GST Act, 2017, demanding tax Rs. 23,66,020/- and equal penalty, totalling to Rs. 47,32,040/- from the Petitioner.
• The Petitioner furnished the security in the shape of bank guarantee for the above amount. Before the petitioner could have availed any remedy in appeal, that Bank Guarantee is disclosed to have been encashed on that date itself, at the instance of respondent no. 3. Encashment of the bank guarantee is not in dispute. Thus, the entire disputed amount of tax and penalty stood recovered by respondent no. 3.
• Against the said order dated 09.03.2018, the Petitioner filed an appeal before the Appellate Authority, which was allowed, and it is then, the petitioner-assessee's real troubles began inasmuch as though the appeal order was never challenged by the State and though more than four years have passed since then, the said order has not been given effect to. Neither, the principal amount Rs. 47,32,040/- has been refunded to the petitioner nor any interest has been paid thereon.
• The State respondents are of the view that such refund may have been granted only if the petitioner had made an application for refund on the online form RFD-01. Since that compliance of law has not been made, the claim for refund has not been honoured, till date.

Petitioner’s Submissions: –

• Referring to Section 54(1) read with 54(7) and Section 56 as well as provisions of Rule 97-A of the UP GST Rules, it was pointed out on the behalf of the petitioner that the petitioner was effectively prevented from moving the online application owing to technical glitches that existed on the GSTN portal. Thus, the petitioner had moved its physical application to claim the refund within the statutory period of 60 days, by filing such application before respondent no.3 on 02.04.2019.  Further, applications filed by it on 15.04.2019, 29.05.2019 and 04.07.2019 remained unattended.
• Further, reference was made to the interpretation of Rule 97 – A made by the division bench of this Court in Savista Global Solutions Pvt. Ltd. Vs. Union of India & 5 Ors. (Writ Tax No. 113 of 2021) – Rule 97-A of the Rules has been clearly read to permit a physical application to be filed. Referring to another decision of a co-ordinate bench of this Court in M/S Alok Traders Vs. Commissioner Commercial Taxes & 2 Ors., 2022 UPTC [111] 845, it has been further submitted, the respondents do stand exposed to interest liability for the delay caused.

On the other hand, it was submitted on the behalf of the respondents that since the primary scheme of the Act is to entertain application through online mode, the delay was caused since the petitioner failed to file online application over a long period of time despite certain communications sent to it to move such application through online mode.

Held: –

• The Hon’ble Court after considering the submissions made, facts of the case and the provisions of the law applicable, found that the appeal order dated 18.03.2019 has long attained finality. It clearly mentions of refund the amount of Rs. 47,32,040/-. Therefore, by way of a right, that amount cannot be retained by the State. Only procedural requirements were required to be completed for its refund to be made.
• Further, in terms of Section 54(7) read with Section 56, any delay beyond statutory period of 60 days in dealing with the claim for refund, the revenue entailed the interest liability @ 6% from the end of period of 60 days.
• Thereafter, the Hon’ble Court referring to Rule 97 – A and the judgment of Co-ordinate bench of this Court in Savista Global Solutions Pvt. Ltd. (Supra), found that in the first place, there is no contrary opinion existing and perhaps none may arise as the language of the statute as it stands admits of no doubt. As to the filing of physical/offline application on 02.04.2019, there is no doubt raised by the revenue.  Therefore, that application had been filed within the statutory period of two years from the date when the refund became due from the date of the first appeal order dated 09.03.2018.
• Thus, the revenue authorities were obligated in law to deal with that application in terms of Section 54(7) of the Act, within a period of 60 days. Failing that, the revenue further became exposed to discharge interest liability on the delay in making the refund at the statutory rate from the end of 60 days from 02.06.2019.

The Hon’ble Court with the above observations and findings, allowed the petition directing respondent no. 3 to dispose of the petitioner's refund claim application dated 02.04.2019 in light of the observations made above and to pay up the amount of refund claim together with statutory interest.