The Delhi High Court in the case of PEDERSEN CONSULTANTS INDIA PVT LTD VERSUS UNION OF INDIA & ORS. vide W.P.(C) 1039/2024 dated 19.03.2024, addressed the issue of Input Tax Credit (ITC) denial due to late return filing by the supplier. The court ruled that ITC cannot be denied simply because the supplier filed their returns late, and allowed the recipient to file a refund application for the tax paid. This judgment reinforces the principle that procedural delays by suppliers should not unduly penalize recipients of goods and services. It ensures that recipients who have made double payments due to such delays are entitled to seek refunds. The decision to exclude specific periods from the limitation period for filing refund applications provides relief to taxpayers affected by procedural delays.

Facts of the Case:-  In this case, the petitioner (i.e. recipient) had claimed ITC on certain invoices for the period 2019-2020. However, the supplier failed to file their tax returns on time. Due to the late filing by the supplier, the department asked the Petitioner to reverse the ITC claimed and deposit the same amount to the government. It was later discovered that the supplier had eventually filed the returns and paid the tax on the said invoices.This resulted in a situation where tax was paid twice—once by the Petitioner (as reversal of ITC) and once by the supplier.

Petitioner's Contention:-  The Petitioner requests that the respondents grant the benefit of the ITC, which was paid by the Petitioner on the same invoices for the period 2019-2020, on which supplier has also paid the tax. 

The Petitioner filed a writ petition seeking a refund of the tax paid, arguing that they were coerced into depositing the tax due to the supplier's delayed filing.

Department Contention:-  It was argued that the Petitioner’s claim was not considered because the Petitioner failed to file the appropriate refund application as required under Section 54 of the Central Goods & Services Tax Act, 2017.

Held that: – The Court held as under:

• ITC cannot be denied solely due to the supplier's late filing of returns.
• The recipient is allowed to file a refund application for the ITC reversed and deposited with the government. Directed the Petitioner to file an appropriate refund application with the concerned Authority within one week.
• The court referred to Notification No. 13/2022 dated 05.07.2022, which specifies that the period between 01.03.2020 and 28.02.2023 should be excluded when computing the limitation period for filing a refund application under Section 54 or 55 of the Central Goods and Services Tax (CGST) Act, 2017.
• Additionally, the period between the filing of the subject petition (19.01.2024) and the date of disposal of the writ petition is also to be excluded from the limitation period.
• The claim that the Petitioner is covered by Notification No. 13/2022 must be considered by the Proper Officer according to the law while processing the refund application.

This judgment exemplifies the court's efforts to ensure fairness and justice in the application of tax laws, particularly in situations where procedural issues result in undue financial burdens on taxpayers.

To read the complete judgment 2024 Taxo.online 508