Recently, Madras High Court, in the matter of Quest Global Engineering Servcies (P.) Ltd. vs. Deputy Commissioner, Chennai, reported in [2022] 134 taxman.com 225, held that refund claim filed after expiry of limitation period cannot be entertained, the only option available to taxpayer to request his customer to issue an appropriate credit note to neutralize excess payment of GST.
Transferor Company namely the Quest Global Engineering Private Limited stood merged with the petitioner (named Quest Global Engineering Services Private Limited). It is submitted that the said Transferor Company had raised invoices during the month of June, July, August and September 2017 on their client/customer namely M/s.Caterpillar India Private Limited and had discharged the Tax liability particularly under the provisions of the Finance Act, 1994 and the respective GST Acts, 2017. Further, submitted that after merger, by mistake, the system picked the same invoices on which service tax was paid by the transferor company and which were reflected in the returns for the period between June, July, August and September 2017 on 01.11.2017 and tax was paid by the petitioner without either actually supplying service to their customer or by raising corresponding invoice on the customer. Also, the petitioner submitted that all the invoices which are dated 01.11.2017 in the returns were never generated by the petitioner. However, the petitioner ended up paying tax on account of invoice numbers being generated on 01.11.2017. Thereafter, the petitioner filed the refund claim, which was rejected by respondent in order dated 23.06.2020.
As against the order the Writ Petition filed under Article 226 of Constitution of India, for issuance of a Writ of Certiorarified Mandamus, to call for the records in Order dated 23.06.2020 passed by the respondent and quash the same as arbitrary and illegal and to direct the respondent to refund the amount of Rs.19,18,622/-.
The respondent opposes the contention on the ground that the limitation under Section 54 of the Central Goods and Services Tax Act, 2017 also makes it clear that even if tax was paid by mistake on account of non-supply of any service either wholly or partially, for which no invoices were raised or issued or where a refund voucher had been issued cannot be ignored under explanation to Section 54 of the CGST Act. Further, the tax was admittedly paid on 01.11.2017. Therefore, the refund claim should have been filed within two years from the date of payment of tax by the petitioner. Since the refund claim was filed on 30.05.2020, long after the expiry of limitation prescribed under Section 54 of the CGST Act, 2017, the respondent was justified in rejecting the refund claim of the partitioner as time barred. It is also submits, that even as per the decision of the Hon’ble Supreme Court in Mafatlal Industries Vs Union of India, 1997 (89) ELT 247 (S.C) except in the case of unconstitutional levy, limitations prescribed under the Act cannot be overlooked.
After hearing both sides, the single bench of Justice C.Saravanan held that the option available to the petitioner was to request its customer/client M/s.Caterpillar India Private Limited to issue an appropriate credit notes to neutrilize the alleged excess payment of GST while generating and issuing invoices dated 01.11.2017 details of which was captured in their regular return and tax was paid. “The refund claim filed by the petitioner is clearly barred under the limitation prescribed under Section 54(1) of the respective enactments read with explanation (h).
