The timeline of refund u/s 54 is not mandatory- HC Download and read pdf
Time limit for filing the GST refund-
(Author can be reached at shaifaly.ca@gmail.com)
The GST law provides for the filing of refund. Section 54 of CGST act specifically covers the refund.
Section 54 reads as-
“(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed”
The limit of 2 years is levied by the lawmaker. As per the interpretation of statute the work may can be read as shall when it mandated something. Industry was also taking it in the same manner but the recent judgment of Madras high court changed the dynamics.
The interpretation of Honourable high court-
The honourable high court in case of Lenovo India took the literal interpretation of the provision. They said that lawmaker has used the word may, thus the time limit is recommendatory.
Let us have a look at the exact words of the honourable high court.
“Para 15.6 Even Section 54 (1) of CGST states that ‘‘any person claiming refund of any tax and interest, if any, paid on such tax, or any other amount paid by him, may make application before expiry of two years from the relevant date in such form and manner as may be prescribed”.
Para 15.7 “Thus, a reading of the Section 54 (1) of CGST Act would make it clear that the assessee can make the application within two years. The terms used in said Section ”may make application before two years from the relevant date in such form and manner as may be prescribed”, which means that the assessee may make application within two years and it is not mandatory that the application has to be made within two years and in appropriate cases, refund application can be made even beyond two years. The time limit fixed under Section 54 (1) is directory in nature and it is not mandatory. Therefore, even if the application is filed beyond the period of two years, the legitimate claim of refund by the assessee cannot be denied in appropriate cases.”
Will this sustain?
Well this is reasonably surprising. Although this point was not the main matter of the case but it is going to have deep impact. Many refund applications are time barred and if we consider this judgment, They all are eligible for the filing.
This can create a chaos as many taxpayers will now try to file their time barred refund applications.
Read and download the document-
HC 2023 Mad Lenovo_
The time limit given under section 54 for filing of refund is not mandatory but recommendatory
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