Garment Exporter’s ₹6.78-Lakh GST Refund Claim Survives Vague Memo As Delhi GSTAT Finds Feb 29, 2024 Deadline After COVID Limitation Pause

Falak Industries sought a refund of ₹6,78,822 for input tax credit accumulated on exports made during October–December 2021.

It filed its first refund application on 22 February 2024. A deficiency memo dated 6 March 2024 stated only that supporting documents were incomplete; the company filed a fresh application on 27 March 2024.

The adjudicating authority rejected the claim as time-barred, but the appellate authority set aside that decision, finding the first application timely and relying, among other things, on the Delhi High Court’s decision in Bharat Sanchar Nigam Limited v. Union of India (“BSNL”).

The Department appealed under Section 112(3) of the CGST Act.

Section 54(1) of the CGST Act requires a refund application to be made within two years of the relevant date; for the exports at issue, the relevant date was determined by reference to the “Let Export Date” on the shipping bills.

Notification No. 13/2022 excludes 1 March 2020 to 28 February 2022 from the computation of the limitation period, in accordance with the Supreme Court’s directions in In Re: Cognizance for Extension of Limitation.

Rule 90(3), including its third proviso, and paragraph 12 of Circular No. 125/44/2019-GST govern the treatment of applications followed by deficiency memos and re-filing.

Under BSNL and National Internet Exchange of India v. Union of India, an application that is not deficient in material particulars is not rendered non est by a request for further documents or clarification; a compliant, timely original application may remain the relevant filing for limitation.

The Tribunal further applied the principle that limitation prescribed by a special fiscal statute must be strictly observed and cannot be extended on equitable grounds absent statutory authority to condone delay.

The Tribunal held that the monetary-threshold objection failed because the circular expressly excludes matters related to refunds and recurring or interpretive issues, and the appeal raised questions concerning Section 54, Rule 90(3), and the effect of a deficiency memo.

Applying the Supreme Court’s limitation directions and Notification No. 13/2022, it excluded the period during which the limitation clock could not run and determined that the extended deadline was 29 February 2024. The first application, filed on 22 February 2024, was therefore timely.

The deficiency memo did not identify which documents were incomplete, and the Department did not establish that the first application lacked a material particular.

Applying BSNL, the Tribunal treated the second application as a continuation of the first, so the alleged 12-day delay did not arise.

Although the appellate authority erred in treating Section 54(1)’s limitation period as directory, that error did not affect the result because the claim was timely even under a mandatory limitation period.

It also held that Section 54(1)’s two-year period is mandatory, not directory, but that this did not alter the outcome.

The Department’s appeal was dismissed, the appellate authority’s decision allowing the refund appeal remained undisturbed, and no order as to costs was made.