GSTAT Holds Kaneka’s ₹39.88-Lakh GST Refund Application Timely, With COVID Exclusion Extending Deadline To February 29, 2024

Kaneka India paid GST on an advance received in April 2020 and later sought a refund of ₹39,88,388 for the portion not adjusted against supplies.

Its first refund application was filed on 29 February 2024; after deficiency memos, it filed further applications on 31 March and 25 May 2024.

The adjudicating authority rejected the claim as time-barred.

The appellate authority annulled that order on natural-justice grounds without deciding limitation.

The Department appealed, arguing that the first application was filed one day late under the correct computation of the COVID-period exclusion.

Section 54(1) of the CGST Act requires a refund application to be filed within two years of the relevant date; the Tribunal treated this limitation as a substantive statutory condition that cannot be relaxed on equitable grounds.

Notification No. 13/2022-Central Tax excludes 1 March 2020 to 28 February 2022 when computing the limitation period for refund applications.

The Supreme Court’s directions in In Re: Cognizance for Extension of Limitation, Suo Motu Writ Petition (C) No. 3 of 2020, excluded the same period and made the balance limitation available from 1 March 2022.

Rule 90(3) of the CGST Rules provides for a fresh application following a deficiency memo, while its third proviso excludes the period between the initial application and communication of deficiencies from the two-year period.

Sections 107(11)–(12) require the appellate authority to decide the appeal on the merits, state the points for determination, and give reasons; Section 113(1) empowers the Tribunal to decide the appeal or remit the case.

A timely original application is not rendered time-barred merely because a rectified application follows a deficiency memo, but relation-back cannot cure an original application that was itself late.

The Tribunal rejected the maintainability objection because limitation was the ground of rejection throughout, and the Department’s challenge concerned the arithmetic of the notification-based computation on facts already on record.

It held that the original order had failed to consider the taxpayer’s reply, but the appellate authority was still required to decide limitation and give reasons rather than annul the order without resolving the dispute.

On limitation, the relevant date was 19 May 2020.

The Tribunal rejected the competing 650-day calculation and held that, because the relevant date fell within the excluded period, the entire period through 28 February 2022 was excluded and the two-year period ran from 1 March 2022.

Applying the calendar-year calculation, it held that the filing date of 29 February 2024 was the last day of the extended period.

The later applications, filed pursuant to deficiency memos, therefore did not create a separate limitation bar.

The Tribunal also rejected the deposit argument: the GST had been validly paid on a taxable advance, and Section 54 covers both tax and other amounts paid.

The claim’s timely filing made the Tribunal’s conclusions on the deposit and substantive nature of limitation non-determinative of the outcome.

It upheld the appellate authority’s annulment of the original rejection, but substituted its own reasons, holding that the first refund application, filed on 29 February 2024, was within the limitation period under Section 54(1), as extended by Notification No. 13/2022-Central Tax.

No order as to costs was made.