The Andhra Pradesh High Court has quashed the rejection of a GST refund application by Axis Bank and remanded the matter back to the original authority.
The division bench of Justice C. Praveen Kumar and Justice A.V. Ravindra Babu has referred to a circular dated 25.09.2021 issued clarifying that the insertion of rule (1A) to Rule 89 provides a time limit of 2 years. The two-year time limit would apply from the date of the introduction of the said rule and not from the date of payment of GST.
The petitioner, Axis Bank, is the third largest private bank in India, providing an entire spectrum of financial services for personal and corporate banking. The petitioner bank was registered in Andhra Pradesh and also in the State of Telangana with two different GSTN numbers. With the advent of GST, the petitioner moved from a single centralised registration under the Service Tax regime to having state-specific GST registrations with separate GST for each state where it conducts business. For the ease of distinguishing and determining the "Location of Supplier" (LOS) and the "Place of Supply" (POS), the petitioner tagged all the branches in the respective states from where the services are provided and paid the taxes from the appropriate state.
The petitioner submitted that during system configuration at the time of the implementation of GST, a few business premises located in Telangana State were erroneously tagged to Andhra Pradesh. Thus, the services provided for office premises in Telangana were alleged to be erroneously mapped as being provided in Andhra Pradesh instead of in Telangana State.
As a result of incorrect mapping of a few Telangana office premises to Andhra Pradesh, the source system of the petitioner bank wrongly considered the State of Andhra Pradesh as 'LOS' instead of Telangana State, for the services rendered for such premises. However, the place of supply was correctly identified as Telangana. The IGST was paid from the AP GST registration on services rendered from such branches in Telangana instead of CGST and SGST from the Telangana registration.
The petitioner bank filed refund applications for the IGST paid for the years July, 2017 to August, 2019 on 14.02.2020 in Andhra Pradesh. The amount according to the petitioner is Rs. 16,90,41,709. A Show Cause Notice dated August 8, 2020 was issued, calling upon the petitioner to explain why the refund claim should not be rejected on the ground that the refund claim is time barred as per Section 54.
The issue raised was whether the application made by the petitioner is barred by limitation and whether all the documents as required are filed along with the said refund applications.
The department submitted that the provisions of Section 54 of the CGST Act prescribe a period of limitation for filing the claim for refund, and the application has to be made within the period. The claim came to be made beyond the period of limitation, i.e., beyond the period of two years, and the authorities rightly rejected the same. Apart from that, he would also submit all the necessary documents as required for making a claim, more particularly, the invoices, bills, etc., and the details of the branches in respect of which incorrect payments took place. Except making a bald statement that GST payments were made in the state of Andhra Pradesh, which was required to be paid in the state of Telangana, no documentary evidence to that effect came to be filed. Of the nine claims made, six pertain to the period July, 2017 to December, 2017. The refund claim submitted in the month of February, 2020 was barred by limitation, and so far as the other claims are concerned, he would submit that no material has been placed in support.
The petitioner contended that the Government of India, Ministry of Finance, issued a Circular dated 25.09.2021 which relates to the "Refund of Tax" specified in Section 77(1) of CGST and Section 19(1) of the IGST Act. In this case, the adjudicating authority holds that the transaction is an inter-State supply and if 'A' pays IGST in respect of the transaction on 10.5.2019, the last date for filing a refund application would be 23.09.2023. However, if a particular person pays IGST on the same transaction on 10.11.2022, i.e., after the issuance of Notification No.35/2021, the last date for filing would be 09.11.2024.
The court held that the entire counter of the department was only in relation to Section 54 of the CGST Act. The authorities who passed the order could not have considered the Circular issued by the Ministry of Finance in September 2021, as it was not issued by the date of the order.
Case Title: Axis Bank Ltd. Versus The Union Of India
Case No: Writ Petition No. 11424 of 2021
Citation: 2022 LiveLaw (AP) 127
Counsel For Petitioner: Advocate Bharat Raichandrani
Counsel For Respondent: Advocate Suresh Kumar Routhu