Merely Seeking Documents Or Clarifications By Issuing Deficiency Memo Will Not Render Refund Application Non Est: Delhi High Court

The Delhi High Court has held that merely because certain other documents or clarifications are sought by way of issuing a Deficiency Memo, the same will not render the application filed by a taxpayer as non-est.

The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that if the application filed is not deficient in material particulars, it cannot be treated as non est. If it is accompanied by the "documentary evidence" as mentioned in Rule 89(2) of the Rules, it cannot be ignored for the purposes of limitation. The limitation would necessarily stop upon filing the application.

The petitioner/assessee challenged the denial of his request for a refund of GST amounting to Rs. 2,63,98,462. The petitioner claimed that excess tax to that extent was paid for the month of December 2017, and the petitioner is entitled to a refund of the said amount.

The petitioner explained that there was an error on its part in reporting the sales for the month. The petitioner stated that it had raised an invoice for carrying out the work of the NFS Project, which involved laying an alternate communication network for the Defense Services. The petitioner had also deposited the goods and services tax amounting to Rs. 18,60,35,829 and reported it in its returns (GSTR-1 and GSTR-3B) filed for the month of December, 2017.

The petitioner received a letter dated February 22, 2018 from the Department of Telecommunications (DOT) clarifying that the amount of Rs. 104,651,628 paid to the petitioner was inclusive of taxes. It is the petitioner’s case that, on receipt of the said letter, it realized that the calculation of GST was erroneous inasmuch as the petitioner had assumed that the amount received was exclusive of GST, which would be paid over and above the specified amount.

The petitioner contended that it was open for the respondents to seek any documents required for clarification relating to the refund claim made by a taxpayer. However, the taxpayer’s application cannot be considered deficient if it was duly accompanied by the documents prescribed under Rule 89(2).

The court held that it is erroneous to assume that the application, which is accompanied by the documents as specified under Rule 89(2) of the Rules, is required to be treated as complete only after the taxpayer furnishes the clarification of further documents as may be required by the proper officer, and that too from the date the clarification is issued.

Case Title: Bharat Sanchar Nigam Limited Versus UOI

Citation: 2023 LiveLaw (Del) 308

Date: April 6, 2023

Counsel For Petitioner: Kamal Sawhney, Krishna Rao, Aakansha Wadhwani, Deepak Thackur and Anishka Gupta

Counsel For Respondent: Bhagwan Swarup Shukla, Sarvan Kumar and Vikrant, R. Ramachandran

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