Aref Abdul Sattar Textiles Pvt Ltd VS Deputy Commissioner

Mr. Karan Talwar, learned counsel for the petitioner, and Mr. K. Raji Reddy, learned Senior Standing Counsel for Commercial Tax appearing for the respondents, present this writ petition under Article 226 of the Constitution of India. The petitioner seeks the quashing of the order dated 15.09.2022 passed by respondent No.1, which rejected the petitioner’s refund application for the period from July 2017 to March 2018. The petitioner further seeks a direction to the respondents to grant a refund of the excess payment of tax by the petitioner for the aforementioned period.

Mr. Karan Talwar, learned counsel for the petitioner, and Mr. K. Raji Reddy, learned Senior Standing Counsel for Commercial Tax, appeared for the respondents. The petitioner filed this writ petition under Article 226 of the Constitution of India seeking the quashing of an order dated 15.09.2022 passed by respondent No. 1, which rejected the refund application of the petitioner for the period from July 2017 to March 2018. The petitioner further seeks a direction to the respondents to grant a refund of the excess payment of tax by the petitioner for the aforesaid period. The petitioner is registered under the Goods and Services Tax (GST) and is engaged in the business of textiles.

In this case, Mr. Karan Talwar, representing the petitioner, and Mr. K.Raji Reddy, representing the Commercial Tax department, appeared before the court. The petitioner filed this writ petition under Article 226 of the Constitution of India, seeking to quash the order dated 15.09.2022 issued by respondent No.1, which rejected the refund application of the petitioner for the period from July 2017 to March 2018. Additionally, the petitioner seeks a direction to the respondents to grant a refund of the excess tax payment made during the aforementioned period. The petitioner, registered under the Goods and Services Tax (GST) and engaged in the business of textiles and the sale of ready-made garments, has been regularly filing GSTR-3B returns, including for the period from July 2017 to March 2018. For this period, the petitioner filed a refund application dated 14.01.2022 before respondent No.1, claiming a refund amounting to Rs.88,89,113.00. The breakup of the claimed amount is Rs.76,08,563.00 for Integrated Goods and Services Tax (IGST), Rs.6,40,275.00 for Central Goods and Services Tax (CGST), and Rs.6,40,275.00 for State Goods and Services Tax (SGST).

The petitioner applied for a refund, claiming they had overpaid GST for a specified period. On March 9, 2022, Respondent No. 1 issued a show cause notice to the petitioner. The notice stated that the refund application was time-barred because the petitioner should have claimed the refund within two years from the date of the excess payment.

A refund application was submitted by the petitioner claiming there had been an excess payment of GST for a specified period. However, a show cause notice dated March 9, 2022, was issued by respondent No.1, stating that the refund application was barred by limitation as per Section 54 of the Central Goods and Services Tax Act, 2017, and the Telangana Goods and Services Tax Act, 2017. According to these acts, the petitioner should have claimed the refund within two years from the date of the excess payment. Consequently, respondent No.1 proposed to reject the refund claim and requested the petitioner to file an objection with supporting documentary evidence if any.

In response, the petitioner submitted a detailed objection on March 10, 2022, explicitly arguing that the refund application was filed within the allowable time frame and should not be considered time-barred.

The petitioner applied for a refund on the grounds of having overpaid GST for a specific period. On March 9, 2022, Respondent No. 1 issued a show cause notice to the petitioner, stating that the refund application was time-barred. According to Section 54 of the Central Goods and Services Tax Act, 2017, and the Telangana Goods and Services Tax Act, 2017, the refund should have been claimed within two years from the relevant date, which is the date of the excess payment. Respondent No. 1 proposed to reject the refund claim and asked the petitioner to submit any objections along with documentary evidence.

On March 10, 2022, the petitioner submitted a detailed objection, asserting that the refund application was filed within the allowable time frame and was not late. Despite this, Respondent No. 1 issued an order on March 16, 2022, rejecting the refund claim, citing “delay in refund application” as the reason for the application’s inadmissibility.

Upon reviewing the order, it was found that the order was not a speaking order, meaning it did not provide adequate reasons for the rejection of the refund application. Respondent No. 1 failed to justify the decision to reject the petitioner’s claim.

The petitioner filed a refund application claiming excess payment of GST. Respondent No.1 issued a show cause notice on 09.03.2022, asserting that the application was time-barred under Section 54 of the Central Goods and Services Tax Act, 2017. Respondent No.1 proposed to reject the refund claim and invited objections with supporting documents.

On 10.03.2022, the petitioner submitted detailed objections, arguing that the refund application was within the statutory time limit and not barred by limitation. Despite this, respondent No.1 issued an order on 16.03.2022 rejecting the refund claim, citing “delay in refund application” without providing specific reasons.

Upon review, it was found that the order lacked substantive reasoning and failed to address the petitioner’s objections filed on 10.03.2022. Consequently, the order dated 16.03.2022 was set aside, and the matter was remanded to respondent No.1. The court directed respondent No.1 to reconsider the refund application, provide a reasoned order, grant a reasonable opportunity of hearing to the petitioner, including a personal hearing, and complete the process within three months from the date of receipt.

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