C.P. Ravindranath Menon VS Union of India

No. 5 was to supply goods to the Petitioner under this Agreement, and the Petitioner made substantial advance payments. However, due to certain issues in the supply chain and the Petitioner’s dissatisfaction with the quality and delivery timelines of the goods, the Petitioner sought a refund of the advance payments made.

1. The Petitioner initially filed a refund application manually. However, the application was rejected by the Respondent No. 3 on 18th February 2021, citing the requirement that all refund claims must be filed electronically as mandated by the Circular No. 125/44/2019-GST, which came into effect on 26th September 2019. The Petitioner argued that they were not aware of the electronic filing requirement and that the manual submission was not due to any negligence on their part but rather a lack of awareness and system issues.

2. The Petitioner, feeling aggrieved by the rejection, approached the court under Article 226 of the Constitution of India, seeking relief and requesting the court to direct the Respondent No. 3 to reconsider the refund application considering the circumstances and any possible leniency due to the Petitioner’s lack of awareness about the mandatory electronic filing rule.

3. The case was heard with consent from all parties, and the main issue centered around whether the strict adherence to the electronic filing requirement should be enforced, considering the Petitioner’s claims of ignorance and systemic barriers in meeting the electronic filing mandate.

4. During the hearing, the learned counsels for the Respondents emphasized the importance of compliance with the GST procedural norms and the legal obligations set forth by the Government’s circular. They argued that adherence to the electronic filing requirement was crucial for maintaining the integrity and efficiency of the GST refund process.

5. The Petitioner’s counsel contended that the strict application of the electronic filing requirement without considering the Petitioner’s situation would cause undue hardship and that the rule should be interpreted with some flexibility, especially in light of the Petitioner’s efforts to comply in good faith.

6. The court, after hearing the arguments and reviewing the case details, would need to decide whether to uphold the Respondent No. 3’s rejection of the refund application based solely on the non-electronic filing or to provide relief to the Petitioner by considering the circumstances surrounding their application and any potential procedural leniency.

7. The outcome of this case would hinge on the court’s interpretation of the balance between regulatory compliance and equitable consideration of individual circumstances within the GST framework.

In this legal case, the Petitioner has filed a Petition under Article 226 of the Constitution of India, challenging the Order dated 18th February 2021 issued by Respondent No.3. The order rejected the Petitioner’s application for a GST refund on the grounds that it was not filed electronically, which had been mandated since 26th September 2019, as per the Circular No. 125/44/2019-GST dated 18th November 2019 by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs.

The Petitioner and Respondent No.5 had entered into an Agreement for Sale on 10th May 2018, and the Respondent No.5 had paid GST amounting to Rs. 18,26,412. This Agreement was, however, terminated due to the non-sanction of the loan by the bank, although no Deed of Cancellation has been executed. The Petitioner subsequently applied for a refund of the GST paid by Respondent No.5, as it had been collected from the Petitioner.

On 4th September 2020, the Petitioner submitted the refund application in Form GST-RFD-01-A, along with necessary documents. Later, on 6th January 2021, Respondent No.2 requested information on whether Respondent No.5 had also applied for a refund for the same transaction. The Petitioner responded via email, confirming that Respondent No.5 had not applied for any refund.

Despite this, on 18th February 2021, Respondent No.3 rejected the refund application, citing non-compliance with the electronic filing requirement stipulated by the 2019 Circular. The Petitioner then initiated this Writ Petition, seeking to quash the Order dated 18th February 2021, asserting that the rejection was unjustified.

The case underscores the legal complexities surrounding the procedural requirements for GST refunds and the impact of non-compliance with mandatory electronic filing protocols. The Petitioner’s appeal centers on the argument that the procedural technicality should not preclude legitimate refund claims.

In the case summarized, the Petitioner challenged the Order dated 18th February 2021 issued by the Respondent No.3, which rejected their refund application for GST paid by the Respondent No.5. The rejection was based on the claim that the application was not submitted electronically, a requirement set forth in the Circular No. 125/44/2019-GST from November 2019.

The Petitioner and Respondent No.5 had entered into an Agreement for Sale on 10th May 2018, where GST of Rs. 18,26,412/- was paid by the Respondent No.5. The Agreement was later terminated by Respondent No.5 due to the bank not sanctioning the loan for the Petitioner, though no formal Deed of Cancellation had been executed.

The Petitioner submitted an application for a GST refund on 4th September 2020 to Respondent No.3, providing all required details. On 6th January 2021, Respondent No.2 requested information on whether Respondent No.5 had also applied for a refund, to which the Petitioner confirmed via email that no such refund had been applied for by Respondent No.5.

The refund application was denied by Respondent No.3 on the grounds of non-electronic filing. The Petitioner then filed a Writ Petition seeking to quash this order and to mandate the Respondent Nos. 2 and 3 to process the refund application.

Respondent Nos. 1 to 4 opposed the Writ Petition, and Respondent No.5 indicated that a draft Deed of Cancellation was shared with the Petitioner in March 2021, though no further action had been taken by the Petitioner. The Petitioner argued that the Respondent No.5 had collected the GST and deposited it with the authorities and, despite the proposed cancellation of the Agreement, had not sought a refund. Hence, the Petitioner asserted entitlement to the refund of the GST amount.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law: