Laxmi Organic Industries Ltd VS Union of India

In a recent case, the petitioner encountered a significant issue with the submission of refund applications for the financial years 2018-19 and 2019-2020. The petitioner had initially attempted to upload “Statement 5B” along with the refund applications online but failed to complete this process correctly. Consequently, the petitioner submitted the applications manually on June 10 and June 22, 2021. However, these applications were returned without processing, as they did not comply with the procedural requirements stipulated by the relevant authorities.

The return of the applications was based on the guidelines outlined in Circular No. 125/44/2019-GST, dated November 18, 2019, which is referred to as the “impugned circular.” According to this circular, refund applications must be submitted using FORM GST RFD 01 through the common GST portal. This requirement has been in effect since September 26, 2019, emphasizing the need for electronic submission of refund applications. The authorities’ refusal to process the manually submitted applications was a direct consequence of not adhering to this electronic filing mandate.

The circular’s stipulation underscores a broader shift towards digital processes in GST compliance and refund claims. The petitioner’s failure to meet these electronic submission requirements led to the rejection of their refund claims, prompting further action from the petitioner to address and rectify the procedural non-compliance.

In the case presented, the petitioner encountered an issue with their refund applications for the fiscal years 2018-19 and 2019-20. Despite initially attempting to file the applications online, the petitioner failed to upload “Statement 5B” as required. Consequently, on 10th and 22nd June 2021, they submitted the refund applications manually. These applications were returned without processing, accompanied by instructions based on Circular No. 125/44/2019-GST, dated 18th November 2019, which mandates that refund applications must be filed online through FORM GST RFD 01 on the common portal and processed electronically from 26th September 2019. This directive was reiterated in a letter from the Superintendent, Tech-II Division, CGST & C. Ex., Raigad, dated 27th July 2021.

The petitioner, feeling aggrieved by this instruction, filed a writ petition on 4th September 2021, seeking the following reliefs:

1. A declaration that the impugned circular, which mandates online filing of refund applications, is beyond the provisions of the Central Goods and Services Tax Act, 2017 (specifically Sections 54, 16, and 168(1) of the Act and Rule 89 of the CGST Rules, 2017), and thus ultra vires the Act.

2. A directive that the petitioner should be allowed to file refund applications manually if unable to file them online.

The petitioner’s advocate, Mr. Raichandani, argued that Rule 97A of the CGST Rules allows for the processing of manual refund applications. He contended that this rule supports the acceptance of manually filed applications and mandates the issuance of an order, whether approving or rejecting the application. He asserted that the Superintendent’s refusal to accept and process the manual applications was an illegal act, challenging the validity of the circular’s online-only stipulation.

The case raises significant questions about the interpretation and application of refund procedures under the GST framework, particularly regarding the flexibility of filing methods and adherence to statutory provisions versus administrative instructions.

The case revolves around a petitioner who faced issues with filing refund applications for the fiscal years 2018-19 and 2019-20. Initially, the petitioner attempted to upload “Statement 5B” alongside the refund applications online but failed. Consequently, the petitioner submitted the applications manually on June 10, 2021, and June 22, 2021. These submissions were returned without processing, with instructions citing Circular No. 125/44/2019-GST, dated November 18, 2019, which mandates that refund applications must be filed electronically via FORM GST RFD 01 on the common portal from September 26, 2019. This requirement is reinforced in a letter from the Superintendent of CGST & C. Ex., Raigad, dated July 27, 2021.

The petitioner, feeling aggrieved by this directive, filed a writ petition on September 4, 2021, seeking to challenge the validity of the impugned circular. The petitioner argued that the circular’s requirement for online filing was beyond the statutory provisions outlined in Section 54, Section 16, and Section 168(1) of the CGST Act, 2017, as well as Rule 89 of the CGST Rules, 2017. The petitioner’s plea was twofold: (a) to declare the impugned circular as ultra vires the Act, and (b) to assert the right to file refund applications manually if unable to file them online.

The petitioner’s advocate, Mr. Raichandani, highlighted Rule 97A of the CGST Rules, 2017, which he argued allows for the manual processing of refund applications. He contended that the Superintendent’s refusal to accept and process the manual application was illegal and contrary to the provisions of Rule 97A. The petitioner’s argument was that the circular should not override the statutory provisions permitting manual filings.

In response, the respondents, represented by Mr. Mishra, argued that the Superintendent was bound by the impugned circular and was thus unable to process the manual refund application. They referenced a decision by the Gujarat High Court (F. S. Enterprise vs. State of Gujarat), which supported the validity of the circular’s requirement for electronic filing. The respondents also pointed out that any provisions applicable for electronic filing under Chapter X of the CGST Rules, 2017, were equally applicable for manual filing, as stated in Paragraph 6.1 of their reply affidavit.

After reviewing the arguments and statutory materials, the court considered the origin of the impugned circular, which is rooted in Section 168 of the CGST Act, 2017, granting powers to the authorities to issue such directives. The court’s deliberation centered on whether the circular’s mandate for online filing was within the scope of the statutory framework and whether it infringed on the petitioner’s rights to file manually. The final judgment would determine the legitimacy of the circular and the petitioner’s entitlement to file refund applications manually.

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