Pedersen Consultants India Pvt Ltd vs Union of India

Mr. Mahesh K. Chaudhary, Advocate, has entered an appearance for Respondent No. 3. The office report indicates that Respondent No. 3 is not residing at the given address, and accordingly, Respondent No. 3 is directed to file his latest residential address on record. The petitioner in this case seeks a direction to the respondents to grant the benefit of Input Tax Credit (ITC) that was paid by the petitioner on certain invoices for the period 2019-2020, on which Respondent No. 3 has also paid the tax. The learned counsel for the petitioner submits that the petitioner was coerced into depositing the tax on these invoices because Respondent No. 3 had not filed returns within the stipulated time. However, it later transpired that Respondent No. 3 eventually filed the returns and claimed ITC for the same invoices, resulting in a double payment to the tax department. The petitioner now seeks a refund of the amount that was forcibly deposited on the said invoices.

The learned counsel for the respondent counters by stating that the petitioner’s claim was not considered because the petitioner failed to file an appropriate refund application as required under Section 54 of the Central Goods & Service Tax (CGST) Act, 2017. This section mandates that any refund claim must be made through a formal application, which the petitioner did not do, thereby complicating the process of reclaiming the double-paid amount.

Despite the clear procedural requirements, the petitioner’s argument rests on the premise that the payment was made under duress and that the subsequent actions of Respondent No. 3—filing the returns and claiming the ITC—led to an unfair situation of double taxation. The petitioner argues that the tax authorities should consider the unique circumstances of this case and grant relief by refunding the overpaid amount. The petitioner’s counsel further emphasizes that the petitioner had complied with tax payment obligations under significant pressure, only to discover later that the same invoices had been processed and ITC claimed by Respondent No. 3, causing a financial burden that should rightfully be rectified by the authorities.

In addition to the procedural argument, the petitioner points to the principle of equity, arguing that it would be unjust for the tax authorities to retain the double payment when the facts clearly show that the petitioner was placed in an untenable position due to the delay and subsequent actions of Respondent No. 3. The petitioner’s counsel argues that the tax department should exercise discretion and allow the refund, recognizing the coercive circumstances under which the payment was made and the subsequent realization of double payment.

The learned counsel for the respondent, while acknowledging the petitioner’s predicament, reiterates that the procedural lapse—namely, the failure to file the appropriate refund application—cannot be overlooked. The CGST Act sets clear guidelines for refund claims to ensure that the process is orderly and verifiable. The respondent’s counsel argues that allowing exceptions could set a precedent that might undermine the procedural integrity of tax administration.

Given the complexities of the case, including the coercive payment under duress and the subsequent double payment, the petitioner’s counsel requests the court to intervene and direct the tax authorities to consider the refund on merits, taking into account the extraordinary circumstances. The respondent’s counsel, while sympathetic to the petitioner’s situation, maintains that adherence to statutory procedures is paramount and that any deviation could complicate the tax administration process.

In light of these arguments, the court must weigh the petitioner’s claim for equitable relief against the strict procedural requirements of the CGST Act. The decision will likely hinge on balancing the need for procedural compliance with the equitable principle of preventing unjust enrichment by the tax authorities due to the double payment. The petitioner’s plea highlights the tension between rigid adherence to procedure and the need for flexibility in the face of unique and compelling circumstances, prompting a nuanced judicial consideration of both statutory requirements and equitable justice.

Learned counsel for the petitioner submits that, given the objection raised concerning the non-filing of an appropriate refund application, the petitioner intends to file the necessary application with the concerned authority within one week. In support of this, the counsel relies on Notification No. 13/2022, dated 05.07.2022, which provides that the period from 01.03.2020 to 28.02.2023 should be excluded when computing the limitation period for filing a refund application under Sections 54 or 55 of the Central Goods and Services Tax (CGST) Act, 2017. This exclusion, as per the counsel, is crucial for ensuring that the petitioner’s claim is considered timely and in accordance with the provisions of the Act. Additionally, the counsel argues that the period from the filing of the subject petition, i.e., 19.01.2024, up to the present date, should also be excluded from the calculation of the limitation period. This request is made to ensure that the petitioner is not prejudiced by delays beyond their control while seeking a refund.

In light of these submissions, the petition is disposed of with an allowance for the petitioner to file the appropriate refund application as mandated by Section 54 of the CGST Act. The Court orders that the period from 19.01.2024 until today shall be excluded when calculating the limitation period for the refund application. This means that the petitioner will have the opportunity to submit their refund claim without being penalized for the elapsed time between the filing of the petition and the present date. Furthermore, the proper officer is directed to consider the petitioner’s claim under Notification No. 13/2022 when reviewing the refund application. This consideration must be conducted in accordance with the applicable legal provisions and guidelines set forth in the notification.

It is important to clarify that this Court has not examined or commented on the substantive merits of the petitioner’s claims or the objections raised by the respondents. The adjudication of the refund claim, including any determination of whether the petitioner is indeed covered by the provisions of Notification No. 13/2022, will be conducted by the proper officer in line with the legal framework and procedural requirements. The Court’s decision thus allows the petitioner to proceed with their refund application while reserving the rights and contentions of both parties for future consideration.

The matter is, therefore, disposed of on these terms, and the parties’ rights remain intact for any further proceedings as per the law.

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