Case Note & Summary
The petitioner, Saiher Supply Chain Consulting Pvt. Ltd., filed a writ petition under Article 226 of the Constitution of India challenging the constitutional validity of Rule 90(3) of the Central Goods and Services Tax Rules, 2017 and seeking quashing of a rejection order dated 26 November 2020. The petitioner had filed three refund applications under Section 54 of the CGST Act, 2017 for the period July 2018 to September 2018. The first application dated 21 August 2020 was rejected on 5 September 2020 due to deficiencies. The second application dated 8 September 2020 was also rejected on 18 September 2020 on merits. The third application dated 30 September 2020 was rejected by the Assistant Commissioner of CGST on 26 November 2020 on the ground that under Rule 90(3), a fresh refund application could only be filed within two years from the relevant date, and since the relevant date was the end of the quarter (30 September 2018), the application was time-barred. The petitioner argued that Rule 90(3) is ultra vires Section 54 of the CGST Act, which provides a two-year limitation period from the relevant date for filing refund applications, and that the rule imposes an additional restriction not found in the parent Act. The respondents contended that the rule was valid and that the rejection on merits barred a fresh application. The court held that Rule 90(3) is ultra vires Section 54 of the CGST Act, 2017, as it imposes a restriction not contemplated by the parent Act. The court also held that rejection of a refund application on merits does not preclude a fresh application within the limitation period under Section 54. Consequently, the rejection order dated 26 November 2020 was quashed, and the third refund application dated 30 September 2020 was restored for decision on merits. The court directed the respondents to decide the application within four weeks from the date of the order.
Headnote
A) Constitutional Law - Ultra Vires - Rule 90(3) of CGST Rules, 2017 - Section 54 of CGST Act, 2017 - The court considered whether Rule 90(3) which requires a fresh refund application to be filed within two years from the relevant date is ultra vires the parent Act. Held that Rule 90(3) imposes an additional restriction not found in Section 54 and is therefore ultra vires. (Paras 4-10) B) Goods and Services Tax - Refund - Limitation - Section 54 of CGST Act, 2017 - Rule 90(3) of CGST Rules, 2017 - The court examined whether rejection of a refund application on merits bars a fresh application within the limitation period under Section 54. Held that rejection on merits does not preclude a fresh application as long as it is within the two-year period from the relevant date. (Paras 5-10) C) Goods and Services Tax - Refund - Rejection Order - Section 54 of CGST Act, 2017 - Rule 90(3) of CGST Rules, 2017 - The court considered the validity of a rejection order dated 26 November 2020 that refused to process the petitioner's third refund application citing Rule 90(3). Held that the rejection order is set aside and the third refund application dated 30 September 2020 is restored for decision on merits. (Paras 4-10)
Issue of Consideration
Whether Rule 90(3) of the Central Goods and Services Tax Rules, 2017 is ultra vires the Central Goods and Services Tax Act, 2017 and the Constitution of India, and whether the rejection of a refund application on merits precludes a fresh application within the limitation period under Section 54 of the CGST Act.
Final Decision
Rule 90(3) of the Central Goods and Services Tax Rules, 2017 is declared ultra vires the Central Goods and Services Tax Act, 2017. The rejection order dated 26 November 2020 is quashed and set aside. The third refund application dated 30 September 2020 is restored to the file of Respondent No.2 for decision on merits within four weeks from the date of the order.
Law Points
- Rule 90(3) of CGST Rules
- 2017 is ultra vires Section 54 of CGST Act
- 2017
- Limitation period for refund application under Section 54 cannot be curtailed by rules
- Rejection of refund application on merits does not bar fresh application within limitation period
- Rule 90(3) imposes additional restriction not found in parent Act
