Case Note & Summary
The petitioners, C.P. Ravindranath Menon and Sindhu Ravindranath Menon, filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court challenging an order dated 18 February 2021 passed by the Deputy Commissioner of GST & Central Excise (Respondent No.3). The impugned order rejected the petitioners' refund claim application under the Central Goods and Services Tax Act, 2017 (CGST Act) solely on the ground that the application was not filed electronically, which was allegedly mandatory with effect from 26 September 2019 as per Circular No. 125/44/2019-GST dated 18 November 2019 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing. The petitioners had entered into an Agreement for Sale on 10 May 2018 with Respondent No.5, Godrej Redevelopers (Mumbai) Pvt. Ltd., which was duly registered. The petitioners sought a refund of tax paid, but the application was rejected without considering the merits. The legal issue was whether a circular issued by the government could impose a mandatory electronic filing requirement when the statute (Section 54 of the CGST Act) and the rules (Rule 91 of the CGST Rules, 2017) do not explicitly mandate electronic filing. The petitioners argued that the circular is directory and cannot override the statutory provisions. The respondents, including the Union of India and the GST authorities, contended that the circular was binding. The court analyzed the provisions and held that the circular is directory in nature and cannot override the statute. The court quashed the impugned order and directed the respondents to process the refund claim on merits within four weeks. The petition was allowed with no order as to costs.
Headnote
A) GST - Refund Claim - Electronic Filing - Circular No. 125/44/2019-GST dated 18.11.2019 - The court considered whether a refund application under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act) filed manually could be rejected for non-compliance with a circular requiring electronic filing. Held that the circular is directory and cannot override the statutory provisions which do not mandate electronic filing. The impugned order was quashed and the refund claim was directed to be processed on merits (Paras 1-10).
Issue of Consideration
Whether the rejection of refund claim on the ground that the application was not filed electronically as per Circular No. 125/44/2019-GST is valid when the statute does not mandate electronic filing.
Final Decision
The impugned order dated 18 February 2021 is quashed and set aside. The respondents are directed to process the refund claim of the petitioners on merits within four weeks from the date of the order. The petition is allowed. No order as to costs.
Law Points
- Circular cannot override statutory provisions
- Refund claim under Section 54 of CGST Act
- 2017
- Electronic filing requirement is directory
- Not mandatory
- Rule 91 of CGST Rules
- Article 226 of Constitution of India
