COVID-19 limitation extension saves refund claim for tax paid under wrong head

Issue

Whether the refund applications filed for tax paid under the wrong head (Section 77) for the period January 2019 to March 2022 were barred by limitation, considering the exclusion of the COVID-19 period under Notification No. 13/2022-Central Tax.

Facts

Period Involved: January 2019 to March 2022.
Nature of Claim: The petitioner sought a refund under Section 77 (Tax wrongfully collected and paid to Central/State Govt) read with Rule 89(1A) for tax paid under the wrong head.
Filing Timeline:
- First Application: Filed on 09.05.2023 covering the period Jan 2019 to Mar 2021. This drew a deficiency memo.
- Subsequent Applications: Filed on 28.02.2024 (covering Jan 2019 to Mar 2022) and another on 16.01.2025.
Rejection: The Adjudicating Authority rejected the claims as time-barred.
- The Authority applied Notification 13/2022, which excluded the period from March 2020 to February 2022 from the limitation calculation.
- Based on this, the Authority computed the last date for filing as 28.02.2024.
- Despite the petitioner filing an application on exactly that date (28.02.2024), the claim was rejected.

Decision

Limitation Computation: The High Court observed that the Authority correctly identified Notification 13/2022 as applicable but failed to apply it logically to the facts.
First Application Valid: The application dated 09.05.2023 (for the period Jan 2019 – Mar 2021) was well within the extended limitation period provided by the COVID-19 relief notifications but was erroneously ignored after the deficiency memo.
Second Application Timely: The application dated 28.02.2024 was filed on the very last date computed by the Authority itself. Rejecting a claim filed within the permissible window (even on the last day) is contrary to the statute.
Ruling: The exclusion of the COVID-19 period (March 2020 – February 2022) enures to the benefit of the petitioner. The rejection order was set aside, and the refund applications filed between 09.05.2023 and 03.02.2025 were held to be within time.

Key Takeaways

Notification 13/2022 Impact: The period from 01.03.2020 to 28.02.2022 is strictly excluded when calculating the 2-year limitation for refund claims under Section 54/55. If your original deadline fell within this window, you got a significant extension (often up to Feb 2024 or later depending on the exact dates).

Deficiency Memos: Mere issuance of a deficiency memo does not extinguish the original date of filing if the claim is re-filed/rectified. Courts increasingly hold that the limitation should be reckoned from the initial valid attempt if the delay is procedural.

Wrong Head Refunds: Refunds for taxes paid under the wrong head (IGST instead of CGST/SGST or vice versa) are covered under Section 77. The limitation for these often gets intertwined with the date of subsequent correct payment, providing additional breathing room beyond the standard 2-year window from the original payment.

HIGH COURT OF KARNATAKA

Amidc Automation Technologies (P.) Ltd.

Central Board of Indirect Taxes and Customs

S.R.Krishna Kumar, J.

WRIT PETITION NO. 16978 OF 2025 (T-RES)

OCTOBER 30, 2025

Gowrishankar Prasad H.R., Adv. for the Petitioner. Aravind V. Chavan, Adv. for the Respondent.

ORDER

1. In this petition, petitioner seeks for the following reliefs:-

“A. To issue a Writ of Certiorari or any other appropriate writ to quash the impugned order passed by the Assistant Commissioner of Central Taxes, NWD-1 Division, Bengaluru, the Respondent No.2 in Form GST-RFD-06 dated 21.02.2025, bearing No.141/2024-25, enclosed as “Annexure – S” for the reasons stated in the grounds;

B. To issue a Writ of Mandamus or any other appropriate writ directing the Respondent No.2 to accept the refund application in FORM GST-RFD-01 which has been filed within the due date for the period JAN 2019 to March 2022 and thus grant refund of taxes in accordance with law along with the interest as applicable, without insisting on limitation and jurisdictional issues;

C. To pass any such other Writ, Order or Direction as this Hon’ble Court might deem fit to be issued in the fact and circumstances of the case in the interest of justice and equity.”

2. Heard learned counsel for the petitioner and learned counsel for respondent Nos.1 and 2 and perused the material on record.

3. A perusal of the material on record will indicate that on 09.05.2023, the petitioner filed a refund application for the period from January-2019 to March-2021, to which respondent No.2 issued deficiency memo dated 01.06.2023 calling upon to fill up the deficiency before the proper jurisdictional authority. Subsequently, the petitioner filed one more application dated 04.08.2023 for the very same period January-2019 to March-2021 asking for the very same amount, to which also respondent No.2 issued deficiency memo with no specific reasons for rectification. Subsequently, on 28.02.2024, the petitioner filed one more application for the period from January-2019 to March-2022 to an additional amount, which was withdrawn by him on 16.04.2024 and rectified on 16.04.2024, to which the respondent issued a deficiency memo dated 30.04.2024 stating that the documents are incomplete, as a result of which the petitioner filed one more application dated 10.06.2024 for the period from January-2019 to March-2022 culminating in the last application dated 16.01.2025 for the very same period from January-2019 to March-2022, show-cause notice dated 12.02.2025 proposing to reject the application as time barred, to which the petitioner reply dated 18.02.2025, all of which culminated in the impugned order dated 20.02.2025 rejecting the claim of the petitioner on the ground that the same is barred by limitation.

4. Learned counsel for the petitioner invited my attention to the impugned order in order to point out that the original applications filed by the petitioner was on 09.05.2023, which was well within the period of limitation and the same was not considered for the period from January-2019 to March-2021 and one more application dated 28.02.2024 for the period from January-2019 to March-2022, both were within the prescribed period of limitation, has been erroneously rejected by respondent No.2 as barred by limitation. It is also submitted that though respondent No.2 referred exclusion of time in favour of the petitioner by virtue of the decision of the Apex Court relating to Covid-19 pandemic exigency in terms of Notification-13/2022 dated 05.07.2022, respondent No.2 has come to the erroneous conclusion that the said notification would not enure to the benefit of exclusion of time, which is contrary to the facts and law and the said notification and as such, the impugned order may be set aside and respondent No.2 may be directed to consider the case on merits and proceed further in accordance with law.

5. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed.

6. Before adverting to the rival contentions, it is necessary to extract the relevant paragraphs of the impugned order, which is as under:

“8. In pursuance to the principles of Natural Justice Personal hearing was fixed at 11:15 AM on 13.02.2025 and the same was adjourned to 12:30 PM on 20.02.2025 on the request of the claimant. The authorized representatives of the claimant appeared for personal hearing and reiterated the written submissions.

Discussions and Findings:

9. I have carefully gone through the relevant refund claim, show cause notice issued vide Ref No.ZD290225044633E dated: 12.02.2025, reply to the show cause notice in Form GST-RFD-09 dated: 18.02.2025 submitted by the claimant on the GST portal.

10. In the present case, t he allegation in the show cause notice is that the claimant have filed the instant refund claim after the permissible time limit. Hence, the refund claim is time barred.

11. On perusal of the reply dated: 18.02.2025 on the GST portal, I find that the claimant have stated that “The case is not time-barred; rather, there was a jurisdictional issue.”

12. I find that the claimant have file the said refund application under Section 54 read with Section 77 of CGST Act, 2017 read with sub rule (1A) of Rule 89 of CGST Rules, 2017 read with Section 20 of IGST Act, 2017.

13. Section 77 of CGST Act, 2017 is reproduced below:

“(1) A registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.”

i Sub Rule (1A) of Rule 89 of the CGST Rules, 2017 states as follows:

“(1A) Any person, claiming refund under section 77 of the Act of any tax paid by him, in respect of a transaction considered by him to be an intra-State supply, which is subsequently held to be an interState supply, may before the expiry of a period of two years from the date of payment of the tax on the interState supply, file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Center notified by the Commissioner.:

Provided that the said application may, as regard to any payment of tax on inter-State supply before coming into force of this sub-rule, be filed before the expiry of a period of two years from the date on which this sub-rule comes into force.”

14. Provision of Time limit:

The instant refund claim has been filed on 16.01.2025 for the tax period of January, 2019 to March, 2022 under Section 77 of CGST Act, 2017 read with sub rule (1A) of Rule 89 of the CGST Rules, 2017 read with Section 20 of the IGST Act, 2017.

ii.

Rule 89 (1A) has been inserted vide notification no.35/2021-CT dated: 24.09.2021 and it has come into force w.e.f. 24.9.2021.

iii.

Accordingly, it is opined that the instant refund claim should have been filed within 2 years from 24.9.2021 i.e., the refund claim should have been filed on or before 23.9.2023.

iv.

Further, I also find that Notification No.13/2022-Central Tax dated: 05.07.2022 ha been issued providing relaxation in time limit for filing refund application on account of COVID crisis and the period from March, 2020 to February, 2022 has been excluded for computing the time limit. The same is reproduced below:

ii.

……

iii.

……

iv.

“excludes the period from the 1^st day of March, 2020 to the 28^th day of February, 2022 for computation of period of limitation for filing refund application under section 54 or section 55 of the said Act.”

15. On plain reading of the above-discussed provisions, I find that as per sub-rule (1A) of Rule 89 time limit for filing the refund was due on or before 24.09.2021 and in terms of Notification No.13/2022- CT dated: 05.07.2023, the time limit was up to February, 2024. However, in the instant issue I find that the claimant have filed the said refund claim on 16.01.2025 whereas, they should have filed the refund claim on or before 28.02.2024. Hence, the instant refund claim is hit by time bar.

16. I find that the claimant have mentioned that there was not mistake on their part and that there was jurisdictional issue and that there was no error committed at their end. In this regard I draw attention to Trade Notice No. 01/2017 Central Tax dated: 20.06.2017 issued by the Principal Chief Commissioner, Bengaluru Zone, wherein, the jurisdiction of each Commissionerate has been mentioned with pin codes. The claimant could have gone through the said trade notice and seen that their unit is mapped in the correct jurisdiction, they cannot claim ignorance on their part in this regard. Hence, the contention of the claimant that their was no error on their part is not tenable. The case laws cited by the claimant do not come to their rescue.

17. In view of the above-detailed discussions and findings, I pass the following order.

Order

I reject the refund claim filed vide ARN AA290125040841E dated: 16.01.2025 M/s AMIDC AUTOMATION TECHNOLOGIES PRIVATE LIMITED, 2^nd STAGE, RING ROAD, 19/A, INDUSTRIAL SUBURB, DR. RAJKUMAR SAMADHI ROAD, GORGUNTEPALYA, BANGALORE – 560022 for an amount of Rs.1,97,60,852/- (IGST-Rs. 97,33,753/-, CGST-Rs. 49,45,284/- & SGST-Rs. 50,81,815/-) for the period January, 2019 to March, 2022 as ‘Time-barred.’

7. As rightly contended by the learned counsel for the petitioner, the undisputed fact borne out from the material on record is that the petitioner has initially filed refund application as long back as on 09.05.2023 well within the period of limitation for the period from January-2019 to March-2021 and the same has not been considered by passing the impugned order. So also, despite specifically stating at paragraph No.15 that the refund claim ought to have been filed on or before 28.02.2024 by the petitioner for the period from January-2019 to March-2021, the respondent failed to consider and appreciate that the petitioner has actually filed refund claim on 28.02.2024 itself, which is also not considered by the respondent while passing the impugned order. It is also relevant to state that though the respondent refers exclusion of time referred by the Apex Court relating to Covid-19 pandemic exigency in terms of Notification-13/2022 dated 05.07.2022, excluding period of limitation from March-2020 to February-2022. The said exclusion which would clearly enure to the benefit of the petitioner has not been considered or appreciated by respondent No.2, who erroneously rejected the claim of the petitioner as barred by limitation, which is contrary to law, provisions of the Act and the material on record, warranting interference by this Court in the present petition.

8. In the result, I pass the following:

ORDER

(i)

The petition is allowed.

(ii)

The impugned order at Annexure-S dated 21.02.2025 passed by respondent No.2 is hereby set aside.

(iii)

It is held that the refund claim of the petitioner vide several refund applications commencing from 09.05.2023 up to 03.02.2025 are not barred by limitation and the same are within time.

(iv)

Respondents are directed to consider the claim of the petitioner and pass appropriate orders together with applicable interest, as expeditiously as possible and at any rate, within a period of three months from the date of receipt of a copy of this order, without reference to limitation, which stands concluded in favour of the petitioner by this order,.