2024 (10) TMI 1677 - HC - GST

Direction for processing of refund claim - respondents failed to upload the deficiencies in Form GST RFD 03 - HELD THAT - Since the respondents have now identified the deficiencies in Court today which are now on record there cannot be any impediment for the petitioner to refile the application in proper form. The petitioner is thus permitted to take appropriate steps in this regard and file proper applications. If any such applications in Form GST RFD 01 are now filed by the petitioner by taking corrective steps in terms of the aforesaid order within a period of 6 weeks from date the proper officer shall process the same within a period of 8 weeks thereafter by treating the deficiencies to have been communicated to the petitioner in Court today. The records as placed before this Court are returned to Mr. Bhattacharya by retaining a photocopy of the same - Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

• Whether the respondents were obliged to upload specific deficiency memoranda in Form GST RFD - 03 on the portal, clearly identifying the deficiencies in the petitioner's refund applications as required under the statutory provisions.
• Whether the failure to disclose the exact deficiencies in the refund applications, as mandated by Rule 90(3) of the WBGST/CGST Rules, 2017, caused prejudice to the petitioner by preventing corrective action.
• Whether the petitioner's refund applications were incomplete and liable to be rejected due to missing declarations and supporting documents, including the absence of particulars such as HSN/SAC codes and annexures required under the relevant provisions.
• What procedural steps should be taken to remedy the situation, including the timeline for refiling and processing the refund applications.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Obligation to Upload Deficiency Memoranda in Form GST RFD - 03 and Disclosure of Deficiencies

Relevant legal framework and precedents: Section 54 of the WBGST/CGST Act, 2017 governs the refund of tax, and the procedural rules under the said Act are detailed in the WBGST/CGST Rules, 2017. Specifically, Rule 90(3) requires that any deficiency in the refund application be communicated to the applicant through a deficiency memo in Form GST RFD - 03, specifying the exact nature of the deficiency.

Court's interpretation and reasoning: The petitioner contended that although the portal indicated deficiency memoranda had been issued, the actual particulars of the deficiencies were not uploaded or communicated, thereby violating the statutory mandate and causing prejudice. The Court noted that the respondents initially could not identify the particulars of the deficiencies on the portal. However, upon production of records in Court, the respondents identified specific deficiencies related to missing declarations and supporting documents. The Court emphasized that since the deficiencies are now identified and recorded in Court, the petitioner is not prejudiced going forward.

Key evidence and findings: The records produced before the Court showed that deficiency memoranda were indeed issued, but the portal's limitations prevented clear disclosure of the exact deficiencies. The respondents selected the option "supporting documents attached are incomplete" due to the absence of a more precise deficiency category on the portal.

Application of law to facts: The Court found that the statutory requirement to disclose deficiencies was effectively met once the deficiencies were identified and communicated in Court, thereby curing the procedural lapse on the portal. This remedial approach balanced the petitioner's right to be informed with the practical limitations of the portal system.

Treatment of competing arguments: The petitioner's argument stressed the statutory mandate and prejudice caused by non-disclosure, while the respondents highlighted the technical limitations and the substantive deficiencies in the applications. The Court reconciled these by allowing corrective steps based on the deficiencies now disclosed.

Conclusion: The Court held that the respondents' failure to disclose deficiencies on the portal was remedied by the disclosure in Court, permitting the petitioner to file corrected applications.

Issue 2: Completeness of Refund Applications - Missing Declarations and Supporting Documents

Relevant legal framework and precedents: Section 54(3) of the WBGST/CGST Act, 2017 and the second proviso thereto require certain declarations to be filed along with refund applications in Form GST RFD - 01. Further, Rule 89(5) and Rule 89(2)(h) of the WBGST/CGST Rules, 2017 mandate the filing of annexure statements (Statement 1 and Statement 1A) and the inclusion of particulars such as HSN/SAC codes in the invoice statements.

Court's interpretation and reasoning: The respondents demonstrated that the petitioner's refund applications lacked the necessary declarations and annexures, and that the statements of invoices were incomplete, missing required HSN/SAC codes. The Court accepted that these omissions constituted valid grounds for issuing deficiency memoranda and withholding refund processing.

Key evidence and findings: The records included copies of the refund applications and annexures, showing the absence of the required declarations and incomplete invoice statements. The respondents' counsel relied on these documents to substantiate the deficiencies.

Application of law to facts: The Court applied the statutory provisions strictly, recognizing that the completeness and correctness of refund applications are essential for their acceptance and processing. The absence of required declarations and annexures justified the issuance of deficiency notices.

Treatment of competing arguments: While the petitioner argued that the deficiencies were not properly communicated, the Court found that the substantive deficiencies were real and material, necessitating corrective action by the petitioner.

Conclusion: The Court concluded that the petitioner's applications were incomplete and liable to be rejected unless the missing declarations and supporting documents were furnished.

Issue 3: Procedural Remedy and Timeline for Refiling and Processing Refund Applications

Relevant legal framework and precedents: The procedural rules under the WBGST/CGST Act and Rules do not prescribe explicit timelines for refiling but require deficiency memoranda to be communicated to enable corrective steps. The Court's supervisory jurisdiction under writ proceedings allows it to direct timelines to ensure justice.

Court's interpretation and reasoning: The Court observed that since the deficiencies have now been identified in Court, the petitioner should be permitted to refile proper applications. The Court directed that the petitioner file corrected applications within six weeks and that the respondents process these applications within eight weeks thereafter, treating the communication of deficiencies in Court as valid notice.

Key evidence and findings: The Court relied on the records and submissions to frame a timeline that balances procedural fairness and administrative efficiency.

Application of law to facts: The Court's directions ensure that the petitioner is not prejudiced by earlier procedural lapses and that the respondents fulfill their statutory duty to process refund claims expeditiously.

Treatment of competing arguments: The petitioner sought relief to cure procedural defects, while the respondents sought to uphold procedural requirements. The Court's timeline order accommodates both positions.

Conclusion: The Court ordered the petitioner to file corrected refund applications within six weeks and the respondents to process the same within eight weeks, treating deficiencies as communicated in Court.

3. SIGNIFICANT HOLDINGS

The Court held:

"Since the respondents have now identified the deficiencies in Court, today, which are now on record, there cannot be any impediment for the petitioner to refile the application in proper form."

"If any such applications, in Form GST RFD - 01 are now filed by the petitioner by taking corrective steps in terms of the aforesaid order within a period of 6 weeks from date, the proper officer shall process the same within a period of 8 weeks thereafter, by treating the deficiencies to have been communicated to the petitioner in Court today."

Core principles established include:

• The statutory requirement to communicate deficiencies in refund applications must be complied with, but procedural lapses in electronic portals can be remedied by disclosure in Court.
• Refund applications under the GST regime must be complete with all required declarations, annex