2025 (6) TMI 2030 - HC - GST

Prayer for a direction upon the respondent authorities to forthwith process the refund applications filed by the petitioners in form GSTRFD 01 for the tax periods of February 2020 to March 2021 April 2021 to December 2021 and January 2022 to September 2022 and October 2022 to March 2023 - HELD THAT - The right to seek refund is provided for in Section 54 of the WBGST/CGST Act 2017 (hereinafter referred to as the said Act ). In terms of the provisions contained in sub section (4) of Section 54 an application in Section 54(1) is required to be accompanied with documents as identified in the said Section and should be filed in form RFD 01 electronically on the portal. Section 54(1) provides that the claim of refund of any tax or interest if any shall be made by making an application before expiry of 2 years. The procedure for filing of such application is provided for in Rule 89 of the WBGST/CGST Rules 2017 and the procedure for issuance of acknowledgement is also provided for in Rule 90 of the said Rules. Admittedly in this case from the documents available on records it transpires that though the proper officer may have identified certain deficiencies however such deficiencies did not reflect in the view site of the portal. Be that as it may while directing the respondents to take up this issue with the appropriate authority and noting that the petitioner no. 1 cannot be made to suffer without being made aware of the deficiencies the petitioner no.1 is permitted to re-file the refund application in respect of the aforesaid period by treating that the deficiency memo be communicated to the petitioner on this day. The writ petition is disposed of.

Summary

The core legal questions considered by the Court in this matter include: (1) Whether the respondent authorities are obligated to process the refund applications filed by the petitioners within the stipulated time; (2) Whether the proper officer complied with the procedural requirements under Rule 90(3) of the WBGST/CGST Rules, 2017, specifically regarding communication of deficiencies in refund applications via Form RFD-03 through the common portal; (3) Whether the deficiencies in the refund applications were adequately communicated to the petitioners to enable them to rectify and re-file the applications; and (4) The implications of any failure in communication on the limitation period prescribed under Section 54(1) of the WBGST/CGST Act, 2017 for filing refund claims.

Regarding the obligation to process refund applications, the Court examined the statutory framework under Section 54 of the WBGST/CGST Act, 2017, which grants the right to claim refund of tax or interest within two years of the relevant period. The procedure for filing refund claims is governed by Rule 89 of the said Rules, while Rule 90 outlines the process for issuance of acknowledgments and communication of deficiencies. Rule 90(3) mandates that if any deficiency is noticed in a refund application, the proper officer must communicate such deficiency electronically through Form RFD-03 on the common portal within 15 days of filing.

The Court analyzed the factual matrix wherein the petitioners had filed refund applications in Form GSTRFD 01 for multiple tax periods ranging from February 2020 to March 2023. Although deficiency memos in Form RFD-03 were uploaded on the portal by the respondents, these memos did not specify the reasons or identify the particular deficiencies, nor were any documents attached to elucidate the nature of the deficiencies. This lack of clarity was evident from screenshots and portal views submitted by the petitioners, which showed that the deficiency memos were devoid of any explanatory content accessible to them.

In response, the respondents submitted an affidavit enclosing the deficiency memo, which indicated that the rejection was due to "Data provided in Annexures is appeared to be improper and cannot be verified from ICEGATE." Despite this, the Court observed that the deficiency memo as available on the common portal to the petitioners did not reflect this reasoning or attach any supporting documents. This revealed a communication gap between the proper officer's internal records and the information accessible to the petitioners on the portal.

The Court's interpretation emphasized that the right to re-file a refund application arises only upon proper communication of the deficiencies by the proper officer through the common portal electronically. The Court noted that although the proper officer may have identified deficiencies and discharged their responsibility internally, the petitioner's right to rectify and re-file is contingent upon receiving clear and accessible communication of such deficiencies. The Court highlighted a discrepancy between the portal view available to the officer and the portal interface accessible to the petitioner, leading to non-communication of essential information.

On the limitation aspect, the Court referred to the proviso under Rule 90(3) which excludes the period between the date of filing the refund application and the date of communication of deficiencies from the two-year limitation period under Section 54(1). The Court reasoned that since the deficiencies were not effectively communicated, the limitation period should not prejudice the petitioners. This principle ensures that taxpayers are not unfairly barred from exercising their statutory rights due to procedural lapses by the authorities.

In addressing competing arguments, the respondents contended that the proper officer had fulfilled their duty by uploading the deficiency memos. However, the Court found that such compliance was insufficient if the communication did not reach the petitioner in a manner that enabled them to understand and remedy the deficiencies. The Court underscored the necessity of transparent and effective communication in administrative processes, particularly where rights and remedies depend on timely and informed action by the claimant.

Consequently, the Court directed the respondents to allow the petitioner to re-file the refund applications, treating the date of this order as the date of communication of the deficiency memo. The Court also instructed the respondents to take up the issue of portal functionality and communication gaps with the appropriate authority to prevent recurrence. The order was passed with the caveat that it is based on the peculiar facts of the case, emphasizing the fact-specific nature of the relief granted.

Significant holdings from the judgment include the following verbatim excerpt encapsulating the Court's core reasoning: "The right of the petitioner no. 1 to refile an application accrues only when the deficiencies are communicated by the proper officer through the common portal electronically to the petitioner no.1. In this case, there appears a communication gap in the officer discharging his duties and the same not being communicated to the petitioner no.1." This principle establishes that procedural compliance by tax authorities must include effective communication of deficiencies to safeguard the taxpayer's right to remedy and re-file refund claims.

Further, the Court elucidated the interplay between Rule 90(3) and Section 54(1), stating that the limitation period for filing refund claims is tolled during the interval between the initial application and the communication of deficiencies. This ensures that taxpayers are not penalized for delays attributable to administrative shortcomings.

In conclusion, the Court determined that the refund applications filed by the petitioners were not properly processed due to failure in communicating deficiencies via the common portal. The respondents were directed to permit re-filing of the refund claims, treating the date of the Court's order as the date of deficiency communication, thereby preserving the petitioners' statutory rights. The judgment reinforces the principle that administrative authorities must ensure transparent and effective communication in tax refund proceedings to uphold procedural fairness and statutory mandates.