9911796707
TMI Blog2023 (11) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the receipt of the application filed pursuant to the order passed by the Appellate Authority. Since in the present case, the refund was processed within the period of sixty days from the date of such application, no interest was payable under Section 56 of the DGST Act. 2. According to the petitioner, the Adjudicating Authority has misinterpreted the provisions of Section 56 of the DGST Act. The petitioner claims that he is entitled to interest for the period immediately after the expiry of sixty days from the date of the first application for a refund and not after sixty days from the application filed after succeeding in his claim for refund before the Appellate Authority. 3. In view of the above, the principal controversy to be addressed is whether the period for which the interest is payable under Section 56 of the DGST Act - which is similarly worded as Section 56 of the Central Goods and Services Tax Act, 2017 (hereafter 'the CGST Act') - commences from the date immediately after expiry of sixty days from the receipt of an application for refund or from a later date, in case the refund is initially denied but subsequently allowed by the Appellate Authority, Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contention that it was open for a taxpayer to discharge its tax obligations either in cash or through utilisation of ITC admissible in respect of such supplies. Accordingly, the Appellate Authority set aside the order dated 10.11.2020 passed by the Adjudicating Authority to the extent that it rejected the petitioner's claim for refund. The petitioner was directed to file an application for fresh refund and the Adjudicating Authority was directed to process the petitioner's application in accordance with the timeline as prescribed in the CGST/DGST Act and the Central Goods & Services Tax Rules, 2017 (hereafter 'the Rules'). The petitioner's claim for interest was denied. 4.6. On 23.11.2022, the petitioner once again filed an application (in RFD-01) for the refund of Rs.52,84,223/- as well as the interest. Pursuant to the said application, the Adjudicating Authority passed an order dated 28.12.2022 sanctioning a refund of balance amount of Rs.52,84,223/-. However, the Adjudicating Authority did not sanction any amount on account of interest on the said amount. Thus, the petitioner's claim for refund was allowed in entirety but interest on the said amount was denied. 4.7. The amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5)." 7. In terms of Section 54(1) of the CGST Act, any person claiming refund of tax and any interest paid on such tax or any other amount paid by him can make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. If his refund as ordered, is not paid within a period of sixty days from the date of the application, the applicant is required to be paid interest not exceeding 6% per annum from the date immediately after the expiry of sixty days from the date of receipt of the said application. 8. Sub-section (4) of Section 54 of the CGST Act requires the said application for refund to be accompanied by such documentary evidence as may be prescribed to establish that a refund is due to the applicant and such documentary or other evidence to establish that the incidence of tax and interest claimed has not been passed on to any other person. Sub-section (1) and Sub-section (4) of Section 54 of the CGST Act are relevant and are set out below: "54. Refund of tax.- (1) Any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund or reference number of the payment of the amount specified in subsection (6) of section 107 and sub-section (8) of section 112 claimed as refund; (b) a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods, other than electricity; (ba) a statement containing the number and date of the export invoices, details of energy exported, tariff per unit for export of electricity as per agreement, along with the copy of statement of scheduled energy for exported electricity by Generation Plants issued by the Regional Power Committee Secretariat as a part of the Regional Energy Account (REA) under clause (nnn) of sub-regulation 1 of Regulation 2 of the Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in case where refund is on account of export of electricity; (c) a statement containing the number and date of invoices and the relevant Bank Realisation Certificates or Foreign Inward Remittance Certificates, as the case may be, in a case whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement or contract, as applicable, entered with the supplier for supply of service, the letter issued by the supplier for cancellation or termination of agreement or contract for supply of service, details of payment received from the supplier against cancellation or termination of such agreement along with proof thereof, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated; (kb) a certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; that he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated; (l) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing. (2) The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within a period of fifteen days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of subrule (2), (3) and (4) of rule 89, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing. (3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the common portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies. Provided that the time period, from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORM GST RFD-03 by the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5; Gojer Bros Pvt Ltd v Ratan Lal Singh: (1974) 2 SCC 453.] and an order passed by the Adjudicating Authority would stand merged with the order passed by the Appellate Authority or the Appellate Tribunal/High Court. Once a person has triggered the proceedings for claiming refund by filing an application under Section 54(1) of the CGST Act along with all relevant documents as specified under Section 54(4) of the CGST Act read with Rule 89(2) of the Rules, which are acknowledged in terms of Rule 90 of the Rules, and his claim is ordered but not paid within a period of sixty days, his entitlement to interest is crystalised. In case where the claim initially is denied by the Adjudicating Authority but subsequently ordered by the Appellate Authority, Appellate Tribunal or the court, the said orders are deemed to be the orders passed under Section 54(5) of the CGST Act. This is expressly stipulated in the Explanation to Section 56 of the CGST Act. It is obvious that the right to receive interest would arise only if the refund is ordered under Section 54 of the CGST Act. The period for which the interest is to be calculated would commence from the date immediately after the expiry of sixt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a fresh application under Section 54(1) of the CGST Act, is clearly unmerited. This is apparent when one considers that an application under Section 54(1) of the CGST Act is required to be made within a period of two years from the relevant date. The logical sequitur of the Revenue's contention is that the period spent by the taxpayer in pursuing its appellate remedies would also be disregarded for the purposes of calculating the period of two years within which an application is required to be made under Section 54(1) of the CGST Act. Resultantly, the taxpayer would be denied its claim for refund altogether in cases where the first application for refund was made within the stipulated period of two years from the relevant date (as defined under explanation to Section 54 of the CGST Act) but the proceedings before the appellate forum had carried on beyond the said period. This is, plainly, unacceptable, and therefore, the assumption that the application filed after the appellate orders is required to be treated as a fresh application is clearly flawed. 22. It is well settled that an interpretation of a statute that leads to an absurd result must be eschewed. A statute must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of the refund application is to ensure that a taxpayer is adequately compensated for denial of the funds that were legitimately due to it after accounting for a reasonable period of sixty days for processing its claim. The right of a taxpayer to receive such compensation would be severally diluted if the reference to the date of receipt of application under Section 54(1) of the CGST Act, in Section 56 of the CGST Act is construed to mean the date of an application for refund filed subsequently - that is, after the first application for refund is rejected in whole or in part - pursuant to the orders passed by the appellate fora. 26. We are of the view that on a plain reading of the main provisions of Section 56 of the CGST Act, a taxpayer would be entitled to interest from the date immediately after the expiry of sixty days from the receipt of the first application under Section 54(1) of the CGST Act, which is accompanied by the documents as specified under Section 54(4) of the CGST Act read with Rule 89 of the Rules. 27. We are also unable to accept that the proviso to Section 56 of the CGST Act in any manner dilutes the right of a taxpayer to receive interest unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 215-234.] formulates the governing principles of interpretation which have been adopted by courts while construing a statutory proviso. The first rule of interpretation is that: "The normal function of a proviso is to except something out of the enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. As stated by Lush, J. [Mullins v. Treasurer of the County of Surrey, (1880) LR 5 QBD 170] : (QBD p. 173) '... When one finds a proviso to the section, the natural presumption is that but for the proviso the enacting part of the section would have included the subject-matter of the proviso.' In the words of Lord Macmillan [Madras & Southern Mahratta Railway Co. Ltd. v. Bezwada Municipality, 1944 SCC OnLine PC 7]: (SCC OnLine PC) '... The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case.' The proviso may, as Lord Macnaghten [Local Govt. Board v. South Stoneham Union, 1909 AC 57 (HL)] laid down, be 'a qualification of the preceding enactment which is expressed in terms too general t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses a situation which is covered by the main clause. 31. It is important to note that the rate of interest as specified in the main provision of Section 56 of the CGST Act and the proviso to Section 56 of the CGST Act is materially different. Whereas, the main provision of Section 56 of the CGST Act provides for an interest at the rate not exceeding 6% per annum, the proviso to Section 56 of the CGST Act stipulates interest at the rate not exceeding 9% per annum. 32. The learned counsel also informed this Court that the interest at the rate of 6% per annum and 9% per annum has been notified for the purposes of Section 56 of the CGST Act and the proviso to the said section, respectively. Thus, there are two separate rates of interest specified under Section 56 of the CGST Act. The interest at the rate of 6% is payable for the period commencing from a date immediately after expiry of sixty days from the date of an application under Section 54(1) of the CGST Act, however, this rate is enhanced for the period covered under the proviso to Section 56 of the CGST Act. The proviso to Section 56 of the CGST Act expressly provides that an interest at the rate of 9% per annum would be payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders. However, this does not mean that the rate of 6% per annum is not payable for the period commencing from the date immediately after expiry of sixty days from his first application till sixty days after filing of his second application pursuant to the appellate orders. In another words, the proviso merely enhances the interest payable to a person for the period commencing from the date immediately after sixty days from the date of his application filed pursuant to its entitlement to refund claim attaining finality. 34. The applications for refund filed pursuant to orders passed by the Appellate Authority, do not invite any fresh adjudication. The said applications are merely to implement the orders already passed. Sensu stricto, such application is only for the purposes of convenience and to retrigger the processing of the refund claimed. It is obvious that the petitioner's claim for refund cannot be subjected to repeated rounds of adjudication by the Adjudicating Authority. Once an application for refund under Section 54(1) of the CGST Act has been filed, the same requires to be carried to its logical conclusion. If the said claim is denied by the Adjudicating Authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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