In a welcome clarification for taxpayers, the Kerala High Court ruled that when a refund application is refiled after curing deficiencies, the date of the original application must be considered for calculating limitation. The petitioner, Sali P. Mathai, had originally filed a refund application on 5 April 2021, which was rejected citing defects. A rectified application was filed on 30 September 2021, but the department rejected it as time-barred under Section 54 of the CGST Act.
Justice Gopinath P. held that Rule 90(3) of the CGST Rules, which mandates filing a fresh application upon deficiency notice, does not override the statutory rights conferred under Section 54. The Court emphasized that the limitation period should be assessed from the date of the initial application, not the rectified one.
This ruling strengthens the principle that technical processes must not defeat substantive entitlements. The judgment also resolves a recurring administrative confusion—whether departments can apply a fresh limitation clock each time rectifications are filed, which in practice penalizes assessees for acting upon departmental instructions.
The decision not only quashes the rejection order but also reaffirms that administrative interpretation of rules cannot create unintended limitations on statutory claims. Refunds, the Court reiterated, are not ex gratia benefits but legal rights that must be adjudicated fairly.
Case: Sali P. Mathai v. State Tax Officer, decided on 29.10.2024 by Kerala High Court
