Bombay HC allows filing of refund application for a period already covered under an earlier application

This Tax Alert summarizes a recent judgement of the Bombay High Court (HC) ^[1] on the validity of multiple refund applications filed by the taxpayer under section 54(1) of the Central Goods and Services Tax Act, 2017 (CGST Act) for the same tax period.

Assessee filed a refund application for the tax period of August 2022 which was rejected by the Revenue on the ground that assessee had earlier filed and obtained refund through a consolidated application covering the period July 2022 to September 2022. The petitioner contended that the August 2022 invoice had been inadvertently omitted from the earlier application. The rejection was thus challenged before the HC.

The key observations of the HC are:

• The plain language of Section 54(1) of the CGST Act does not provide any bar on filing more than one refund application, particularly where omission to include certain invoices in the earlier application was due to inadvertence, and the subsequent application is within limitation period.
• Where the basic statutory condition of filing application within the prescribed two-year period is satisfied, technical grounds should not defeat the right to have the subsequent application considered on merits.
• Principles of res judicata (or analogous principles) are not to be read into such refund proceedings for distinct periods.
• The proper officer was required to consider, and follow, the judgement of Gujarat HC ^[2] on similar matter which has attained finality, instead of distinguishing it on the basis of the nature of error.

Basis above, HC allowed the writ petition and remanded the matter back to Revenue for fresh adjudication based on merits of the case.

Comments:

• The ruling may aid taxpayers facing refund rejections on procedural/technical grounds.
• The judgement also emphasizes on the requirement for departmental uniformity in approach, particularly where the decision of HC in another jurisdiction has attained finality. This aspect may be relevant in cases where field formations seek to distinguish HC decisions basis the nature of error, without testing the claim on merits.