Tax Vista Edn. 256 - 6th October 2025 Kasi Viswanathan V

 

 

A. Litigation

1. The Limitation under Special law (GST) are held inapplicable to refund of tax paid without availing exemption benefit:

The refund claim was made by registered recipient, an educational institution, in respect of GST paid by its supplier (landlord) on renting of a residential dwelling used for accommodation of students. The supplier did not avail the exemption under Sr. No. 12 of Notification No.12 of 2017 - Central Tax (Rate) dated 28.06.2017, applicable to such services during the relevant period. The refund claim was beyond the statutory period of two years even after excluding covid relaxation period. The proper officer issued deficiency memos stating that the claims were time-barred. Aggrieved, the petitioner approached the Hon'ble Andhra Pradesh High Court.

 

The Hon'ble AP High Court relied upon decision of Comsol Energy Private Limited Vs. State of Gujarat [2021-VIL-477-GUJ] and its earlier decision in the case of Louis Dreyfus Company Private Limited in [2025-VIL-852-AP], held that the claimant was not bound by the limitation prescribed under the special law (GST) for refund of tax collected without authority of law. The High Court directed to adjudicate the refund claim without going into the question of limitation.

 

The decisions referred to, viz., Comsol Energy & Louis Dreyfus, pertain to cases involving tax paid on ocean freight under a notification subsequently declared ultra vires and unconstitutional in Mohit Minerals [2022-VIL-30-SC]. In the present case, however, the payment was made without availing the exemption available under law, which distinguishes it from the cases relied upon.

 

A settled position in law is that limitation under a special law does not apply where the levy itself is unconstitutional. To portray a payment as unconstitutional and overcome the restrictions under the special law, the taxpayers often cite Article 265 of the Constitution, contending that tax paid despite an available exemption is without authority of law. However, the majority decision in Mafatlal Industries Ltd. [1996-VIL-01-SC-CE] held that provisions in special enactments constitute "law" within the meaning of Article 265, and any tax collected, retained, or not refunded in accordance with such provisions, is done under the authority of law. Accordingly, non-refund of tax as per time limit under Section 54 of the CGST Act is with the authority of law.

 

The non-applicability of a special law is limited to cases where the levy is held ultra vires, illegal, or unconstitutional, and cannot be extended to taxes paid under the Act despite an exemption. While there exists an opposing view, such positions must be approached with caution, particularly in light of the majority decision in Mafatlal Industries Ltd.

 

An additional fact in the present matter is that the first deficiency memo did not raise limitation as an objection, and it was raised only in the subsequent deficiency memo [2025-VIL-1009-AP].

 

RFN Considered sufficient proof of digital signature

The petitioner challenged the order-in-original before the Hon'ble Andhra Pradesh High Court on the ground that it did not bear a physical or digital signature of the adjudicating authority, nor any digital signature certificate issued by a certifying agency.

 

The Hon'ble High Court first clarified that Rule 26 of the CGST Rules, 2017, which prescribes methods of authentication, applies only to Chapter III (relating to registration). The Court noted that under Rule-142(5), notices and orders are to be served electronically. Based on the counter affidavit filed by the respondent, the Court observed that such electronic notices or orders cannot be issued unless digitally signed by the proper officer. Since the Reference Number (RFN) is generated upon affixture of the digital signature, its presence serves as sufficient evidence that the document has been digitally signed. Accordingly, in the present case, the orders containing an RFN were held to be valid.

 

The petitioner, however, succeeded in obtaining a remand on other grounds viz., issuance of composite notices & orders for multiple assessment years and non-issuance of DRC-01A.

 

The GSTN advisory dated 25.09.2024 had clarified that notices and orders are generated on the common portal from the login of the officer, who logs in the system through digital signature. Based on this advisory, the Gujarat High Court in Radhe Enterprise [2025-VIL-623-GUJ] observed that an order cannot be uploaded on the GST portal without being digitally signed and held that onus lies on taxpayer to demonstrate that the document does contain digital signature of the officer. This, however, posed a practical challenge since taxpayers have no means beyond the downloaded document to verify digital authentication. The present decision, by holding that the presence of the Reference Number (RFN) itself is sufficient proof of digital authentication, brings greater clarity, irrespective of whether login through DSC on the common portal automatically affixes the signature to the generated documents or requires a separate act of authentication.

 

Another important takeaway from the decision is the Court's observation that once a person has acted upon a notice or participated in proceedings, they cannot subsequently challenge their validity. This principle is also codified under Section 160 of the CGST Act [2025-VIL-1008-AP].

 

3. CESTAT holds ER-1 Return to be a duty paying document for Re-credit of excess debited Amount

The assessee paid duty on certain clearances, though no duty was payable, by utilizing Cenvat credit during June and July 2016. Subsequently, the assessee re-availed the excess credit and adjusted it against the duty liability for February 2017, after intimating the department. The department, however, advised the assessee to file a refund claim instead of making such adjustment. Despite this, the assessee proceeded with the adjustment, leading to further correspondence, issuance of a show cause notice, and confirmation of demand through adjudication and appellate orders. Aggrieved, the assessee approached the CESTAT, Allahabad.

 

There was no dispute with respect to the fact that duty has been paid in excess The CESTAT allowed the appeal, holding that ER-1 return filed by the assessee constituted a duty paying document and it contains all particulars prescribed under the proviso to Rule 9(2) of Cenvat Credit Rules, 2004.

 

Normally disputes of this nature are examined from the standpoint of whether re-credit or suo motu adjustment of excess paid tax is permissible, or whether a refund claim is the proper course to address unjust enrichment. Whereas, in the present case, the order focused on contravention of Rule 9 of CCR, 2004. Notably, the Hon'ble Member referred to an earlier order passed by him in the case of HDFC Bank Ltd. [ST/89160/2018], wherein the Commissioner had allowed credit based on documents issued by NPCI on interchange fees, by taking support from the proviso to Rule 9(2) of CCR, 2004 and Rule 4A of STR,1994. The department had carried the matter in appeal before the Tribunal. Tribunal elaborated on the contours of Rule 9(1) and Rule 9(2), observing that prescribed documents serve as direct evidence of duty payment, whereas in other cases, the onus rests upon the taxpayer to establish such payment, and accordingly remanded the matter for verification. The cited case, however, was not directly related to present case, as it did not involve any doubt regarding the tax payment itself. The present decision goes a step further, holding that the ER-1 return constitutes a duty-paying document for the purpose of re-availment of the excess debited amount.

 

Implicit in the reasoning is that all necessary particulars of the original duty-paying documents were subsumed within the ER-1 return, thereby enabling the return to serve as a valid duty-paying document for re-availment of credit. Interestingly, the proviso to Rule 36(2) of the CGST Rules, 2017 is similarly worded, and the rationale adopted in the present case could provide a new line of argument in situations where compliance under Rule 36 is questioned at the time of re-credit [2025-VIL-1620-CESTAT-ALH-CE].

 

B. CBIC Section:

Central GST Prepones Operationalization of Provisional Refund for ITC under Inverted Duty Structure

The Central GST has advanced the date for sanctioning provisional refunds of 90% of Input Tax Credit (ITC) accumulated due to the inverted duty structure. The operationalization, initially scheduled for 01.11.2025, has been preponed to 01.10.2025. Instructions in this regard have been issued vide Instruction No. 06/2025-GST dated 03.10.2025.

 

This is a case of advance roll-out, the instructions are ready, and the rules are in place, while the formal amendment to section 54(6) of the Act is yet to be made to include ITC accumulation on account of IDS.

 

Under the provisional route, refunds will not be granted in the following cases:

 

o   Cases not categorized as "low-risk" by the system.

o   Cases where withholding are proposed under Section 54(10) or 54(11) of the Act.

o   Cases where previous refund claims are pending at the SCN, adjudication, or appellate stage.

 

C. In the Foreign Trade Section

i. Project imports - extension of sunset date for concession by two more years till 30.09.2027

For following projects, the concession is extended till 30.09.2027 under sr. no. 597 of Notification No.50/2017-Customs dated 30.06.2017 [amended by Notification No. 40/2025-Customs dated 25.09.2025]:

 

Clause (iii) - power generation projects including gas turbine power projects (excluding captive power plants set up by projects engaged in activities other than in power generation) and

Clause (v) - power transmission, sub-transmission or distribution projects

 

For clause (i) coal mining projects, there is no extension after 30.09.2025.

 

ii. Extension of Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme benefits till 31.03.2026

Notification No. 35/2025 dated 30.09.2025 extends the benefit of the RoDTEP scheme for exports made up to 31.03.2026. The extension covers:

 

-            Domestic Tariff Area (DTA) units, and

-            Advance Authorisation (AA) holders, Special Economic Zone (SEZ) units, and Export Oriented Units (EOUs), for whom the scheme had been restored w.e.f. 01.06.2025.

 

iii. India-European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA) comes into effect from 01.10.2025.

To operationalize the Agreement, the following notifications and trade facilitation measures have been issued which are effective from 01.10.2025:

 

a.   Three customs tariff notifications covering Iceland, Norway and Switzerland [Notification No. 41/2025 - Customs, Notification No. 42/2025 - Customs and Notification No. 43/2025 - Customs, all dated 30.09.2025

b.   The Customs Tariff (Determination of Origin of Goods under the Trade and Economic Partnership Agreement between India and the EFTA States) Rules, 2025, notified vide Notification No. 59/2025 - Customs (NT) dated 29.09.2025, and

c.    Trade Notice No. 13/2025-2026 dated 30.09.2025 issued for electronic filing and Issuance of Preferential Certificate of Origin (CoO) under India-EFTA TPA.

 

(The views expressed are personal. The author can be reached for feedback or queries on v.k.vishwa@gmail.com)