2026-VIL-211-GSTAT-VSK
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  2. 2026-VIL-211-GSTAT-VSK

SGST Tribunal

GST - Refund of interest paid on tax discharged through electronic credit ledger in view of retrospective amendment to Section 50(1) of the CGST Act - Appellant filed returns belatedly, discharged tax partly through the electronic credit ledger and partly through the electronic cash ledger, and paid interest on the entire tax liability – The refund claim of excess interest was rejected as premature since no notification bringing the amendment into force was available - Whether the Appellant is entitled to refund of interest paid on the portion of tax discharged through the electronic credit ledger after the substituted proviso to Section 50(1) - HELD - Section 112 of the Finance Act, 2021 substituted the proviso to Section 50(1) and expressly declared that it shall be deemed to have been substituted with effect from 1st July, 2017. The amendment operates retrospectively and not merely from the date of its notification, and interest is leviable only on that portion of tax which is paid by debiting the electronic cash ledger, subject to the conditions in the proviso. The Notification merely appointed the date of commencement and did not alter the retrospective declaration by Parliament. The earlier voluntary payment of interest cannot validate an amount not legally payable, and the reasoning that the claim could not be considered for want of a notification is unsustainable, particularly in view of the administrative instructions of the Board to recover interest only on the net cash tax liability - The Appellant is entitled to have its claim considered in accordance with the retrospective amendment, the competent authority shall verify the interest paid and the portion attributable to tax discharged through the electronic credit ledger - The appeal is allowed - Rejection of refund claim on a fresh ground of limitation under Section 54 without notice and without considering exclusion of period under Notification No. 13/2022-Central Tax - First Appellate Authority dismissed the appeals on the ground of limitation, though this was not the ground of rejection by the original authority, and the Appellant was neither put to notice nor given an opportunity to make submissions - Whether the finding on limitation can be sustained, and whether the matter should be remanded - HELD - When an appellate authority proposes to decide a matter on a ground not put to the affected party, reasonable notice and an effective opportunity to meet that ground must be afforded - The doctrine of audi alteram partem requires notice with an opportunity of hearing and a reasoned order - The Authorised Representative of the Respondent admitted that no notice on limitation was issued. Notification No. 13/2022-Central Tax issued under Section 168A excludes the period from 1st March, 2020 to 28th February, 2022 for computing limitation for refund applications under Section 54 or 55, and limitation must be freshly worked out after this exclusion - The notification does not dispense with the requirement of satisfying limitation, and an open-ended remand is not warranted as the controversy can be determined on the statutory provisions and the record - The finding on limitation is unsustainable and the impugned order is set aside, the competent authority shall recompute limitation after giving effect to the exclusion and quantify the eligible refund after affording the Appellant a reasonable opportunity of being heard - The appeal is allowed.
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