Jharkhand High Court
Indicon Viva vs The State Of Jharkhand on 30 January, 2025
Author: Deepak Roshan
Bench: Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(T) No. 6527 of 2024
.........
M/s. BLA Infrastructure Private Limited, A Company
within the meaning of section 2 (20) of the Companies
Act, 2013, having its registered office at 53A, 3rd Floor,
Indicon Viva, Leela Roy Sarani, , P.O.- Ballygunge, P.S.-
Gariahat, Dist. - Kolkata, in the State of West Bengal, PIN
- 700019 and principal place of business at 2nd Floor,
2B, Brindavan Apartment, Kanke Road, Chandni Chowk,
P.O.- Gandhi Nagar & P.S.- Gonda, Dist.- Ranchi, in the
State of Jharkhand, PIN - 834008, represented through
its Director, Shri Sanjay Agarwala, S/o Shri Liladhar
Agarwala, aged about 38 years, Resident of At - 52/2B,
Hazra Road, Ballygunge, P.O.- Ballygunge, P.S.- Gariahat,
Dist.- Kolkata, in the State of West Bengal, PIN - 700019,
who is citizen of India. ..... Petitioner
Versus
1. The State of Jharkhand
2. Commissioner, State Goods & Services Tax,
Jharkhand, having its office at Utpad Bhawan, 1st Floor,
Opposite C.M. House, Kanke Road, P.O. & P.S.- Gonda,
Town & District- Ranchi-834008 (Jharkhand).
3. Assistant Commissioner, State Goods & Services Tax,
Jharkhand, Commercial Tax Department, Court
Compound, Behind Jaipal Singh Stadium, Kutchery road,
P.O.- G.P.O., P.S.- Kotwali, Ranchi-834001 (Jharkhand).
4. State Tax Officer, Ranchi West Circle, Commercial Tax
Department, Court Compound, Behind Jaipal Singh
Stadium, Kutchery Road, P.O.- G.P.O., P.S.- Kotwali,
Ranchi-834001 (Jharkhand). ..... Respondents
.........
1
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE DEEPAK ROSHAN
.......
For the Petitioner : Mr. Nitin Kumar Pasari, Advocate
For the Respondents : Mr. Mohan Kr. Dubey, A.C. to A.G
.........
C.A.V. ON 18/12/2024 PRONOUNCED ON:30/01/2025
Per Deepak Roshan, J.
Heard learned counsel for the parties.
2. The instant writ application has been preferred by
the petitioner praying therein for the following reliefs:
a. For issuance of an appropriate writ, order or direction,
directing upon the Respondents to show cause as to
why the refund application of the Petitioner has not
been processed which pertains to refund of the pre-
deposited amount with the government exchequer in
order to maintain the appeal under Section 107 of the
Act.
b. Consequent upon showing cause, if any, and on being
satisfied that the Respondents were obligated to grant
refund of the pre-deposit amount and the refund
application of the Petitioner could not have been
automatically rejected on the ground of being time
barred, the Respondents be directed to refund the
amount of pre-deposit forthwith along with statutory
interest.
c. For issuance of an appropriate writ, order or direction,
holding and declaring that once the appeal preferred
by the assessee is allowed, withholding of the pre-
deposit amount without any reasonable cause would
be hit by Article 265 of the Constitution of India, which
mandates that no tax shall be levied or collected
except by authority of law.
d. For issuance of an appropriate writ, order or direction,
quashing and setting aside the deficiency memos
issued in Form GST RFD-03 dated 06.11.2024
(Annexure-5) being wholly illegal and arbitrary and
consequently direction be issued to grant refund of Rs.
1,13,454/- illegally retained by the Respondents,
along with applicable interest and costs;
e. For issuance of any other appropriate writ(s)/
order(s)/ direction(s) as Your Lordships may deem just2
and proper in the facts and circumstances of the case
for imparting substantial justice to the Petitioner.
3. The brief facts of the case are that the petitioner is a
registered dealer under the Goods & Services Tax Act and is
carrying out business of loading, unloading of Coal and
transportation of coal loaded into tipper. In the month of
January 2021, alleging mismatch in GSTR-1 and GSTR-3B
for the month of September 2019, Show Cause Notice
under Section 74 of the JGST Act, 2017 was issued and ex-
parte order was passed vide order dated 31.08.2021,
imposing liability of Rs. 16,90,442/-, which inter alia
included tax, interest and penalty.
4. Aggrieved thereof, the petitioner preferred an appeal
within time making a statutory pre-deposit of the 10% of
the disputed tax amount under Section 107(6)(b) of the Act,
in order to maintain the appeal.
5. After hearing the petitioner and scrutinizing the
documents, the appeal was allowed on 09.02.2022 and
Form GST APL-04 dated 10.02.2022 was issued.
6. The petitioner made an application for refund of the
pre-deposit amount on 11.09.2024, which by virtue of a
Deficiency Memo dated 06.11.2024 was held to be beyond
the period prescribed under section 54(1) of the Goods &
Services Tax Act and hence, aggrieved thereof, the
petitioner is before this Court.
7. Counter Affidavit has been filed by the respondents,
defending the actions of the Department inter alia
purportedly in terms of Section 54 and also referring to
Circular No. 125/44/2019-GST dated 18.11.2019 issued
by the Government of India, Ministry of Finance, GST Policy
3
Wing, treating the application to be time barred and further
submitting that the Jurisdictional Officer has no
authority/discretion to condone the delay.
8. In the aforesaid background, we have to decide as to
whether the application for refund made beyond a period of
2 years should be entertained or not or if it is time barred.
9. For better appreciation, Section 54 of the Act is
hereto quoted for ease:
Section 54. Refund of tax.-
(1) Any person claiming refund of any tax and interest, if any,
paid on such tax or any other amount paid by him, may make
an application before the expiry of two years from the relevant
date in such form and manner as may be prescribed:
Provided that a registered person, claiming refund of any
balance in the electronic cash ledger in accordance with the
provisions of sub-section (6) of section 49, may claim such
refund in 1[such form and] manner as may be prescribed.
(2) A specialised agency of the United Nations Organisation or
any Multilateral Financial Institution and Organisation notified
under the United Nations (Privileges and Immunities) Act, 1947
(46 of 1947), Consulate or Embassy of foreign countries or any
other person or class of persons, as notified under section 55,
entitled to a refund of tax paid by it on inward supplies of goods
or services or both, may make an application for such refund, in
such form and manner as may be prescribed, before the expiry
of 1[two years] from the last day of the quarter in which such
supply was received.
(3) Subject to the provisions of sub-section (10), a registered
person may claim refund of any unutilised input tax credit at the
end of any tax period:
Provided that no refund of unutilised input tax credit shall be
allowed in cases other than-
(i) zero rated supplies made without payment of tax;
(ii) where the credit has accumulated on account of rate of tax on
inputs being higher than the rate of tax on output supplies (other
than nil rated or fully exempt supplies), except supplies of goods
or services or both as may be notified by the Government on the
recommendations of the Council:
9[****]
Provided also that no refund of input tax credit shall be
allowed, if the supplier of goods or services or both avails of
drawback in respect of central tax or claims refund of the
integrated tax paid on such supplies.
(4) The application shall be accompanied by-
4
(a) such documentary evidence as may be prescribed to
establish that a refund is due to the applicant; and
(b) such documentary or other evidence (including the documents
referred to in section 33) as the applicant may furnish to
establish that the amount of tax and interest, if any, paid on
such tax or any other amount paid in relation to which such
refund is claimed was collected from, or paid by, him and the
incidence of such tax and interest had not been passed on to
any other person:
Provided that where the amount claimed as refund is less than
two lakh rupees, it shall not be necessary for the applicant to
furnish any documentary and other evidences but he may file a
declaration, based on the documentary or other evidences
available with him, certifying that the incidence of such tax and
interest had not been passed on to any other person.
(5) If, on receipt of any such application, the proper officer is
satisfied that the whole or part of the amount claimed as refund
is refundable, he may make an order accordingly and the
amount so determined shall be credited to the Fund referred to
in section 57.
(6) Notwithstanding anything contained in sub-section (5), the
proper officer may, in the case of any claim for refund on
account of zero-rated supply of goods or services or both made
by registered persons, other than such category of registered
persons as may be notified by the Government on the
recommendations of the Council, refund on a provisional basis,
ninety per cent. of the total amount so claimed, 8[****], in such
manner and subject to such conditions, limitations and
safeguards as may be prescribed and thereafter make an order
under sub-section (5) for final settlement of the refund claim
after due verification of documents furnished by the applicant.
(7) The proper officer shall issue the order under sub-section (5)
within sixty days from the date of receipt of application complete
in all respects.
(8) Notwithstanding anything contained in sub-section (5), the
refundable amount shall, instead of being credited to the Fund,
be paid to the applicant, if such amount is relatable to-
(a) refund of tax paid on 2[export] of goods or services or both or
on inputs or input services used in making such 1[exports];
(b) refund of unutilised input tax credit under sub-section (3);
(c) refund of tax paid on a supply which is not provided, either
wholly or partially, and for which invoice has not been issued,
or where a refund voucher has been issued;
(d) refund of tax in pursuance of section 77;
(e) the tax and interest, if any, or any other amount paid by the
applicant, if he had not passed on the incidence of such tax and
interest to any other person; or
(f) the tax or interest borne by such other class of applicants as
the Government may, on the recommendations of the Council, by
notification, specify.
3[(8A) The Government may disburse the refund of the State tax
in such manner as may be prescribed.]
5
(9) Notwithstanding anything to the contrary contained in any
judgment, decree, order or direction of the Appellate Tribunal or
any court or in any other provisions of this Act or the rules made
thereunder or in any other law for the time being in force, no
refund shall be made except in accordance with the provisions
of sub-section (8).
(10) Where any refund is due 4[***] to a registered person who
has defaulted in furnishing any return or who is required to pay
any tax, interest or penalty, which has not been stayed by any
court, Tribunal or Appellate Authority by the specified date, the
proper officer may-
(a) withhold payment of refund due until the said person has
furnished the return or paid the tax, interest or penalty, as the
case may be;
(b) deduct from the refund due, any tax, interest, penalty, fee or
any other amount which the taxable person is liable to pay but
which remains unpaid under this Act or under the existing law .
Explanation.-For the purposes of this sub-section, the
expression “specified date” shall mean the last date for filing an
appeal under this Act.
(11) Where an order giving rise to a refund is the subject matter
of an appeal or further proceedings or where any other
proceedings under this Act is pending and the Commissioner is
of the opinion that grant of such refund is likely to adversely
affect the revenue in the said appeal or other proceedings on
account of malfeasance or fraud committed, he may, after giving
the taxable person an opportunity of being heard, withhold the
refund till such time as he may determine.
(12) Where a refund is withheld under sub-section (11), the
taxable person shall, notwithstanding anything contained
in section 56, be entitled to interest at such rate not exceeding
six per cent. as may be notified on the recommendations of the
Council, if as a result of the appeal or further proceedings he
becomes entitled to refund.
(13) Notwithstanding anything to the contrary contained in this
section, the amount of advance tax deposited by a casual
taxable person or a non-resident taxable person under sub-
section (2) of section 27, shall not be refunded unless such
person has, in respect of the entire period for which the
certificate of registration granted to him had remained in force,
furnished all the returns required under section 39.
(14) Notwithstanding anything contained in this section, no
refund under subsection (5) or sub-section (6) shall be paid to an
applicant, if the amount is less than one thousand rupees.
10[(15) Notwithstanding anything contained in this section, no
refund of unutilised input tax credit on account of zero rated
supply of goods or of integrated tax paid on account of zero
rated supply of goods shall be allowed where such zero rated
supply of goods is subjected to export duty.]
Explanation.- For the purposes of this section,-
(1) “refund” includes refund of tax paid on zero-rated supplies of
goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply
6
of goods regarded as deemed exports, or refund of unutilised
input tax credit as provided under sub-section (3).
(2) “relevant date” means-
(a) in the case of goods exported out of India where a refund of
tax paid is available in respect of goods themselves or, as the
case may be, the inputs or input services used in such goods,-
(i) if the goods are exported by sea or air, the date on which the
ship or the aircraft in which such goods are loaded, leaves
India; or
(ii) if the goods are exported by land, the date on which such
goods pass the frontier; or
(iii) if the goods are exported by post, the date of despatch of
goods by the Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports
where a refund of tax paid is available in respect of the goods,
the date on which the return relating to such deemed exports is
furnished;
[(ba) in case of zero-rated supply of goods or services or both to a
Special Economic Zone developer or a Special Economic Zone
unit where a refund of tax paid is available in respect of such
supplies themselves, or as the case may be, the inputs or input
services used in such supplies, the due date for furnishing of
return under section 39 in respect of such supplies;]
(c) in the case of services exported out of India where a refund of
tax paid is available in respect of services themselves or, as the
case may be, the inputs or input services used in such services,
the date of-
(i) receipt of payment in convertible foreign exchange [or in
Indian rupees wherever permitted by the Reserve Bank of India]
, where the supply of services had been completed prior to the
receipt of such payment; or
(ii) issue of invoice, where payment for the services had been
received in advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence
of judgment, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court, the date of communication of
such judgment, decree, order or direction;
(e) [in the case of refund of unutilised input tax credit under
clause (ii) of the first proviso to sub-section (3), the due date for
furnishing of return under section 39 for the period in which
such claim for refund arises;]
(f) in the case where tax is paid provisionally under this Act or
the rules made thereunder, the date of adjustment of tax after
the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of
receipt of goods or services or both by such person; and
(h) in any other case, the date of payment of tax.
10. Since reference has been made of a Circular of 2019,
Rule 89 also is required to be dealt with:
7
89. Application for refund of tax, interest, penalty, fees or
any other amount.-
(1) Any person, except the persons covered under notification
issued under section 55 claiming refund of any tax, interest,
penalty, fees or any other amount paid by him, other than
refund of integrated tax paid on goods exported out of India,
may file an application electronically in FORM GST RFD-
01 through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner:
Provided that any claim for refund relating to balance in the
electronic cash ledger in accordance with the provisions of sub-
section (6) of Section 49 may be made through the return
furnished for the relevant tax period in FORM GSTR-3 or FORM
GSTR-4 or FORM GSTR-7, as the case may be:
Provided further that in respect of supplies to a Special Economic
Zone unit or a Special Economic Zone developer, the application
for refund shall be filed by the –
(a) supplier of goods after such goods have been admitted in full
in the Special Economic Zone for authorised operations, as
endorsed by the specified officer of the Zone;
(b) supplier of services along with such evidence regarding
receipt of services for authorised operations as endorsed by the
specified officer of the Zone:
Provided also that in respect of supplies regarded as deemed
exports, the application may be filed by the recipient of deemed
export supplies:
Provided also that refund of any amount, after adjusting the
tax payable by the applicant out of the advance tax deposited
by him under section 27 at the time of registration, shall be
claimed in the last return required to be furnished by him.
(2) The application under sub-rule (1) shall be accompanied by
any of the following documentary evidences in Annexure 1
in FORM GST RFD-01, as applicable, to establish that a refund
is due to the applicant, namely:-
(a) the reference number of the order and a copy of the order
passed by the proper officer or an appellate authority or
Appellate Tribunal or court resulting in such refund or reference
number of the payment of the amount specified in sub-section (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;
(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 where the
refund is on account of the export of services;
(d) a statement containing the number and date of invoices as
provided in rule 46 along with the evidence regarding the
endorsement specified in the second proviso to sub-rule (1) in the
case of the supply of goods made to a Special Economic Zone
unit or a Special Economic Zone developer;
8
(e) a statement containing the number and date of invoices, the
evidence regarding the endorsement specified in the second
proviso to sub-rule (1) and the details of payment, along with the
proof thereof, made by the recipient to the supplier for
authorised operations as defined under the Special Economic
Zone Act, 2005, in a case where the refund is on account of
supply of services made to a Special Economic Zone unit or a
Special Economic Zone developer;
(f) a declaration to the effect that tax has not been collected from
the Special Economic Zone unit or the Special Economic Zone
developer, in a case where the refund is on account of supply of
goods or services or both made to a Special Economic Zone unit
or a Special Economic Zone developer;
(g) a statement containing the number and date of invoices along
with such other evidence as may be notified in this behalf, in a
case where the refund is on account of deemed exports;
(h) a statement containing the number and the date of the
invoices received and issued during a tax period in a case where
the claim pertains to refund of any unutilised input tax credit
under sub-section (3) of section 54 where the credit has
accumulated on account of the rate of tax on the inputs being
higher than the rate of tax on output supplies, other than nil-
rated or fully exempt supplies;
(i) the reference number of the final assessment order and a
copy of the said order in a case where the refund arises on
account of the finalisation of provisional assessment;
(j) a statement showing the details of transactions considered as
intra-State supply but which is subsequently held to be inter-
State supply;
(k) a statement showing the details of the amount of claim on
account of excess payment of tax;
(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 amount of refund claimed
does not exceed two lakh rupees:
Provided that a declaration is not required to be furnished in
respect of the cases covered under clause (a) or clause (b) or
clause (c) or clause (d) or clause (f) of sub-section (8) of section
54;
(m) a Certificate in Annexure 2 of FORM GST RFD-01 issued by
a chartered accountant or a cost accountant 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
amount of refund claimed exceeds two lakh rupees:
Provided that a certificate is not required to be furnished in
respect of cases covered under clause (a) or clause (b) or clause
(c) or clause (d) or clause (f) of subsection (8) of section 54;
Explanation. – For the purposes of this rule-
(i) in case of refunds referred to in clause (c) of sub-section (8)
of section 54, the expression “invoice” means invoice conforming
to the provisions contained in section 31;
9
(ii) where the amount of tax has been recovered from the
recipient, it shall be deemed that the incidence of tax has been
passed on to the ultimate consumer.
(3) Where the application relates to refund of input tax credit, the
electronic credit ledger shall be debited by the applicant by an
amount equal to the refund so claimed.
(4) In the case of zero-rated supply of goods or services or both
without payment of tax under bond or letter of undertaking in
accordance with the provisions of sub-section (3) of section 16 of
the Integrated Goods and Services Tax Act, 2017 (13 of 2017),
refund of input tax credit shall be granted as per the following
formula –
Refund Amount = (Turnover of zero-rated supply of goods +
Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted
Total Turnover
Where, –
(A) “Refund amount” means the maximum refund that is
admissible;
(B) “Net ITC” means input tax credit availed on inputs and input
services during the relevant period;
(C) “Turnover of zero-rated supply of goods” means the value of
zero-rated supply of goods made during the relevant period
without payment of tax under bond or letter of undertaking;
(D) “Turnover of zero-rated supply of services” means the value
of zero-rated supply of services made without payment of tax
under bond or letter of undertaking, calculated in the following
manner, namely:-
Zero-rated supply of services is the aggregate of the payments
received during the relevant period for zero-rated supply of
services and zero-rated supply of services where supply has
been completed for which payment had been received in
advance in any period prior to the relevant period reduced by
advances received for zero-rated supply of services for which the
supply of services has not been completed during the relevant
period;
(E)”Adjusted Total Turnover” means the turnover in a State or
Union territory, as defined under sub-section (112) of Section 2,
excluding the value of exempt supplies other than zerorated
supplies, during the relevant period;
(F) “Relevant period” means the period for which the claim has
been filed.
(5) In the case of refund on account of inverted duty structure,
refund of input tax credit shall be granted as per the following
formula:-
Maximum Refund Amount = {(Turnover of inverted rated supply
of goods and services) x Net ITC Adjusted Total Turnover} – tax
payable on such inverted rated supply of goods
Explanation: – For the purposes of this sub-rule, the
expressions “Net ITC” and “Adjusted Total turnover” shall have
the same meaning as assigned to them in sub-rule (4).
10
11. Though, reference has been made to Rule 89,
however, Rule 89 is a procedural rule governing Section 54
and as such, there is no separate influence of Rule 89 and
it is only in order give effect to Section 54, Rule 89 has been
formulated. Hence, there is no requirement to deal with
Rule 89 separately.
In Section 54, ‘relevant date’ has been defined giving
situations and in Rule 89, ‘relevant period’ has been
defined to mean “the period for which the claim has been
filed”.
12. In order to buttress the submission, Mr. Nitin Kumar
Pasari, learned counsel for the petitioner, assisted by Mr.
Shubham Choudhary, has relied upon the judgment of
Hon’ble Madras High Court reported in 2023 SCC Online
Mad. 7810 (Lenovo India Pvt. Ltd. Vs. Joint Commissioner of
GST), wherein the Madras High Court had dealt with the
word ‘may’ as is appearing in Section 54 of the Act and the
Court has recorded its finding as under:
15.7 Thus, a reading of the section 54(1) of the CGST Act
would make it clear that the assessee can make the application
within two years. The terms used in said section “may make
application before two years from the relevant date in such form
and manner as may be prescribed”, which means that the
assessee may make application within two years and it is not
mandatory that the application has to be made within two years
and in appropriate cases, refund application can be made even
beyond two years. The time-limit fixed under section 54(1) is
directory in nature and it is not mandatory. Therefore, even if
the application is filed beyond the period of two years, the
legitimate claim of refund by the assessee cannot be denied in
appropriate cases.
13. Mr. Mohan Dubey, counsel appearing for the
respondents, has highly emphasised on the statements
made in the Counter Affidavit, more particularly Paragraph-
15 & 17.
11
14. During the pendency of the writ petition, this Court
had given a direction orally to the authorities concerned to
issue refund, failing which, adverse consequence would
follow as against the State, however, as would appear from
the Counter Affidavit, in Paragraph-22, following statement
has been made:
“…As per direction dated 17.12.2024 of this Hon’ble Court, the
proper authority has visited the portal and tried to issue the
refund, but same was became unsuccessful as a Deficiency
Memo has been issued and no further process can be performed
in the portal for initiating the refund.”
15. In the aforesaid background, we will deal with the
issue of limitation under Section 54, if it is mandatory or
directory.
16. Article 265 of the Constitution of India provides for –
“265. Taxes not to be imposed save by authority of law
No tax shall be levied or collected except by authority of
law.”
17. There is no dispute to the effect that once refund is
by way of statutory exercise, the same cannot be retained
neither by the State, nor by the Centre, that too by taking
aid of a provision which on the face of it is directory,
inasmuch as, the language couched in Section 54 is “may
make an application before the expiry of 2 years from the
relevant date”.
The word “relevant date” has been defined in
Explanation 2 of Section 54, which thus reads as
follows:
(2)”relevant date” means-
(a) in the case of goods exported out of India where a refund of
tax paid is available in respect of goods themselves or, as the
case may be, the inputs or input services used in such goods,-
(i) if the goods are exported by sea or air, the date on which the
ship or the aircraft in which such goods are loaded, leaves
India; or
(ii) if the goods are exported by land, the date on which such
goods pass the frontier; or
12
(iii) if the goods are exported by post, the date of despatch of
goods by the Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports
where a refund of tax paid is available in respect of the goods,
the date on which the return relating to such deemed exports is
furnished;
[(ba) in case of zero-rated supply of goods or services or both to a
Special Economic Zone developer or a Special Economic Zone
unit where a refund of tax paid is available in respect of such
supplies themselves, or as the case may be, the inputs or input
services used in such supplies, the due date for furnishing of
return under section 39 in respect of such supplies;]
(c) in the case of services exported out of India where a refund of
tax paid is available in respect of services themselves or, as the
case may be, the inputs or input services used in such services,
the date of-
(i) receipt of payment in convertible foreign exchange 6[or in
Indian rupees wherever permitted by the Reserve Bank of India]
, where the supply of services had been completed prior to the
receipt of such payment; or
(ii) issue of invoice, where payment for the services had been
received in advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence
of judgment, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court, the date of communication of
such judgment, decree, order or direction;
(e) 7[in the case of refund of unutilised input tax credit under
clause (ii) of the first proviso to sub-section (3), the due date for
furnishing of return under section 39 for the period in which
such claim for refund arises;]
(f) in the case where tax is paid provisionally under this Act or
the rules made thereunder, the date of adjustment of tax after
the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of
receipt of goods or services or both by such person; and
(h) in any other case, the date of payment of tax.
What is relevant in the aforesaid Explanation is
Explanation 2(d) and it is this explanation which probably
is haunting the minds of the Officer of the State.
18. The word ‘may’ has been interpreted by the Hon’ble
Apex Court in numerous cases and the Hon’ble Apex Court
has opined that the word ‘may’ as would appear in different
statutes, is normally directory in nature and not
mandatory.
19. Recently, the Hon’ble Apex Court in the matter of
Muskan Enterprises & Anr. vs. State of Punjab & Anr.
13
reported in 2024 SCC Online SC 4107 has interpreted the
word ‘may’ and while dealing with the statute the
Negotiable Instrument Act, 1881, has been inter alia
pleased to hold as under:
24. Law is well-settled that user of the verbs ‘may’ and ‘shall’
in a statute is not a sure index for determining whether such
statute is mandatory or directory in character. The legislative
intent has to be gathered looking into other provisions of the
enactment, which can throw light to guide one towards a proper
determination. Although the legislature is often found to use
‘may’, ‘shall’ or ‘must’ interchangeably, ordinarily ‘may’, having
an element of discretion, is directory whereas ‘shall’ and ‘must’
are used in the sense of a mandatory provision. Also, while the
general impression is that ‘may’ and ‘shall’ are intended to have
their natural meaning, it is the duty of the court to gather the
real intention of the legislature by carefully analysing the entire
statute, the section and the phrase/expression under
consideration. A provision appearing to be directory in form
could be mandatory in substance. The substance, rather than
the form, being relevant, ultimately it is a matter of construction
of the statute in question that is decisive.
25. It is also a well-accepted rule that interpretation must
depend on the text and the context – the text representing the
texture and the context giving it colour – and, that interpretation
would be best, which makes the textual interpretation match the
contextual. While wearing the glasses of the statute-maker, the
enactment has to be looked at as a whole and it needs to be
discovered what each section, each clause, each phrase and
each word means and whether it is designed to fit into the
scheme of the entire enactment. While no part of a statute and
no word of a statute can be construed in isolation, statutes have
to be construed so that every word has a place and everything is
in its place. We draw inspiration for the above understanding of
the manner of interpreting a statute from the decision of this
Court in Reserve Bank of India v. Peerless General Finance &
Investment Co. Ltd.
20. The Hon’ble Apex Court in the matter of Rakesh
Ranjan Shrivastava Vs. State of Jharkhand & Anr.
reported in (2024) 4 SCC 419 has pleased to deal with the
word ‘may’ and has been inter alia pleased to hold as
under:
11. There is no doubt that the word “may” ordinarily does not
mean “must”. Ordinarily, “may” will not be construed as “shall”.
But this is not an inflexible rule. The use of the word “may” in
certain legislations can be construed as “shall”, and the word
“shall” can be construed as “may”. It all depends on the nature
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of the power conferred by the relevant provision of the statute
and the effect of the exercise of the power. The legislative intent
also plays a role in the interpretation of such provisions. Even
the context in which the word “may” has been used is also
relevant.
18. In the case of Section 143-A, the power can be exercised
even before the accused is held guilty. Sub-section (1) of Section
143-A provides for passing a drastic order for payment of interim
compensation against the accused in a complaint under Section
138, even before any adjudication is made on the guilt of the
accused. The power can be exercised at the threshold even
before the evidence is recorded. If the word “may” is interpreted
as “shall”, it will have drastic consequences as in every
complaint under Section 138, the accused will have to pay
interim compensation up to 20% of the cheque amount. Such an
interpretation will be unjust and contrary to the well-settled
concept of fairness and justice. If such an interpretation is made,
the provision may expose itself to the vice of manifest
arbitrariness. The provision can be held to be violative of Article
14 of the Constitution. In a sense, sub-section (1) of Section 143-
A provides for penalising an accused even before his guilt is
established.
19. Considering the drastic consequences of exercising the
power under Section 143-A and that also before the finding of
the guilt is recorded in the trial, the word “may” used in the
provision cannot be construed as “shall”. The provision will have
to be held as directory and not mandatory. Hence, we have no
manner of doubt that the word “may” used in Section 143-A,
cannot be construed or interpreted as “shall”. Therefore, the
power under sub-section (1) of Section 143-A is discretionary.
20. Even sub-section (1) of Section 148 uses the word “may”.
In Surinder Singh Deswal v. Virender Gandhi [Surinder Singh
Deswal v. Virender Gandhi, (2019) 11 SCC 341 : (2019) 3 SCC
(Civ) 765 : (2019) 3 SCC (Cri) 461] , this Court, after considering
the provisions of Section 148, held that the word “may” used
therein will have to be generally construed as “rule” or “shall”. It
was further observed that when the appellate court decides not
to direct the deposit by the accused, it must record the reasons.
After considering the said decision in Surinder Singh
Deswal [Surinder Singh Deswal v. Virender Gandhi, (2019) 11
SCC 341 : (2019) 3 SCC (Civ) 765 : (2019) 3 SCC (Cri) 461] , this
Court in Jamboo Bhandari v. M.P. SIDC Ltd. [Jamboo
Bhandari v. M.P. SIDC Ltd., (2023) 10 SCC 446 : (2024) 1 SCC
(Cri) 90 : (2024) 1 SCC (Civ) 547] , in para 6, held thus : (SCC p.
449)
“6. What is held by this Court is that a purposive
interpretation should be made of Section 148 NI Act. Hence,
normally, the appellate court will be justified in imposing
the condition of deposit as provided in Section 148.
However, in a case where the appellate court is satisfied
that the condition of deposit of 20% will be unjust or
imposing such a condition will amount to deprivation of the
15
right of appeal of the appellant, exception can be made for
the reasons specifically recorded.”
(emphasis supplied)
21. In terms of the interpretation extended by the
Hon’ble Apex Court, as also, taking into consideration that
the refund of statutory pre-deposit is a right vested on an
assessee after an appeal is allowed in its favour, we have no
reason to say that the pre-deposit made by an assessee
cannot be forfeited taking aid of section 54 of the Act and
the same cannot be the intent of the Act of 2017.
22. It is not even a case that there is any unjust
enrichment on the part of the assessee, inasmuch as, the
pre-deposit has been made from the own pocket by an
assessee and by restricting the refund in reading the word
‘may’ as ‘shall’ would be unreasonable and would otherwise
be arbitrary and in conflict with the Limitation Act, 1963.
23. Otherwise also, Article 137 of the Limitation Act,
1963, provides for 3 years limitation period for filing a
Money Suit and if section 54 and the word ‘may’ is given
effect to as ‘mandatory’, then in that event an assessee is
otherwise also barred from filing a Money Suit, which
cannot be the intent of the Act.
24. When the Constitution of India restricts levy of any
tax without authority of law, the retention of the same on
the ground of statutory restriction, which is in conflict with
the Limitation Act, appears to be being misread by the
authorities of the GST Department.
25. Under the circumstances, we have every reason to
follow in what has been held by the Hon’ble Apex Court
(Supra), as also, the orders passed by the Madras High
Court in the matter of Lenovo India Pvt. Ltd. (Supra).
16
26. Having regard to the above discussions, it is held
that the action of the respondents in rejecting the refund
application considering it as time barred has no legs to
stand in law and accordingly, the rejection order by way of
Deficiency Memo dated 06.11.2024, is hereby, quashed and
set-aside.
Consequently, the concerned respondent is directed
to process the refund application of the petitioner, which
exercise shall be completed within a period of Six weeks
from today. The petitioner shall also be entitled to interest
in terms of Section 54, which also shall be paid to the
petitioner within the aforesaid stipulated time.
27. Accordingly, the instant writ application stands
allowed. Pending I.As, if any stands closed.
(M.S. Ramachandra Rao, C.J.)
(Deepak Roshan, J.)
Amardeep/
N.A.F.R
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