Mukesh Incense Enterprises Pvt. Ltd v. Union of India

1. Heard learned counsel for the parties.

2. Rule. The rule is made returnable immediately at the request of and with the consent of learned counsel for the parties.

3. The Petitioner, inter alia, challenges orders dated 23 June 2020 rejecting the Petitioner’s refund application under Section 54(3) of the CGST Act, and an order dated 18 August 2021 made by the first Appellate Authority rejecting the Appeal against the order dated 23 June 2020. In addition, the Petitioner has sought a declaration that Rule 90(3) of the CGST and NGST Rules is ultra vires Section 54(3) SHUBHAM PRAVINRAO of the CGST and SGST Act, and, based thereon, the impugned orders could not have been made.

4. Mr Bapat, learned counsel for the Petitioner, relied on the decision of the Gujarat High Court in M/S. Darshan Processors Vs. Union of India & Ors.[1] to submit that Rule 90(3) of the CGST Rules has been construed to count the limitation period from the date of the original application and not from the date of filing of a subsequent application after clearing the deficiencies pointed out in the original application. Mr Bapat submitted that several other High Courts have also taken a similar view in the context of the provision of Rule 90(3) of the CGST and SGST Rules. Mr Bapat submitted that this would be the most reasonable manner to construe Rule 90(3), because otherwise the Rule itself would be vulnerable to a challenge that it is ultra vires the provisions of the parent Act, i.e., Section 54(3) of the CGST and SGST Act.

5. In matters of challenge to constitutional validity or declaring any Rules to be ultra vires, as a Court, we are required to tread cautiously. Such challenges are considered only if they are inevitable and not simply because we are empowered to do so.

6. The impugned orders challenged in the present Petition did not benefit from the later decision of the Gujarat High Court in M/S. Darshan Processors (supra). Similarly, even the decisions of the other High Courts do not appear to have been considered before making the impugned orders dated 23 June 2020 and 18 August 2021. Judgment dated 26 July 2024 passed in Special Civil Application No.2114 of 2021.

7. Therefore, we are satisfied that the interest of justice would be met if the impugned orders dated 23 June 2020 and 18 August 2021 are set aside and directions are issued to the proper officer to decide the Petitioner’s application for refund afresh after considering the decision of the Gujarat High Court and such other decisions as the Petitioner may choose to rely in the context of the limitation issue.

8. The proper officer must dispose of the Petitioner’s refund application afresh as expeditiously as possible and in any event within three months from the date of the Petitioner’s filing an authenticated copy of this order before the proper officer, along with a compilation of decisions that the Petitioner seeks to rely on. The proper officer must afford the Petitioner an opportunity of a personal hearing and pass a reasoned order.

9. If the Petitioner remains aggrieved by the decision on its application for a refund, it may challenge it in accordance with the law. We clarify that the issue of challenge to the validity of Rule 90(3) of the CGST and SGST Rules is expressly kept open, as we have not examined it in this Petition.

10. The Petition is disposed of in the above terms without any order for costs. All concerned to act upon an authenticated copy of this order. (Advait M. Sethna, J) (M. S. Sonak, J.)