Refund Claim Rejected Due to Expiry of Limitation Period under Section 54

Case Title: Nitrex Chemicals India Ltd. v. Assistant Commissioner, GST Division VIII, Valsad
Court: Gujarat High Court
Petition No.: R/Special Civil Application No. 12375 of 2021
Category of Dispute: Refund – Compensation Cess / IGST on Exports
Date of Judgement: 24 January 2025
Relevant Sections: Section 54(1), 54(3) of CGST Act, 2017; Explanation (2) to Section 54; Rule 89 of CGST Rules, 2017

Facts of the Case [¶2–5]

• The petitioner, Nitrex Chemicals India Ltd., exported Nitrocellulose to various countries and filed a refund claim of compensation cess used in exports for the period July 2017 to March 2018.

• The refund application was filed on 15.06.2020.

• The department rejected the refund for being time-barred under Section 54(1) CGST Act.

Questions in Consideration [¶2, ¶8, ¶14]

• Whether the refund claim filed beyond the two-year limitation under Section 54(1) can be entertained?

• Whether the period should be reckoned from the date of return filing or the date of shipping as per Explanation (2) to Section 54?

• Whether the benefit of COVID-19 relaxation can extend the limitation period for all months from July 2017 onwards?

Observations of Court

• Refund Time Barred: Court observed that Section 54(1) is clear and mandates filing within two years from the “relevant date,” which for export is the date the goods leave India by ship or aircraft as per Explanation (2)(a)【¶17】.

• Circular and Return Filing Date Not Relevant: Arguments that refund limitation should start from return filing date or be extended based on GSTR-1 filing were rejected【¶14–15】.

• No Inherent Power to Condone Delay: Referred to IOC Ltd. v. UOI (SCA No. 12074/2011), and Mafatlal Industries Ltd. v. UOI (1997) 5 SCC 536, holding that statutory timelines cannot be extended unless explicitly provided【¶19–20】.

• COVID Relaxation Only for March 2018: As per Notification No. 35/2020, only refund for March 2018 was within the extended deadline (30.06.2020) and was allowed; refunds for July 2017 to February 2018 were beyond limitation【¶11, ¶13】.

Judgement of the Court [¶21–22]

• The Gujarat High Court held that the petitioner’s refund claim for the period July 2017 to February 2018 was time-barred.

• Only the refund for March 2018 was sanctioned as it fell within the extended timeline.

• The writ petition was dismissed.

Between Fine Lines

1. Refund claims under Section 54 must be filed within 2 years from the date of export.

2. The “relevant date” is the date when goods are loaded for export—not the date of return filing.

3. No discretion lies with authorities or the court to condone delay beyond statutory period.

4. COVID extensions applied only for specific periods—not retrospectively.

5. Refund for March 2018 was accepted due to valid extension; others were rightly denied.

Summary of Referred Cases

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