If the Tax Department has demanded payment for taxes from you because your supplier failed to remit them, and later it is discovered that your supplier did, indeed, pay the taxes, you should apply for a refund.

Facts of the Case & Timelines:

The petitioner was compelled to pay taxes on certain invoices for the fiscal year 2019-2020, due to the delayed filing of returns by Respondent No. 3.

Subsequently, it was revealed that Respondent No. 3 had filed returns and claimed Input Tax Credit (ITC) for the same invoices, resulting in double payment. Consequently, the petitioner sought a refund for the excess payment.

Issue:

The main issue revolved around whether the petitioner is eligible for a refund of the tax paid under the assumption of non-compliance by Respondent No. 3, leading to double payment.

Petitioner’s Argument:

The petitioner contended that they were compelled to make the tax payment due to the initial non-compliance by Respondent No. 3. With the subsequent filing of returns, they asserted their right to a refund of the tax paid for the mentioned invoices.

Respondent’s Argument:

The respondent argued against the petitioner’s refund claim, stating that it was not entertained because the petitioner had not filed a proper refund application as required by Section 54 of the Central Goods & Services Tax Act, 2017.

Held:

The Delhi High Court permitted the petitioner to submit an appropriate refund application in accordance with Section 54 of the Act. Furthermore, it decreed that the period from 01.03.2020 to 28.02.2023, as well as the period from the filing of the petition (19.01.2024) until the present date, should be excluded when calculating the limitation period for submitting a refund application.

The court refrained from discussing the merits of the case and reserved the right to adjudicate the refund claim according to the law.