Technical glitches should not stand in way of grant of tax refunds: Kerala High Court

Technical glitches must not stand in the way of ultimate grant of relief by way of refund to taxpayers, the Kerala High Court recently said while allowing tax refund to a petitioner (Dantara Jewellers v. State of Kerala & Ors.)

Single judge Justice Bechu Kurian Thomas, while ordering the respondent authorities to grant tax refund, held that technical glitches should not hamper the grant of tax refunds as otherwise, the confidence of taxpayers to deposit the amount as required under Section 129 of the State Goods and Services Tax(SGST) Act will be affected.

"All the technical glitches that may occur in between, shall not stand in the way of ultimate relief of the grant of refund to the petitioner as otherwise the sanctity of the whole scheme of section 129 of the State Goods and Services Tax Act will lose the confidence of the assessees to deposit the amount as contemplated under section 129 of the State Goods and Services Tax Act, will be affected," the judgment stated.

The Court observed that though the conduct of the respondents in initially declining to grant tax refund is not appreciable, the same must still be viewed considering the fact that transition phase of the new statutes may cause temporary technical glitches.

"Though I find that the conduct of respondents is not appreciable, still taking into consideration the transition phase of the new statute and the temporary glitches that are occurring as well as the fair submission made by the learned Government Pleader that, the amount shall be refunded, I direct the respondents to refund the amount due to the petitioner, within a period of 30 days from the date of receipt of a copy of this judgment," the Court ordered.

The order was passed on a petition that challenged an order issued by the Assistant Commissioner of Excise by which, the petitioner's claim for refund of taxes paid under Central Goods and Services Tax (CGST) as well as SSGST were refused on the ground that there is no evidence to prove the payment of tax by the petitioner.

Advocate Akhil Suresh, appearing for the petitioner, submitted that as per the order of demand of tax and penalty issued under section 129(3) of the SGST Act, the petitioner had remitted an amount of ₹12,26,064 with the State GST Department.

Thereafter, petitioner challenged this order before the Appellate Authority which found that the petitioner is not liable for payment of any amount of tax and quashed the orders issued by the State GST Department.

By virtue of this order of the Appellate Authority, the petitioner became entitled for refund of the amount deposited under Section 129(3) of the SGST Act, for release of the goods, Suresh submitted.

Therefore, the petitioner filed an application for refund but the Assistant Commissioner of Excise issued a show-cause notice to the petitioner seeking a response at to why the refund request should not be rejected on the ground of absence of details of remittance of tax amount, he contended.

While the petitioner submitted a response, the request was rejected which prompted them to approach the Court.

Government Pleader Thushara James, appearing for the respondents, submitted that the reason for rejection is that the amount of tax paid at the first instance was through a temporary account and that since the temporary account is no longer available, the refund cannot be granted through that temporary account.

This is part of the glitches that are occurring on account of the transition phase of the CGST Act, the GP claimed.

However, the GP conceded that the petitioner is entitled for refund of the amount and that the respondents are taking earnest steps to refund the amount without fail in a time bound manner.

While the Court pulled up the respondent authorities for their actions, it accepted that the transition phase may be accompanied by such technical glitches.

The Court, while making it clear that such glitches cannot be held as a reason for such incidents occurring frequently, quashed the order issued by the Assistant Commissioner of Excise and ordered the authorities to remit the tax refund expeditiously.