The Commissioner of Central Tax v. M/s Jeans Knit Private Limited

What happened

The respondent, a garment exporter and 100% EOU, imported capital goods between 1 July 2017 and 13 October 2017 and paid IGST, and claimed refund of accumulated input tax credit for July to December 2017 as zero-rated supplies. The Deputy Commissioner sanctioned refunds on 12 January 2018, 25 January 2018 (two), 8 February 2018, 26 March 2018 and 28 March 2018, totalling ₹33,88,40,732. The Commissioner reviewed them in orders of 6 February 2019 and 26 and 27 February 2019 and authorised appeals under section 107(2). The Commissioner (Appeals), by order of 27 February 2020, rejected the limitation objection, condoned delay under section 107(4), held that refund of ₹29,61,78,425 was erroneously granted because Rule 89 refers to net ITC on inputs and input services, not capital goods, and directed recovery with interest. In W.P. No. 8128/2020, the Single Judge on 11 November 2025 held the appeals barred. The Revenue argued that the orders were communicated to it only on 11 July 2018 and 30 July 2018, that the appeals arose from post-audit and that recovery under section 73 was available. The assessee challenged limitation and the constitutional validity of Rule 89(4).

Questions before the court

• Were the Revenue's appeals against the refund orders filed within the limit under section 107(2) of the CGST Act, and could the delay be condoned?

Why the court ruled this way

Under section 107(2), the Commissioner may direct an officer to apply to the Appellate Authority within six months from the date of communication of the decision, and under section 107(4) the delay can be condoned only up to one month (paragraphs 7 and 8). The review orders for all six months were made more than a year after the sanction orders, so none could direct an appeal within six months (paragraph 9). The date of audit or audit observations is not relevant, and limitation runs from communication of the order (paragraph 11). Following Grapes Digital Pvt. Ltd. v. Principal Commissioner (Delhi High Court), 'communication' for intra-departmental purposes means the date of issue, as there is no provision for the adjudicating authority to communicate the order to the Commissioner and no allowance can be made for miscommunication within the department (paragraphs 13 and 14). CBIC Instruction No. 03/2022-GST requires refund orders to be transmitted online to the review module, post-audit within 3 months, and review to be completed at least 30 days before the appeal limit, so it was not open to the Revenue to say it received the orders after 5 to 6 months (paragraphs 14 to 16). Under section 169(1)(d), an order is served by making it available on the common portal, so communication cannot be indeterminate (paragraphs 17 to 19). The availability of recovery under section 73 does not extend appeal limitation, and the Commissioner (Appeals) could not condone a delay much beyond one month (paragraphs 21 and 22).

Controlling point

The appeals were beyond the limit under section 107(2) and the Single Judge was right.

Order and next steps

The writ appeal was dismissed.

Practical implications

A refund claimant facing a late Revenue appeal can rely on the six-month limit from the issue of the order and the one-month cap on condonation, and the Revenue should keep to the review timelines in the CBIC instruction.

Limits of this ruling

• The Court dealt only with limitation, in the appeal arising from W.P. No. 8128/2020; it did not decide the merits of whether the ITC on capital goods is refundable or the constitutional validity of Rule 89(4).