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Published on:
February 20, 2023
By
Paramita

Applicability of Section 75(2) of CGST Act, 2017  its effect on limitation

Section 75(2) of the CGST Act, 2017 has been the subject of much debate and confusion since its introduction. This section deals with the limitation period for the recovery of tax or other amounts that have been erroneously refunded to a taxpayer.

Understanding Section 75(2)

The section specifies that if any tax or other amount is refunded to a taxpayer by mistake, it shall be recoverable from the person to whom such refund was made. This recovery can be done within a period of two years from the date of payment of the refund.

The implications of this section are far-reaching, as it impacts not only the taxpayers but also the authorities who are responsible for the administration of the CGST Act, 2017.

Applicability of Section 75(2)

Section 75(2) applies when a taxpayer has received a refund of tax or other amounts that they were not entitled to. This could be due to any reason like an error in calculation, processing, or any other technical glitch. In such cases, the amount that was erroneously refunded can be recovered by the authorities.

The section is also applicable when a taxpayer has received a refund of tax or other amounts that were not paid by them. This could happen due to some error or omission on the part of the authorities. In such cases, the authorities have the power to recover the amount that was not paid by the taxpayer.

Effect of Section 75(2)

The effect of Section 75(2) is that taxpayers need to be careful while claiming refunds. They need to ensure that they are entitled to the refund and that all the required conditions are met. If a refund is claimed in error, the authorities can recover the amount even if it has already been paid to the taxpayer.

On the other hand, the authorities need to exercise caution while processing refund claims. They need to ensure that all the required conditions are met before making the refund payment. If a refund is paid in error, the authorities have the power to recover the amount within two years from the date of payment.

Limits on the Recovery of Refund

Section 75(2) sets a limitation period of two years from the date of payment of the refund for its recovery. This means that the authorities cannot recover the amount after two years have elapsed from the date of payment of the refund.

However, there are certain exceptions to this rule. For instance, if the refund was obtained by fraudulent means or by misrepresentation of facts, the limitation period does not apply. Similarly, if the refund was obtained by suppression of facts or by wilful misstatement, the authorities can recover the amount beyond the limitation period.

Conclusion

In conclusion, Section 75(2) of the CGST Act, 2017 is an important provision that deals with the recovery of tax or other amounts that have been erroneously refunded to a taxpayer. The section applies when a taxpayer has received a refund of tax or other amounts that they were not entitled to or when a taxpayer has received a refund of tax or other amounts that were not paid by them.

The section has far-reaching implications for both taxpayers and the authorities. Taxpayers need to ensure that they are entitled to the refund and that all the required conditions are met before claiming a refund. Similarly, the authorities need to ensure that all the required conditions are met before making the refund payment.

Finally, the limitation period of two years from the date of payment of the refund sets a time limit for the recovery of the amount. However, there are some exceptions to this rule, and the authorities can recover the amount beyond the limitation period in certain cases.

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Updated on:
March 16, 2024