“MAY” in GST Refunds: Directory or Mandatory?
In GST, timelines matter — but so does fairness. While the law must ensure discipline, it should not create hardship when taxpayers act in good faith. Courts often remind us that provisions must be read in line with intent, not just literal wording.
Section 54 of the CGST Act says a refund “may” be filed within two years. But does “may” mean flexibility or restriction? This one word has led to years of confusion and inconsistent refund rejections.
Recent judicial interpretation settles the debate: “may” is permissive, not mandatory. The two-year limit is directory, meaning refunds filed beyond the timeline — especially where tax was paid under mistake — cannot be rejected mechanically. Officers must evaluate the merits, not just the calendar.
Why this matters: GST mistakes surface late — wrong tax head, misclassification, export position errors, or retrospective rulings. Courts emphasise that tax can be retained only under authority of law; procedure cannot defeat a rightful refund.
Interactive thought:
If the law says “may file within 2 years,” does it mean:
• flexibility to file later in genuine cases? or
• filing allowed only within 2 years?
Courts clearly favour the first view, reshaping how delayed refund claims should be treated.
Happy reading!
