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GST – Refund of GST on notice pay recovery, Refund of tax paid under a mistake of law, Limitation period - Petitioner deposited GST from own pocket on notice pay recovery from employees who left employment before the serving the notice period – The Circular No.178/10/2022-GST dated 03.08.2022 clarified that such recovery was not taxable - Petitioner filed for refund of the amounts paid, which were partially rejected by the authorities as time-barred - Whether the refund claims filed by the petitioner were time-barred under Section 54 of the CGST Act, 2017 - HELD – Vide the Circular No.178/10/2022-GST dated 03.08.2022, the Government clarified that the forfeiture of salary or payment of bond amount in the event of an employee leaving the employment before the minimum agreed period, was not taxable, inasmuch as, there was no supply of service by the employer in this situation and therefore, the recovery of notice pay by the employer was not taxable under the CGST Act. Since the said Circular came out on 03.08.2022, it has to be said that the petitioners could not have had the opportunity of filing of the refund claims in respect of the GST deposited by the petitioner, till such date. Therefore, the period of two years, for filing a claim, within the meaning of Section 54 of the CGST Act has to be computed from the date of the Circular i.e. from 03.08.2022. In that view of the matter, the refund claims dated 05.11.2022 and 07.11.2022, for whatever period of tax deposited, cannot be said to be time barred - The limitation period for filing the refund claims should be calculated from the date of the Circular i.e. 03.08.2022, which clarified that the transactions were not taxable - just as citizens have to diligently pay tax which are legally due to the State, equally, as a corollary, the State is also not entitled to unjustly enrich itself with amounts collected from citizens which are not sanctioned as “Tax” within the meaning of Article 265 of the Constitution - the refund claims filed by the petitioner within two years from 03.08.2022 could not be considered time-barred. The impugned order rejecting the refund claims are quashed and the respondents are directed to sanction and pay the petitioner the amount with 9% interest per annum from the date of filing the refund application till the date of actual payment – The petition is allowed
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