2025-VIL-1175-KAR
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SGST High Court Cases

GST – Refund of GST paid under wrong head, Payment of IGST instead of CGST+SGST, Rejection of refund on ground of Limitation – Petitioner provided intermediary services to foreign entities – The petitioner, under the bonafide belief that the services provided to the foreign entity qualified as export of services, paid IGST in GSTR-3B returns - Petitioner later having realized that the services were not inter-State supply but intra-State supply, paid SGST and filed refund applications before the Central authorities seeking refund of the IGST paid – Rejection of refund on the ground that the applications were time-barred under Section 54 of the CGST Act, 2017 - Whether the period of limitation prescribed under Rule 89(1A) of the CGST Rules, 2017 and Section 54 of the CGST Act, for filing refund applications is mandatory or directory in nature – HELD - A plain reading of Section 77(1) of the CGST Act clearly indicate that the taxpayer who pays tax to the Central Authority by oversight, inadvertence and erroneously, would be entitled to refund of the amount of taxes so paid. A similar provision exists in the IGST Act which relates to Inter-State supply – The payment in excess made by the petitioner to the Central Authorities has not been disputed by the Authorities. The petitioner had made payment to the State GST Authorities subsequent to the payment made to the Central GST Authorities. It is therefore clear that respondents have admitted that the petitioner had made such payment in favour of the Central GST Authorities towards IGST prior to making similar payment to the State GST Authorities – By the judgements of High Court of Madras and the High Court of Andhra Pradesh, the Section 54 of the CGST Act and Rule 89(1A) of the CGST Rules, 2017 have been held to be directory and not mandatory. Further, having regard to Article 265 of the Constitution, the respondent-Central GST authorities are not entitled to collect IGST from the petitioner, who was not liable to pay the same and consequently, upon the petitioner paying the same amount to the State GST authorities subsequently, the respondent-Centre authorities is not entitled to retain the IGST and by applying the principles of restitution and unjust enrichment, the respondents are obligated to refund IGST back to the petitioner - the impugned orders holding that the refund claim is barred by limitation is contrary to facts and law and the same is set aside by holding that the refund application of the petitioner is within time and is not barred by limitation – The matter is remitted back to the respondent-authorities to consider the petitioner's refund applications on merits and in accordance with law – The writ petition is allowed
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