2026-VIL-153-GSTAT-SRT
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SGST Tribunal

GST - Refund of IGST paid on ocean freight under Reverse Charge Mechanism, Whether utilisation of IGST credit bars refund and amounts to unjust enrichment - Respondent paid IGST under RCM on ocean freight on import of goods under notifications later declared ultra vires. Respondent filed refund claims after the Supreme Court judgment - The adjudicating authority rejected the claims on the ground that the credit was availed and utilised. The Appellate Authority allowed the assessee appeal - Whether the Revenue can raise the ground of utilisation of IGST credit when it was not specified in the order of the Commissioner under Section 112(3), and whether refund is barred because the IGST credit was availed and utilised - HELD - The authority of the officer to file an application before the Tribunal flows from the order of the Commissioner and is confined to the points specified by the Commissioner in his order. The Commissioner did not dispute the Appellate Authority's finding on utilisation of IGST, so there was no sanction of appeal on that point. A ground considered and dropped by the Commissioner cannot be raised by the Authorised Representative - In any case, the judgment relied upon by the Revenue did not hold that refund is disallowed if IGST has been utilised. In that case the IGST credit had been reversed by utilising the balance of State GST, and refund was allowed. Here also the IGST had been utilised and the balance remained in CGST and SGST. Holding a combined unutilised balance of CGST and SGST equal to the refund amount and debiting it from the credit ledger amounts to non-utilisation of the credit in substance. No double benefit arises, so the bar of unjust enrichment does not apply merely because the IGST equivalent to the refund amount is debited by utilising CGST or SGST or both - The contention of the Revenue is rejected - The appeals filed by the Department are dismissed, the order of the Appellate Authority is upheld and the department is directed to process the refund claims and pay the refund and interest under Section 56 for the period of delay beyond 60 days from the date of the original application – The Revenue appeal is dismissed - Refund of IGST paid on ocean freight under RCM - Retrospective effect of Supreme Court judgment declaring notifications ultra vires - Whether the judgment in Mohit Mineral declaring the notifications ultra vires and unconstitutional operates only prospectively so as to deny refund of tax paid before the date of the judgment - HELD - Unless otherwise specified, all laws are prospective and all judgments are retrospective. A legal provision or notification cannot be given retrospective effect unless specifically mentioned therein, but the converse is true for judgments, which apply with retrospective effect unless the Court expressly makes them prospective. Courts interpret and declare the law and do not legislate or amend it - When the levy is declared ultra vires and unconstitutional, it was always so, and the levy did not become ultra vires or unconstitutional due to the judgment. The doctrine of prospective overruling is an exception that applies only when the Court itself declares the judgment to be prospective. There was no such declaration in the Supreme Court judgment - The decision on prospective application of a Constitutional amendment also does not declare that judgments operate prospectively, and it reinforces that where the Court wants its judgment to be prospective, it directs so - Refund cannot be rejected on the ground that the judgment does not state that it has retrospective effect - Department contended that the Respondent was not a party to the Supreme Court judgment declaring the levy unconstitutional - Whether a taxpayer who was not a party to the judgment can claim refund of tax collected under a levy declared ultra vires and unconstitutional, and whether the judgment is the order contemplated by Rule 89(2) - HELD - Under Article 265, no tax shall be levied or collected except by authority of law. Where the levy itself is declared ultra vires and unconstitutional, the collection of tax is without authority of law from the inception. The levy stood equally and ab initio void against a taxpayer who was a party to the judgment and one who was not. Following the decision of the Supreme Court in Mafatlal case, where the levy is held unconstitutional, the claimant is not fettered by the provisions of the taxing statute except the bar of unjust enrichment. The limitation under the statute does not apply, and the period under Section 17(1)(c) of the Limitation Act, 1963 is available. The refund is not barred merely because the claimant was not a party to the judgment - The only exception is a person who himself unsuccessfully challenged the same provision and allowed the adverse decision to attain finality. The Respondent did not challenge the levy and lose, and it simply paid tax under a levy since declared void ab initio. The declaration by the court that the levy was ab initio void is itself the legal foundation for entitlement to refund. No further order in the name of the claimant is required, and the objection that the judgment is not an order contemplated by Rule 89(2) is rejected.
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