GST refund allowed for tax wrongly paid due to inadvertent GSTR-1 filing error when electronic rectification impossible

M/s. Varshan Enterprises Versus Office of the GST Council

M/s. Varshan Enterprises Versus Office of the GST Council - 2023 (69) G. S. T. L. 133 (A. P.) Issues Involved:
1. Human error in keying GSTIN on the GST portal.
2. Denial of rectification or refund by the Superintendent of Central GST.
3. Applicability of Section 54 of the CGST Act and the Circular dated 18.11.2019.
4. Manual filing under Rule 97A of the CGST Rules.
5. Doctrine of unjust enrichment and applicability of Section 72 of the Indian Contract Act.

Issue-wise Detailed Analysis:

1. Human Error in Keying GSTIN on the GST Portal:
The petitioner, a taxable person under the CGST Act, mistakenly keyed in the GSTIN of M/s. Vodafone Mobile Services Limited, Mumbai instead of the correct GSTIN for M/s. Vodafone Mobile Services Limited, Kandlakoya, Telangana. This error occurred while filing quarterly returns for the quarter ending June 30, 2018. The petitioner realized this mistake in May 2020 when the actual recipient refused to pay the GST amount due to the incorrect GSTIN.

2. Denial of Rectification or Refund by the Superintendent of Central GST:
Upon realizing the error, the petitioner requested the Superintendent of Central GST, Bhimavaram Range, to either allow rectification or refund the erroneously paid amount. The Superintendent, in his communication dated 26.02.2021, directed the petitioner to follow the Circular CBEC-20/16/04/18-GST dated 18.11.2019, which pertains to Section 54 of the CGST Act. The petitioner argued that this directive was illegal, arbitrary, and unjustified.

3. Applicability of Section 54 of the CGST Act and the Circular dated 18.11.2019:
Section 54 of the CGST Act prescribes a two-year limitation period for claiming refunds. The respondents argued that the petitioner's claim was barred by this limitation. However, the petitioner contended that the limitation under Section 54 did not apply to their case, as the amount was paid due to a human error and not as a tax legally due. The petitioner also argued that the Circular of 2019, which mandates electronic filing for certain refunds, was impractical in their case since the GST portal did not permit rectification after the error was discovered.

4. Manual Filing under Rule 97A of the CGST Rules:
The petitioner argued that Rule 97A of the CGST Rules allows for manual filing of applications, which the respondents had restricted to electronic filing through the Circular dated 18.11.2019. The court noted that Rule 97A includes manual filing and that the restriction to electronic filing in the Circular was improper. The court cited various judgments supporting the petitioner's contention, including decisions from the High Courts of Madras, Bombay, Telangana, and Gujarat, which emphasized the allowance of manual filings and the principle that procedural rules should not bar legitimate claims.

5. Doctrine of Unjust Enrichment and Applicability of Section 72 of the Indian Contract Act:
The petitioner relied on the doctrine of unjust enrichment, arguing that the respondents could not retain the erroneously paid amount without authority of law. The court referred to the Supreme Court's decision in Mafatlal Industries Limited, which held that amounts paid under mistake or coercion must be returned under Section 72 of the Indian Contract Act. The court concluded that the respondents' retention of the amount was unjust and that the petitioner was entitled to a refund.

Conclusion:
The court allowed the writ petition, setting aside the Superintendent's communication dated 26.02.2021. The petitioner was directed to make an application for a refund manually, and the respondents were instructed to process this application in accordance with the law within four weeks. The court emphasized that the petitioner could not be compelled to follow an impractical directive and that the amounts paid erroneously could not be retained by the respondents.