Restitutionary interest on unconstitutional tax levy protects the payer's loss of use of money until refund.

Refund of tax collected under a levy later declared unconstitutional is treated as a restitutionary claim, so the ordinary limitation and restrictive refund conditions under Section 54 of the Andhra Pradesh GST Act do not control entitlement to return of the amount. Interest is compensatory for loss of use of money, and where tax was paid under an unconstitutional levy, interest is payable for the entire period from deposit until refund. The rate was treated as fair and equitable by reference to the statutory benchmark, supporting interest on the refunded sum rather than denial on limitation grounds.

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Issues: (i) Whether the limitation and refund framework under Section 54 of the Andhra Pradesh Goods and Services Tax Act, 2017, and the interest provision under Section 56 of that Act, govern refund claims where the levy itself has been declared unconstitutional; (ii) whether interest is payable on the refunded amount from the date of deposit till the date of refund, and at what rate.

Issue (i): Whether the limitation and refund framework under Section 54 of the Andhra Pradesh Goods and Services Tax Act, 2017, and the interest provision under Section 56 of that Act, govern refund claims where the levy itself has been declared unconstitutional.

Analysis: Refund of tax collected under a levy later declared unconstitutional is governed by the principle that such exaction cannot be retained by the State merely because the claim is presented through the refund machinery. Where the levy itself has been struck down, the normal limitation attached to the statutory refund provision does not control the entitlement to restitution. The earlier view treated Section 54 as inapplicable to such claims, and the same position was applied here to reject the Revenue's objection based on limitation and the refund timeline.

Conclusion: The limitation and restrictive refund conditions under Section 54 did not defeat the petitioner's claim for refund-related interest in a case of unconstitutional levy.

Issue (ii): Whether interest is payable on the refunded amount from the date of deposit till the date of refund, and at what rate.

Analysis: Interest is compensatory and is awarded for the loss of use of money. Once the tax paid under protest was found to have been levied unconstitutionally, the petitioner was deprived of the use of that amount from the date of payment until refund. On that basis, interest was held payable for the entire period of deprivation. The rate of 6% was treated as fair and equitable and was also consistent with the statutory benchmark reflected in Section 34 of the Code of Civil Procedure, 1908.

Conclusion: Interest was held payable from the date of deposit until the date of refund at 6% per annum.

Final Conclusion: The judgment recognises a restitutionary entitlement to interest where tax collected under an unconstitutional levy is returned, and the statutory refund limitation cannot be used to deny compensatory interest for the period during which the assessee was deprived of the money.

Ratio Decidendi: Where tax is collected under a levy subsequently declared unconstitutional, the payer is entitled to restitutionary interest for loss of use of money from the date of payment until refund, and the ordinary refund limitation under the GST statute does not control that entitlement.

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