GST refund on rejected seed sales must be processed promptly and passed on when tax liability is undisputed.

GST deducted on the sale of rejected wheat and paddy seeds was treated as refundable because the underlying tax liability was not disputed and the Corporation accepted that the amount had to be returned. The Court held that the department could not retain the sum indefinitely merely because refund applications had already been filed. It directed the Corporation to submit the refund application in the prescribed form, after which the tax department was to release the refund promptly and the Corporation was then to pass the amount to the petitioner.

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Issues: Whether GST collected on the sale of rejected wheat and paddy seeds was refundable and whether directions were required for processing and returning the amount.

Analysis: The amount had been deducted towards GST even though the basic liability to pay GST on the transaction was not in dispute. The Corporation itself did not dispute that the amount deducted was liable to be refunded, and the only explanation offered was that refund applications had been made to the tax department. In these circumstances, the department could not retain the amount any further. The Court therefore directed the Corporation to move the refund application in the appropriate form, after which the department was to release the refund forthwith, and the Corporation was then to pass the amount to the petitioner.

Conclusion: The GST amount was held refundable and directions were issued to secure refund to the petitioner, in favour of the assessee.

Final Conclusion: The writ petition was disposed of with a direction to complete the refund process and ensure payment of the collected GST amount to the petitioner.

Ratio Decidendi: Where tax collected is not legally payable and the liability is undisputed, the amount cannot be retained indefinitely and refund must be processed through the prescribed mechanism and passed on to the person from whom it was recovered.

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