Refund of Excess Tax Paid

[Sangeetha D]

This person Received DRC - 07 Order on 25/02/2022 for Excess ITC Claimed for the tax period 2017-18. under Notices and Orders Coloum.

Subsequently the client paid the above demand through voluntary payment on 21/03/2023.

(Note. The above DRC-07 and voluntary payment made were not linked. So it shows outstanding even though the payment made through voluntary)

Again another DRC-07 issued on the same defect (Excess ITC for period 2017-18) on 31/12/2023.

Due to the Outstanding of the above 2 DRC-07, the bank account got freezed. The person paid the tax (only Tax amount, not Interest an Penalty) amount against the above 2 DRC-07 once again to unfreeze the bank account on 18/10/2024.

Now only we came to know that for 1 Defect, we have paid Thrice.

We check with the GST Department for Refund of excess tax paid. but they said the tax period should be with in 2years. Is there is any way to get Refund.

[KASTURI SETHI]

In this scenario, the period of two years is to computed from the date of payment (in excess). Read the meaning of ''relevant date '' given in Explanation -(2) (h) to Section 54 below Sub-Section 15 of Section 54.

(h) refers. (in bold letters at the bottom.)

SECTION 54. Refund of tax. — (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed :

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in [such form and] manner as may be prescribed.

(2) “relevant date” means —

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, —

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

[(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies;]

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of —

(i) receipt of payment in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India], where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

[(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;]

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.

[Sangeetha D]

Thank you So much , Sir. Is there is any restriction to get refund when the payment is made through ITC.

[KASTURI SETHI]

No. Refund may be allowed in Electronic Credit Ledger.

[Sangeetha D]

Thanks a lot Sir.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

Once the due is cleared, the liability to tax payable or reversible is seized. Any excess payment or reversal is not a tax liability on the taxpayer. Therefore, such payment of amount or reversal is refundable. Further, the condition of 2 years for a refund application is also not applicable since the taxpayer is not applying for a refund of tax. 

This is only for information, not legal advice.

AI Summary

Relevant date for refund: refund claims must be filed within two years from the date of payment, refundable to credit ledger. Under Section 54 the limitation to claim refund runs from the relevant date; where no other category applies, the relevant date is the date of payment of tax. Each excess payment therefore creates its own two year period for filing a refund application. Refunds may be credited to the electronic credit ledger and the method of payment (including use of ITC) does not preclude refund entitlement.