GST | Refund or Adjustment of Tax Paid Pursuant to Favourable Advance Ruling

[Abhijeet Mane]

If an assessee has paid GST on a transaction for past periods and subsequently obtains a favourable AAR/AAAR holding that the transaction is exempt/not taxable, whether the assessee need to mandatory refund of GST already paid for prior periods?

Or, whether the tax already paid be adjusted through GSTR-3B or is refund under Section 54 the only remedy?

AI Summary

GST refund for exempt transactions generally requires the statutory refund route, not adjustment through subsequent GSTR-3B filings.
GST paid on transactions subsequently found exempt or non-taxable under a favourable advance ruling may generally be recovered through a refund claim under Section 54, subject to the two-year limitation period and unjust-enrichment requirements. Historical GST should not ordinarily be adjusted by reducing liability in a later GSTR-3B, as this does not generally substitute for the statutory refund process. Where limitation has expired, constitutional or writ remedies may require fact- and jurisdiction-specific examination.