TaxTMI 
TaxTMI 
2026 (2) TMI 1101
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....ing Cash Ledger vide Form GST DRC-03 dated 18th September, 2022 on the ground of limitation stipulated in Section 54 read with Clause (h) of Paragraph (2) of Explanation appended thereto has been rejected, the petitioner has approached this Court craving to invoke extraordinary jurisdiction under Article 226/227 of the Constitution of India with the following prayer(s): "In the facts and under the circumstances stated above, the Hon'ble Court would graciously be pleased to admit this writ application and issue appropriate writ/writ(s) including writ of mandamus and/or certiorari or by any other writ: a) Admit this writ application b) Issue rule nisi calling upon the opposite parties as to why the impugned refund rejection order dated 22.10.2025 issued vide Annexure-1 shall not be quashed being arbitrary, erroneous, unreasonable, contrary to the provisions and unsustainable in law; c) And if the opposite parties fail to show cause or show insufficient cause make the said Rule absolute by issuing appropriate writ in the nature of certiorari quashing the impugned order under Annexure-1; d) Issue appropriate writ/writs in form of Mandamus di....
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....vide ref. no. ZD210222001162K, dated 02.02.2022. You had replied in DRC-06 vide ARN: ZD210322001012P dated 02.03.2022, stating that you had already filed the annual return on 08.02.2021 for the Financial Year, 2019- 0, paying all the differential taxes in DRC-03. Further, you have also paid the liable interest in DRC-03 on dated 02.03.2022. It is worthwhile to mention that the GST Audit of your business entity has already been completed for the FY 2019-20. On verification, your compliance is considered as genuine; hence the proceeding is hereby dropped." 2.2. At this stage, the petitioner could come to notice that on account of mistaken notion it deposited the taxes twice for the self-same transactions during the period 2019-20; utilising Credit Ledger on 08.02.2021 while furnishing annual return and thereafter again by utilising Cash Ledger on 18.09.2022. Hence, he filed an application in Form GST RFD-01, dated 23rd August, 2025 claiming refund to the tune of Rs. 12,03,290/- (CGST: Rs. 6,01,645/- + OGST: Rs. 6,01,645/-). On 19^th September, 2025, a Show-Cause Notice was issued by the Joint Commissioner of State Tax, CT&GST Circle, Cuttack-I East (for short be referred ....
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....t petition by sustaining the Order of rejection dated 22nd October, 2025. He would submit that since the application for refund being not made within the period envisaged under Section 54 of the GST Act, the claim of the petitioner has rightfully been denied by the Proper Officer. Hearing: 4. As short point is involved in the matter, on consent of counsel appearing for the parties the writ petition is heard and disposed of at the stage of "Fresh Admission". 4.1. Heard Sri Madhab Lal Agarwal, learned counsel for the petitioner and Sri Sunil Mishra, learned Standing Counsel appearing for the Commercial Tax and Goods and Services Tax Organisation. Consideration of rival contentions and arguments: 5. On perusal of Order of rejection dated 22nd October, 2025 (referred to as "impugned Order"), the following fact emerged: "On verification of eligibility to get refund, it is found that the Taxpayer has already paid the tax liability as against DRC-01A vide Letter No.7931 on dated 01.12.2020 of Rs. 6,01,645.00 each under CGST and SGST vide DRC-03, on dated 08.02.2021. Further, the tax payer has again paid the same amount i.e. of Rs.6,01,644.00 each under CGST & SGST ....
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....onstitution vis-à-vis refund of amount deposited under mistake. It is held therein as follows: "12. Article 265 of the Constitution of India proscribes any levy or collection of tax except by authority of law. Concededly, GST is not payable by the DMRC in respect of the service of preparation of Detailed Project Report for respondent no. 3. Thus, the amount of Rs.2,90,520/- deposited by the DMRC on an erroneous belief that payment for services rendered by it were chargeable to tax, cannot be retained by the respondents. 13. It is well-settled that GST is an indirect tax. The burden of such tax is inevitably borne by the final recipient. In the present case, respondent No. 3 would be liable to reimburse the GST chargeable on services availed by it. But since GST is not payable in respect of such services, respondent No. 3 has not paid the said amount. 14. The period of limitation for applying for a refund as prescribed under Section 54 of the CGST Act, would not apply where GST is not chargeable and it is established an amount has been deposited under a mistake of law." 5.6. In aforesaid Delhi Metro Rail Corporation Ltd. (supra) it has also been ....
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.... 17 of the Limitation Act is the appropriate provision for claiming the refund of the amount paid to the Revenue under mistake of law, which is as under: 'Section 17(1) of the Limitation Act, 1963: (1) Where, in the case of any suit or application for which a period of limitation is prescribed by this Act,- (a) the suit or application is based upon the fraud of the defendant or respondent or his agent; or (b) *** (c) the suit or application is for relief from the consequences of a mistake; or (d) ***' 8. This Court, in the case of Binani Cement Ltd. Vrs. Union of India, reported in 2013 (288) ELT 193 (Guj), held that where the duty is collected without any authority of law, such collection of duty is considered as collected without authority of law and, therefore, is opposed to Article 265 of the Constitution of India and, thus, unconstitutional. It is held that the assessee is not bound by the limitation prescribed under the special law for claiming the refund of the excess duty or duty collected illegally. The period of limitation prescribed under the Limitation Act would apply. The relevant abstract of the d....
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....r Section 11B of the Central Excise Act is not applicable to the claim of refund of duty paid under mistake as the same was paid under mistake of law and, therefore, such claim is considered as outside purview of enactment. It was held that general provisions provided under the Limitation Act is applicable to claim refund of such duty. The relevant paragraphs of the decision are given as under: '14.4 Thus, in view of the principles enunciated by the Supreme Court in Salonah Tea Co. Ltd. Vrs. Superintendent of Taxes, Nowgong, (1988) 2 SCR 474, in case where money is paid by mistake, the period of limitation prescribed is three years from the date when the mistake was known. Besides, Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Therefore, in case where money is paid under a mistake, the limitation would begin to run only when the applicant comes to know of such mistake or with reasonable diligence could have discovered such....
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....mmissioner Vrs. Sahakari Khand Udyog Mandal Ltd., (2005) 3 SCC 738. *** In the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. The petitioner was, therefore, justified in filing the present petition before this court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake. Since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess, cannot in any manner be said to be a duty of excise inasmuch as what was paid by the petitioner was not a duty of excise calculated on the aggregate of all the duties of excise as envisaged under the provisions of Section 93 of the Finance Act, 2004 and section 138 of the Finance Act, 2007. Thus, the amount paid by the petitioner would not take the character of Education Cess and Secondary and Higher Secondary Education Cess but is simply an amount paid under a mistake of law. The provisions....
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....turned to the assessee irrespective of the period covered under the refund application. It was held that refusing to return the amount would go against the mandate of Article 265 of the Constitution of India. The relevant paragraphs of the decision are as under: '12. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law. 13. On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs.4,39,683/- cannot be barred by limitation, and ought to be refunded. 14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of Ind....
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....x without any authority of law cannot be permitted to retain the amount, merely because the taxpayer was not aware at that time that the recovery being made was without any authority of law. In such cases, there is an obligation on the part of the authority to refund the excess tax recovered to the party, subject of course to the statutory provisions dealing with the refund. We are, therefore, of the opinion that the High Court, while disposing of the writ petition under Article 226 of the Constitution of India, was perfectly justified in holding that the bar of limitation which had been put against the respondent by the Collector Central Excise (Appeals) to deny them the refund for the period 01.09.1970 to 28.05.1971 and 01.06.1971 to 19.2.1972 was not proper as admittedly the respondent had approached the Assistant Collector Excise soon after coming to know of the judgment in A.K. Roy Vrs. Voltas Limited, (1973) 2 SCR 1089 and the assessee was not guilty of any laches to claim refund." In Macro Polymers Private Ltd. Vrs. Union of India, R/Special Civil Application No. 921 of 2025, vide Judgment dated 08.08.2025, the Hon'ble Gujarat High Court made reference to C....
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.....09.2004, the payment made by the respondent company would not partake the character of 'service tax' liable to be paid by them. Therefore, mere payment made by the respondent will neither validate the nature of payment nor the nature of transaction. In other words, mere payment of amount would not make it a 'service tax' payable by them. When once there is lack of authority to demand 'service tax' from the respondent company, the Department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect such service tax by the appellant, it would not give them the authority to retain the amount paid by the petitioner, which was initially not payable by them. Therefore, mere nomenclature will not be an embargo on the right of the petitioner to demand refund of payment made by them under mistaken notion. 23. Now we are faced with a similar situation where the claim of the respondent/assessee is on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. If we consider this payment as service tax and duty payable,....
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....b-section (1) of Section 54 and Explanation appended thereto: "(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 manner as may be prescribed. Explanation.- For the purposes of this section,- (1) 'refund' includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit as provided under sub-section (3). (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....
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....d with Clause (h) of Paragraph (2) of Explanation appended thereto is inapplicable and thus, the Order rejecting the application for refund is liable to be quashed. 5.12. The learned Standing Counsel in course of hearing abandoning the ground on which the Proper Officer has rejected the refund application advanced argument that Clause (d) of Paragraph (2) of Explanation appended to Section 54 could have been the appropriate provision for rejecting the application. Bare reading of said clause would suggest that in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, the Appellate Tribunal or any Court, the period of limitation stipulated in sub-section (1) of Section 54 would be reckoned as "relevant date". Since the Order dated 22nd October, 2025 has been passed by the Joint Commissioner of State Tax, CT & GST Circle, Cuttack-I East in consideration of application for refund in Form GST RFD-01, such Order would not be comprehended within the expression "as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any Court" in view of distinction being perceived am....
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..... The finding of Joint Commissioner of State Tax, CT&GST Circle, Cuttack-I East, Cuttack in his Order dated 22nd October, 2025 unequivocally accepted that the petitioner has made an excess payment of tax to the tune of Rs. 12,03,290/- (CGST of Rs. 6,01,645/- + OGST of Rs. 6,01,645/-) as the deposits were made once by way of utilising Credit Ledger and thereafter under mistaken notion by using Cash Ledger. However, discharge of tax liability having been accepted in the proceeding under Section 74 of the GST Act vide Order dated 08.11.2024, there is no warrant for the authority concerned to retain the amounts found to have been deposited twice and reject the application for refund claimed by the petitioner. 7.1. The reason ascribed to by the Proper Officer in rejecting the application taking into account Clause (d) of Paragraph (2) of Explanation to Section 54 is apparently flimsy and inapplicable to the fact-situation of present case. The specious plea of the authority to reject the application for refund that it was filed beyond period stipulated under Section 54 of the GST Act pales into insignificance on the anvil of Article 265 of the Constitution of India. 7.2. Under the ....