Limitation to Claim GST Refund Begins from Date of Correct IGST Payment: Patna HC [Read Order]
The Court found this reasoning flawed, holding that Section 77 and the CBIC Circular No. 162/18/2021-GST clearly allowed the limitation to run from the date of correct IGST payment
![Limitation to Claim GST Refund Begins from Date of Correct IGST Payment: Patna HC [Read Order]](https://images.taxscan.in/h-upload/2025/08/05/2073220-gst-igst-patna-hc-taxscan.webp "Limitation to Claim GST Refund Begins from Date of Correct IGST Payment: Patna HC [Read Order]")
The High Court of Patna, limitation period for claiming a Goods and Service Tax ( GST ) refund in cases of wrong tax deposit begins from the date the correct Integrated Goods and Service Tax (IGST ) is paid, not from the date the original Central Goods and Service Tax / State Goods and Service Tax ( CGST/SGST ) was paid.Sai Steel,petitioner-assessee, stated that for FY 2017-18, it filed all...
The High Court of Patna, limitation period for claiming a Goods and Service Tax ( GST ) refund in cases of wrong tax deposit begins from the date the correct Integrated Goods and Service Tax (IGST ) is paid, not from the date the original Central Goods and Service Tax / State Goods and Service Tax ( CGST/SGST ) was paid.
Sai Steel,petitioner-assessee, stated that for FY 2017-18, it filed all GST returns (GSTR-01, GSTR-3B, and GSTR-09) and paid taxes as per those returns. Later, its accounts were audited under Section 65(1) of the BGST/CGST Act, 2017. The audit report in Form GST ADT-02 claimed a short payment of ₹5,08,195 in IGST, noting that some transactions were Inter-State, though the petitioner had treated them as Intra-State and paid CGST/SGST instead.
The petitioner counsel stated that, based on the audit, the petitioner paid ₹5,08,195 through DRC-03 on 04.03.2023. After this payment, the petitioner sought a refund of excess CGST and SGST of ₹2,54,098 each by filing RFD-01. Later, respondent no. 6 issued a show cause notice on 18.03.2024, which the petitioner replied to on 02.04.2024, and placed the related documents on record.
The petitioner contended that respondent no. 6 admitted the refund was due but rejected the application citing limitation under Section 54 of the BGST Act, 2017. It was argued that this went against Section 77 of the BGST/CGST Act and Rule 19(1A) of the Rules. The rejection order was placed on record as Annexure ‘P4’.
The petitioner referred to Central Board of Indirect Taxes and Customs (CBIC) Circular No. 162/18/2021-GST dated 25.09.2021, which clarified refund rules for wrong tax payments, and relied on a Jharkhand High Court ruling in Gajraj Vahan (P.) Ltd. vs. State of Jharkhand that allowed refunds by extending the time limit under the same circular.
The respondent contended that Section 54 of the CGST/BGST Act, 2017 required refund claims to be filed within two years of paying the tax. Since the tax was paid in January 2018 and the refund application was filed on 17.01.2024, it was nearly four years late. It was added that the authorities were willing to issue the refund but were barred by the two-year time limit in Section 54.
Justice Rajeev Ranjan Prasad and Justice Shailendra Singh heard arguments from both the parties and observed that the Joint Commissioner of State Taxes, in the impugned order, acknowledged multiple times that the amount paid as SGST and CGST was eligible for refund. However, the refund application was ultimately rejected, citing Section 54 of the BGST Act, 2017, and stating it was barred by limitation.
The Court examined Section 54(1) of the BGST Act, 2017, which prescribes a two year limit for filing refund claims, and noted that Section 77 of the BGST/CGST Act and Section 19 of the IGST Act address situations where tax was wrongfully paid under the wrong head.
It highlighted that Circular No. 162/18/2021 GST clarified the interpretation of “subsequently held” and provided guidance on the computation of limitation periods in such refund matters.
The High Court found that the Joint Commissioner failed to appreciate the scope of Section 77 and ignored the circular, which expressly allowed the two year period to run from the date the correct tax was paid under the IGST head, in this case, 04.03.2023.
The bench noted that counting limitation from January 2018, when SGST and CGST were initially paid, would render Section 77 and the clarificatory circular redundant.
Referring to the Jharkhand High Court’s ruling in Gajraj Vahan (P.) Ltd., the Court reiterated that the circular extended a beneficial provision for refund claims in cases of wrong deposit.
Concluding that the impugned order was legally unsustainable, the High Court set it aside and directed that the petitioner be granted a refund of the SGST and CGST paid in January 2018, along with interest at 6% per annum, starting three months after the refund application date until payment. The bench also awarded litigation costs of ₹10,000 and ordered the refund and interest to be paid within three months from the receipt of the judgment.
Accordingly the writ was allowed.
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