In this decision Hon’ble Bombay High Court ruled on the eligibility for refund of tax paid in excess, voluntarily by way of self-assessment. The petitioner is in the business of manufacturing textile machinery and equipment and for such business imported various inputs, raw materials and capital goods during the period May 2019 to March 2020. The imports were made on the clearance of bills of entry on payment of import duties and IGST, which was admissible as ITC.
Such IGST credit was availed by the petitioner. However, due to mismatch in the figures of import IGST credit in GSTR 2A and the monthly returns filed in form GSTR 3B, petitioner got into a mistaken belief that he had availed excess ITC of Rs. 40,00,00/-. Under such mistaken belief he paid such amount by way of DRC 03 on 13.11.2020. Further, the department did not take any action on such DRC 03 and till the date of hearing of the writ petition, GST portal showed status of “pending for action by Tax officer” on the GST portal, against such DRC 03.
In 2024, during the audit conducted by the range Superintendent, it came to be light that there was no tax liability against the petitioner of such amount. ASMT 10 was issued to the petitioner to clarify about the payment of Rs. 40,00,000/-. The petitioner replied that he had made excess payment by mistake. ASMT 12 was issued to the petitioner dropping the proceedings and the petitioner filed a refund application for such amount.
The refund application was rejected on the ground that it was filed after the expiry of limitation period of 2 years as per Section 54 of the CGST Act.
The Court relying upon its earlier judgment held that amount paid by mistake or through ignorance as self-assessment cannot be retained by the revenue. Such a payment is hit by Article 265 of the Constitution which mandates that no tax shall be levied or collected except by authority of law.
The Court held that such amount is not covered by Section 54 of the CGST Act and quashed the impugned refund rejection order. The court also held that since the amount was deposited by mistake, the petitioner shall not be entitled to interest on such refund amount.
W&B Comments: It is a well settled principle of tax law that any amount paid to the Revenue which is in not a part of the tax liability is not governed by the regular statutory refund provisions and the taxpayer shall always be entitled to get its refund.