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Patna High Court Ruling: GST Refund Limitation Period to Start from Date of Correct Tax Payment

By Pavitra Ganapathi Baradavalli
Patna High Court Ruling: GST Refund Limitation Period to Start from Date of Correct Tax Payment

The Patna High Court has ruled that the limitation period for GST refunds, in cases where taxes were paid under the wrong category (e.g., SGST/CGST instead of IGST), must be calculated from the date of correct tax payment. The judgment, delivered by Justices Rajeev Ranjan Prasad and Shailendra Singh, is based on Section 77 of the CGST Act, 2017, Section 19 of the IGST Act, 2017, and CBIC Circular No. 162/18/2021-GST.Sai Steel, a company, had filed its GSTR-01, GSTR-3B, and GSTR-09 returns for the financial year 2017-18 and paid all applicable taxes.

Patna: The Patna High Court has ruled that the limitation period for GST refunds, in cases where taxes were paid under the wrong category (e.g., SGST/CGST instead of IGST), must be calculated from the date of correct tax payment. The judgment, delivered by Justices Rajeev Ranjan Prasad and Shailendra Singh, is based on Section 77 of the CGST Act, 2017, Section 19 of the IGST Act, 2017, and CBIC Circular No. 162/18/2021-GST.Sai Steel, a company, had filed its GSTR-01, GSTR-3B, and GSTR-09 returns for the financial year 2017-18 and paid all applicable taxes. However, an audit under Section 65(1) of the BGST/CGST Act, 2017, revealed that the company had mistakenly classified certain transactions as intra-state (within the state) instead of inter-state, paying taxes under CGST/SGST instead of IGST. Based on the audit report, the company paid ₹5,08,195 in IGST through DRC-03 on March 4, 2023, and applied for a refund of the CGST/SGST paid in January 2018 on January 17, 2024.read also: Successful Test of India’s Most Powerful Agni-5 Missile: Capable of Reaching Northern China


The state’s Joint Commissioner rejected the refund application, calculating the two-year limitation period from the date of the CGST/SGST payment in January 2018, deeming the application filed on January 17, 2024, as time-barred by approximately four years. However, the court found this interpretation incorrect. Based on Section 77 of the CGST Act and CBIC Circular No. 162/18/2021-GST, the court ruled that the limitation period for the refund must be calculated from the date of the correct tax payment (IGST), i.e., March 4, 2023.The court declared the state’s order illegal and quashed it, ruling that the company was entitled to a refund of the CGST/SGST paid in January 2018.read also: Revolutionizing Road Repairs in Bengaluru with Ecofix Technology..!

It ordered the refund amount to be paid with 6% annual interest starting three months from the date of the refund application and directed the payment of ₹10,000 as litigation costs. The judgment aligns with the Jharkhand High Court’s ruling in Gajraj Vahan (P.) Ltd. vs. State, which recognized an extended limitation period for such refunds.This ruling provides clarity to taxpayers regarding refunds for taxes paid under the wrong category. Under Section 54 of the CGST Act, the two-year limitation period for refunds must be calculated from the date of the correct tax payment, not the initial erroneous payment.read also: Delhi CM Rekha Gupta Assaulted, Continues Public Engagement Despite Injuries..!


The judgment offers relief to taxpayers and corrects the tax authorities’ misinterpretation.Tax expert Arpit Kulshreshtha welcomed the verdict, stating, “This judgment upholds the intent of Section 77 of the CGST Act and Section 19 of the IGST Act, ensuring taxpayers are not penalized for technical errors.” Experts believe this ruling will further simplify the GST refund process.JUNEBERRY® 100% Pure Cotton Oversized Loose Baggy Fit Drop Shoulder Half Sleeve Round Neck Cool Front Teddy Printed Cork & White T-Shirt for Women/Girls (Available in from S to 2XL)