The Bombay High Court has held that Section 54(1) of the CGST Act, 2017 does not bar filing of a second refund application, particularly where an eligible refund claim was left out earlier due to inadvertence or mistake, so long as the subsequent application is filed within the prescribed limitation period. Essentially, a refund claim satisfying the statutory limitation requirement cannot be rejected merely on technical grounds that the relevant period had been covered in an earlier refund application, when the statute itself creates no such embargo.
The Court emphasised that in refund matters under Section 54(1), principles of res judicata or analogous concepts cannot be invoked to create a bar not found in the statute. Thus, Departmental authorities are required to consider and ordinarily follow binding or final High Court rulings on interpretation of central statutes, and cannot ignore such decisions on narrow factual distinctions when the governing principle applies.
Accordingly, the impugned order dated 3 April 2025 was quashed and set aside, and the refund application dated 9 August 2024 was restored to the authority for decision on merits after granting the petitioner an opportunity of hearing.
The Division Bench comprising Justice G. S. Kulkarni and Justice Aarti Sathe observed that the officer’s approach was incorrect because Section 54(1) of CGST Act does not provide any bar against maintaining more than one refund application, especially where there is an inadvertent mistake or lapse.
The Bench further held that once the basic statutory requirement was satisfied, namely that the application was filed within the time prescribed under Section 54(1), technical objections of the kind taken in the impugned order could not defeat the petitioner’s right to have the second refund application decided on merits.
The Bench expressly observed that in such refund matters concerning specific claims for distinct periods, there was no question of importing principles of res judicata or analogous principles, as that would create an illusory bar and defeat the object of the provision. It therefore held that the rejection order was flawed and required to be set aside, with the refund application restored for a fresh decision on merits in accordance with law.
Briefly, the petitioner challenged an order passed by the Assistant Commissioner, CGST and Central Excise, rejecting its refund claim of Rs. 1.10 Crores for August 2022. The rejection was not on limitation. The authority accepted that the foreign remittance against the relevant invoice was received on 22 August 2022 and that the refund application dated 9 August 2024 was within the two-year period under Section 54(1) of the CGST Act, 2017. The refund was rejected because the petitioner had earlier filed a refund application on 26 April 2024 for the tax period July 2022 to September 2022, and the authority held that a second refund application for August 2022, being an intervening period already covered by the earlier period, was not maintainable.
The petitioner’s case was that the August 2022 invoice had been inadvertently left out from the earlier application, and Section 54(1) did not bar filing of more than one refund application, particularly where a claim was omitted by mistake. The respondents did not dispute before the Court that the second application was within limitation and also did not dispute that the plain language of Section 54(1) did not create any bar on a second application in the event of inadvertent error or mistake. Their defence was based on the departmental circulars and the reasoning in the impugned order.
Appearances:
Ram Heda i/b Priyanka Shukla, for Petitioner.
Siddharth Chandrashekhar a/w Niyati Mankad a/w Priyanka Singh, for Respondent Nos.1 to 3
