The Goods and Services Tax Appellate Tribunal (GSTAT), Pune Bench, has upheld the rejection of a ₹91 lakh refund claim arising from GST paid at 12% instead of the claimed concessional rate of 5%, holding that the two-year limitation under Section 54 of the CGST Act runs from the date of payment of tax, rather than the subsequent discovery of the mistake.

The Bench comprising Shridhar Mahadeo Bhosale (Judicial Member) and Dr. Nirmal Kumar Soren (Technical Member) held that neither the proper officer nor the first appellate authority has statutory power to sanction a refund application filed beyond the prescribed period, even where the tax paid exceeds the amount legally payable.

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The order clarifies that establishing the absence of unjust enrichment does not overcome the statutory limitation bar.

The dispute arose from a contract awarded to Kirloskar Brothers Limited by the Department of Atomic Energy, Government of India, in February 2011. The contract covered the supply of 12 canned motor pumps intended for nuclear facilities, for a total consideration of ₹72.74 crore.

On March 16, 2018, the company issued an invoice for ₹13 crore towards the supply of the first pump. It charged GST at 12%, amounting to ₹1.56 crore.

According to the company, the applicable concessional rate was 5%, and the higher rate resulted from a human error while entering the tax rate into its system. The tax was reported and paid through the GSTR-3B return for March 2018, filed on April 22, 2018.

The company stated that the error came to light during financial year 2024–25, when the Department of Atomic Energy issued the final settlement invoice applying GST at 5% and cross-referencing the original supplies.

Following verification, the company identified an excess payment of ₹91 lakh, comprising ₹45.50 lakh each towards CGST and SGST. It filed a refund application in Form GST RFD-01 on July 4, 2025.

The Deputy Commissioner of State Tax issued a show-cause notice on August 19, 2025, and rejected the refund application on October 6, 2025, on the ground of limitation.

The officer treated April 22, 2018—the date on which the company paid the tax through its March 2018 return—as the relevant date for calculating the refund period.

The first appellate authority upheld the rejection on January 7, 2026. It held that the GST law did not empower the authorities to condone the delay in filing the refund application.

The company subsequently challenged that decision before the tribunal under Section 112(1) of the CGST and Maharashtra GST Acts.

Before the tribunal, the company argued that the State could not retain an amount collected in excess of the lawful tax liability merely by invoking limitation.

It relied on Article 265 of the Constitution, which prohibits the levy or collection of tax except by authority of law, and cited Mafatlal Industries Ltd. v. Union of India along with High Court decisions concerning refunds of amounts paid erroneously or without legal authority.

The company further contended that its entitlement to seek a refund arose upon discovery of the mistake. It therefore urged that limitation should run from the date when the error was discovered or became reasonably ascertainable.

To address unjust enrichment, it relied on a chartered accountant’s certificate dated June 30, 2025, stating that the company had paid the tax and had not passed its incidence to another person.

The Revenue maintained that April 22, 2018 was the correct relevant date and that the authorities had no power to entertain the delayed claim. It also pointed out that the High Court decisions relied upon by the company involved the exercise of constitutional writ jurisdiction.

The tribunal examined Section 54(1), which prescribes a two-year period from the relevant date for refund applications of the kind before it.

It applied the residual provision in Explanation 2(h) to Section 54, under which the relevant date is the date of payment of tax.

Since the company paid the tax through the GSTR-3B return filed on April 22, 2018, the tribunal upheld that date as the starting point for limitation.

It rejected the argument that limitation should commence upon discovery of the error. The Bench observed that Section 54 contains no specific provision permitting the limitation period for an excess-tax refund to be calculated from the date of discovery of a mistake.

The tribunal also noted that the company had not placed a supporting judicial precedent before it for that particular contention. Consequently, the application filed on July 4, 2025 was held to be time-barred.

The tribunal considered the reliance on Mafatlal Industries but held that the decision did not, by itself, establish an exception authorising the proper officer to disregard the limitation prescribed under Section 54.

It explained that refund claims ordinarily have to follow the statutory mechanism, while constitutional remedies remain available within their respective scope.

The Bench also discussed the Karnataka High Court proceedings concerning Merck Life Science Pvt. Ltd. According to the tribunal’s order, a Single Judge had treated the limitation under Section 54 as directory, but the Division Bench reversed that finding on March 17, 2026.

The tribunal reproduced the Division Bench’s conclusions that the two-year period is mandatory for the proper officer, who has no discretion to entertain a delayed claim without an enabling statutory provision.

At the same time, the reproduced ruling recognised that a taxpayer may approach the High Court under Article 226 to seek condonation of delay, which the court may consider on a case-by-case basis.

That ruling also contemplated corresponding protection for the Revenue. Where necessary, a court condoning the refund delay should grant an appropriate extension for consequential proceedings under Sections 73 or 74 that would otherwise have been available had the refund application been filed in time.

The availability of such constitutional relief, however, did not confer equivalent powers on the statutory refund officer or first appellate authority. No condonation or refund was granted in the present appeal.

The tribunal separately addressed the company’s argument that it had borne the excess tax itself.

It explained that Section 54(8) governs specified circumstances in which an otherwise admissible refund is paid directly to the applicant instead of being credited to the Consumer Welfare Fund.

The provision does not independently create a refund entitlement or dispense with statutory conditions governing admissibility, including limitation under Section 54(1).

Accordingly, even if the company established that it had not passed the tax burden to its customer, that circumstance could not overcome the limitation bar. The question of direct payment under Section 54(8) would arise only after the refund was otherwise found admissible.

Finding no ground to interfere, the tribunal dismissed the appeal and upheld the first appellate authority’s order dated January 7, 2026.

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