GST Refund Limitation Inapplicable to Double Tax Deposit Made Under Mistake: Orissa HC

The Orissa High Court has held that the limitation period prescribed under Section 54 of the GST Act does not apply where tax has been deposited twice under a mistaken notion. The bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman directed refund of excess GST amounting to Rs. 12,03,290, observing that retention of such amount would violate Article 265 of the Constitution of India. The petitioner/assessee, a registered GST dealer, had been subjected to proceedings under Section 74 of the CGST/OGST Acts for the financial year 2019–20. During scrutiny, authorities noted discrepancies between TDS credit received and NIL tax liability disclosed in GSTR-3B returns. In response on February 8, 2021, the petitioner discharged the alleged tax liability using the Electronic Credit Ledger via Form GST DRC-03. Subsequently, due to mistaken advice, he again deposited ₹6,01,645 each under CGST and OGST on September 18, 2022, this time utilizing the Electronic Cash Ledger. Later, on November 8, 2024, the Assistant Commissioner dropped the Section 74 proceedings, acknowledging that tax liability had already been discharged. Upon realizing that tax had been paid twice for the same transactions, the petitioner filed a refund application in Form GST RFD-01 on August 23, 2025. The Joint Commissioner rejected the refund application on October 22, 2025, holding that it was filed beyond the two-year limitation period prescribed under Section 54(1) of the GST Act read with Explanation (2)(h), which defines “relevant date” as the date of payment of tax. The department maintained that since the payment through the cash ledger was made on September 18, 2022, the refund application filed in August 2025 was time-barred. The issue raised was whether the statutory limitation under Section 54 of the GST Act applies where tax has been deposited twice under a mistake of law or fact? The Court examined the impugned rejection order and noted that the department itself admitted that tax liability for FY 2019–20 had already been discharged on February 8, 2021. The same amount was again paid on September 18, 2022. The Court held that such double payment was undisputed. Relying heavily on constitutional principles, the Bench invoked Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by authority of law. The Court observed that once tax liability stood discharged, the second payment had no legal basis. The amount deposited under mistake did not partake the character of “tax lawfully due.” Therefore, its retention by the State would offend Article 265. The Court clarified that Section 54 governs refund of “tax paid under the Act.” However, an amount paid without legal liability does not qualify as tax lawfully payable under the statute. The court held that the limitation period under Section 54(1) was inapplicable. The rejection order dated October 22, 2025 was found unsustainable. The department was directed to refund the excess amount. The court held that mere nomenclature or use of statutory refund form does not convert an unconstitutional collection into lawful tax. Authorities cannot retain money merely because it was voluntarily deposited. Constitutional mandate overrides statutory limitation where levy itself lacks authority of law. Refund claims arising from mistakes fall outside Section 54 and are governed by broader equitable and constitutional principles. Case Details Case Title: Rajendra Narayan Mohanty Versus Joint Commissioner of State Tax Citation: JURISHOUR-08-HC-2026(Ori) Case No.: W.P.(C) No.2271 of 2026 Date: 12.02.2026 Counsel For Petitioner: Madhab Lal Agarwal Counsel For Respondent: Sunil Mishra Click Here To Read Order Read More: Can CA, CS Appear Before Tribunals? Delhi High Court To Examine Bar U/s 33 of Advocates Act

GST Refund Limitation Inapplicable to Double Tax Deposit Made Under Mistake: Orissa HC

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