The Jharkhand High Court has directed the State Goods and Services Tax (SGST) Department to refund the pre-deposit amount paid by GTL Infrastructure Limited while filing its appeal under Section 107 of the GST Act.
The Chief Justice Tarlok Singh Chauhan and Justice Rajesh Shankar observed that withholding pre-deposits after the appeal has been allowed amounts to undue enrichment by the State and violates the constitutional mandate under Article 265.
The petitioner, GTL Infrastructure Limited had approached the High Court after its application seeking refund of pre-deposit was rejected by the tax authorities on the ground of being time-barred under Section 54 of the CGST/Jharkhand GST Act. The company argued that once its appeal was allowed, the State had no authority to withhold the statutory pre-deposit.
The petition sought quashing of the deficiency memos issued in June and August 2024 and demanded refund of the deposit along with statutory interest.
The court examined whether Section 54 of the GST Act — which prescribes a two-year limitation for refund applications — was mandatory or directory in such cases.
The court relied on its earlier ruling in M/s BLA Infrastructure Pvt. Ltd. v. State of Jharkhand (2024) and on Supreme Court judgments that clarified the interpretation of “may” and “shall” in statutory provisions. The judges observed that the word “may” in Section 54 indicates a directory, not mandatory, provision and cannot be used to deny a legitimate refund.
“Refund of statutory pre-deposit is a right vested in the assessee after an appeal is allowed in its favour. Retention of such amounts by the State would clearly amount to undue enrichment, which is impermissible,” the Bench stated.
The State cited a contrary judgment by the Delhi High Court in Sethi Sons (India) v. Assistant Commissioner (2023), but the Jharkhand High Court held that its own Division Bench ruling was binding and more appropriate in the present case.
Allowing the writ petition, the High Court directed the tax authorities to refund the pre-deposit amount within four weeks. In case of failure, the State would be liable to pay interest at 6% per annum from the date the refund became due until actual payment.
Case Details
Case Title: M/S. GTL INFRASTRUCTURE LIMITED Versus The State of Jharkhand
Case No.: W.P. (T) No. 5035 of 2024
Date: 20.08.2025
Counsel For Petitioner: Nitin Kumar Pasari, Advocate
Counsel For Respondent: Ashok Kumar Yadav, Sr. SC 1
