Determining the "Relevant Date" for Refund After Correcting Payment Heads

Determining the “Relevant Date” for Refund After Correcting Payment Heads

1. The Core Dispute: When Does the Two-Year Limitation Start?

The petitioner mistakenly paid the Kerala Flood Cess (KFC) through the regular GSTR-1 portal instead of the dedicated KFC-A return. Realizing the error, the petitioner made a fresh payment under the correct head on 10.03.2025.

Petitioner’s Stand: Filed for a refund of the “wrongly paid” amount on 12.04.2025. They argued that the right to claim a refund only arose once the tax was actually paid into the correct account.
Revenue’s Stand: The Assessing Officer rejected the claim as time-barred. The department calculated the two-year limitation from the original due dates of the 2019-2021 returns, rather than the date of the “correct” payment.

2. Legal Analysis: The “Date of Correct Payment” Rule

The Court analyzed the application of Section 54 (Refunds) in conjunction with the principles of Section 77 (Tax mistakenly paid as CGST/SGST instead of IGST, or vice-versa).

I. Principle of Section 77 Applied Mutatis Mutandis

While Section 77 technically applies to Inter-state vs. Intra-state mistakes, the Court held that the same logic applies to payments made under the wrong head (GSTR-1 vs. KFC-A).

The Ruling: When a taxpayer pays the same tax twice—once incorrectly and once correctly—the “Relevant Date” for claiming a refund of the first (incorrect) payment is the date of the second (correct) payment.

II. The Definition of “Relevant Date”

Under Section 54, a refund must be filed within two years from the “relevant date.”

Finding: Since the “correct” payment was only made on 10.03.2025, the limitation period started from that day. Therefore, the refund applications filed in April 2025 (just one month later) were well within the two-year window.

3. Final Ruling: Refund Rejection Quashed

The Court set aside the rejection orders, ruling that the department cannot withhold money paid under a mistaken head if the liability has been subsequently discharged correctly.

Verdict: Rejection orders quashed.
Direction: The department must process the refund of the cess paid via GSTR-1, as the limitation period had not expired.

Key Takeaways for Taxpayers

Correct the Error First: If you discover you paid tax under the wrong head (e.g., IGST instead of CGST/SGST, or a specific Cess under a general return), pay the tax again under the correct head before applying for a refund.
Resetting the Clock: Making the “correct” payment effectively resets the two-year limitation clock for your refund application. This is supported by CBIC Circular No. 162/18/2021-GST.
Substance over Form: The courts generally favor taxpayers who show they have fulfilled their tax liability, even if they initially navigated the portal’s technicalities incorrectly.

HIGH COURT OF KERALA

Pushpagiri Medical Society

State of Kerala^*

ZIYAD RAHMAN A.A., J.

WP (C) NO. 40664 OF 2025

JANUARY 9, 2026

Harikumar G. (Gopinathan Nair), Smt. P. Devikrishna and Jayasankar R., Advs. for the Petitioner. Arun Ajay Shankar, G.P and P.R. Sreejith, SC for the Respondent.

JUDGMENT

1. The petitioner is a registered non-profit organization and runs a hospital and various medical education institutions in the State of Kerala. The petitioner is also a registered tax payer under the provisions of the ‘Central Goods Services Tax Act 2017 and the Kerala Goods Services Tax Act of 2017. The issue involved in this writ petition pertains to the rejection of refund application submitted by the petitioner for the amounts mistakenly paid by the petitioner; i.e., instead of paying the Kerala Flood Cess, the amount was paid along with GSTR Form-1, due to a misconception.

2. The facts that led to the filing of this writ petition are as follows:- The State Government introduced Kerala Flood Cess as per the Finance Act 2019, which was notified with effect from June 2019. The said Cess was introduced to overcome the crisis caused due to the flood in the State of Kerala in the year 2018. Immediately after the introduction of the same, as there was some confusion in respect of the payment to be made towards Kerala Flood Cess pertaining to the months from August 2019 to July 2021, the petitioner remitted the same by filing GSTR Form 1, whereas the payments ought to have made through Form KFC-A. Since the payments were not effected in the correct account, proceedings were initiated against the petitioner, as evidenced by Ext.P7, wherein, it was informed that the petitioner failed to make the payment towards the Cess pertaining to the period referred to above. According to the petitioner, only upon receipt of the said notice, the petitioner came to be aware of the said mistake, and immediately thereupon, the petitioner made the payment on 10.03.2025 and the same is evidenced by Exts.P8 and P11 certificates issued by the State Tax Officer concerned on 28.07.2025.

3. Thereafter, Exts.P12 and P13 refund applications were submitted before the 2^nd respondent seeking the refund of amount mistakenly paid vide GSTR Form-1. The said applications were rejected by the 2^nd respondent as per Exts.P15 to P18, mainly highlighting that, the said applications were submitted beyond the period of two years and therefore, in the light of the statutory stipulations contained in Sec.77 of the CGST Act read with Sec.19 of IGST Act, 2017, it cannot be entertained. This writ petition is filed challenging Exts.P15 to P18.

4. I have heard Sri. G.Harikumar (Gopinathan Nair) the learned counsel appearing for the petitioner, Sri. Arun Ajay Shankar, the learned Government Pleader for the respondent Nos. 1 to 3 and Sri. P.R.Sreejith, the learned Standing Counsel for the additional 4^th respondent.

5. The specific contention raised by the learned counsel for the petitioner is that, taking note of the nature of the transaction and also in the light of Ext.P5 Circular issued in this regard by the Central Board of Indirect Tax and Custom, the rejection of refund applications is not legally sustainable. The learned counsel for the petitioner brought the attention of this Court to the statutory stipulations contained in Sec.54 which deals with the period of limitation of two years that starts from the relevant date. According to the learned counsel for the petitioner, the relevant date in the light of Ext.P5 in this case, would be the date on which the petitioner had remitted the actual tax payable, as the petitioner would be entitled to claim refund only upon making the said payment.

6. This contention is mainly raised by the petitioner by placing reliance upon Ext.P5 Circular, wherein, after referring to Sec.77 of the CGST Act and Sec.19 of the IGST Act, a clarification was issued with regard to the relevant date. It is also discernible from the impugned orders that, even though Sec.77 of CGST Act and Sec.19 of the IGST Act are not strictly applicable to the case of the petitioner, the same are relied on to reject the contention of the petitioner by holding that the applications are time barred. In clause 4.3 in Ext.P5, a tabular form is provided, wherein, various illustrations are given, to reckon the relevant date from which the period of limitation for submitting the refund application. Entry 4 of the said tabular column is relevant for the purpose of this case which reads as follows:-

Sl No.	Scenario	Last date for filing the refund claim
4.	Proper officer or adjudication authority or appellate authority of “A” has held the transaction as an inter-State supply and accordingly, “A” has paid the IGST in respect of the said transaction on 10.11.2022 i.e. after issuance of notification No. 35/2021-Central Tax dated 24.09.2021	Since “A” has paid the correct tax on 10.11.2022, in terms of rule 89 (1A) of the CGST Rules, the last date for filing refund application in FORM GST RFD-01 would be 09.11.2024 (two years from the date of payment of tax under the correct head, i.e. integrated tax)

7. On going by the said illustration, it is evident that the right to claim a refund arises on the date on which the applicant makes the tax payable by him, in the correct account. Therefore, the period of limitation has to be counted from the date on which such payment has been effected in the correct account. Even though Section 77 of CGST Act and Section 19 of the IGST Act are not strictly applicable in the facts and circumstances of the case, because of the fact that the amounts in question is payable towards Kerala Flood Cess, I am of the view that, taking note of the nature of the transactions which are similar to the same, the principles that are laid down and adopted in Ext.P5, can be made applicable to the case of the petitioner. Moreover, Section 54 of the CGST Act, provides a period of limitation of two years from the relevant date. In the light of Section 54, the first issue to be considered in this case is, with regard to the relevant date on which the period of limitation starts. Going by the principles which are explained through the illustration referred to above, it is evident that, the relevant date in this case can be the date on which, the petitioner had actually made payment of tax in the correct account. In this case, it is evident that the payment was affected by the petitioner in the correct account,only on 10.03.2025 and thus, the petitioner became entitled to seek refund of the said amount on that date onwards. Therefore, the relevant date as specified in Section 54 in the light of Ext.P5 Circular can be treated as 10.03.2025. Therefore, Exts.P12 and P13 applications submitted by the petitioner on 12.04.2025 and 14.04.2025 cannot be treated as time barred. Thus, the impugned orders which are Exts.P15 to P18 are liable to be interfered with.

8. In such circumstances, this writ petition is disposed of quashing Exts.P15 to P18, with a direction to the 2^nd respondent to reconsider Exts.P12 and P13, in the light of the observations made by this Court in this judgment and to grant refund to the petitioner, if the petitioner is otherwise eligible for the same. This shall be done within a period of three months from the date of receipt of a copy of this judgment. It is clarified that, upon effecting such refund, it shall be open for the 2^nd respondent or competent officer to move to the additional 4^th respondent to make the necessary adjustment on account of the refund.