Refund Can’t Be Denied on Limitation Ground on Double Payment of GST (Petitioner vs. The State of West Bengal & Ors.)

Refund Can’t Be Denied on Limitation Ground on Double Payment of GST (Petitioner vs. The State of West Bengal & Ors.)

Issue: Whether a taxpayer who has inadvertently made a double payment of Goods and Services Tax (GST) on a single transaction can be denied a refund for the excess amount solely on the ground of the statutory period of limitation having expired.

Facts:

• The petitioner (taxpayer) made a particular GST payment on a transaction or liability.
• Subsequently, the petitioner inadvertently made a second, duplicate payment for the same liability, resulting in an excess deposit with the government.
• The taxpayer filed a refund application for the excess, duplicated amount.
• The tax authority rejected the refund claim, citing that the application was filed beyond the statutory two-year period of limitation prescribed under the GST Act.

Decision:

The court ruled in favor of the taxpayer, holding that the refund cannot be denied merely on the grounds of limitation when the taxpayer is seeking a refund of a duplicated or excessive tax deposit that was not legally due.

Key TakeDowns:

• Nature of Excess Payment: The court views the return of an excessive or duplicated payment not as a refund of tax paid in pursuance of an assessment, but as the return of a deposit made inadvertently or by mistake, which the government has no right to retain.
• Unjust Enrichment: Retaining tax revenue that was not legally due (the duplicate amount) would constitute unjust enrichment by the State. This principle overrides the procedural rigors of the limitation period in cases of bona fide double payments.
• Focus on Substantive Justice: The ruling prioritizes substantive justice over strict adherence to procedural timelines in cases where the fact of double payment is proven and the revenue is clearly not entitled to the retained funds. The excess deposit must be refunded to the taxpayer.