Statutory Pre-deposit refund vs. Section 54 Limitation: Hon’ble Apex Court Clarification in BLA Infrastructure Case:
Summary: The case of M/s. BLA Infrastructure Pvt. Ltd. vs. State of Jharkhand & Ors concerned rejection of a refund claim for statutory pre-deposit on the ground of limitation under Section 54 of the GST Act, 2017. The petitioner filed a refund application after succeeding in appeal, but authorities denied it as time-barred beyond two years. The petitioner argued that the limitation under Section 54 is directory and should not defeat legitimate claims, especially for statutory pre-deposits. The High Court held that Section 54 cannot be used to forfeit such pre-deposits and interpreted the provision as directory. It relied on judicial precedent and ruled in favour of the petitioner. On appeal, the Supreme Court upheld the High Court’s view, clarifying that refund of statutory pre-deposit is governed by Section 107(6) read with Section 115, not Section 54. Accordingly, the limitation prescribed under Section 54 does not apply, and the appeal filed by revenue was dismissed.
| M/s. BLA Infrastructure Pvt. Ltd. vs. State of Jharkhand & Ors vide W.P.(T) No. 6527 of 2024 before Hon’ble Jharkhand High Court | |
| Facts of the Case:
The petitioner applied for a refund of the pre-deposit on September 11, 2024 against OIA dated 09.02.2022 wherein order was pronounced in favour of the petitioner. The said application was rejected on the ground that the application was barred by limitation as per section 54 of GST Act, 2017 |
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Arguments by Petitioner’s Counsel:
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Arguments by Respondent’s Counsel:
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Pronouncement of the Judgment by Hon’ble Jharkhand High Court:
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Being Aggrieved by the Judgment of Jharkhand HC, the revenue has challenged before Hon’ble Apex court vide SLP No. (CIVIL) Diary No. 56452/2025 wherein the revenue has contested that the High Court’s interpretation of Section 54 and the “directory” nature of the two-year limitation period.
The Apex court dismissed appeal on the following grounds:
- The Apex court agreed with the Hon’ble Jharkhand HC that the refund of a statutory pre-deposit is governed by Section 107(6) read with Section 115 of the JGST Act, and not Section 54 of GST Act.
- that position clear and setting aside the exercise of interpretation of Section 54 of the Act undertaken in that context,.
Our Opinion:
- Since the pre-deposit was paid by the taxpayer from their own pocket as per section 107(6) r.w. section 115 of GST Act. Therefore, the state/ revenue has no right to retain the same on account of explanation provided under 2(d) of Section 54 of GST Act i.e. “relevant date” for refunds resulting from a judgment or order as the date of communication of that order. As refund of pre-deposit amount is not governed by provision of section 54 of GST Act, 2017.
- We Hope that it will be helpful for taxpayers.
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