Gujarat State Police Housing Corporation Ltd. Vs Union of India & Anr. (Gujarat High Court)
Gujarat High Court has set aside the rejection of a refund claim by Gujarat State Police Housing Corporation Ltd., ruling that the two-year limitation under Section 54(1) of the CGST Act does not apply in cases where tax was paid under a mistaken belief. The petitioner, a government undertaking, had paid GST on construction activities for government projects but later realized that the services were exempted under Notification No. 32/2017-Central Tax (Rate). Subsequently, a refund was sought for the tax amount paid from the electronic cash ledger. However, the tax authorities rejected the claim, citing the expiration of the statutory time limit.
The petitioner contended that since the tax was paid under a mistake of law, the standard limitation period should not apply. The Appellate Authority upheld the rejection, prompting the petitioner to challenge the decision before the High Court under Article 227 of the Constitution. The court examined whether the doctrine of unjust enrichment or the statutory time limit under Section 54(1) barred the refund claim. Relying on precedents, including the Supreme Court’s interpretation of refund provisions in indirect tax cases, the court noted that tax paid due to an incorrect legal understanding does not fall strictly within the confines of a standard refund claim.
