In a recent decision, the Orissa High Court addressed the issue of refunding tax paid twice due to a mistake, focusing on the case of Rajendra Narayan Mohanty versus the Joint Commissioner of State Tax and CT & GST Officer. Mohanty, a registered taxpayer, had initially settled his tax liabilities for the fiscal year 2019-20 by utilizing his Credit Ledger. However, he mistakenly made an additional payment of ₹6,01,645 each under CGST and OGST through the Cash Ledger for the same transactions. This error resulted in a double payment.
After the Section 74 proceedings were concluded in his favor, Mohanty sought a refund of the excess amount paid. However, his refund application was rejected by the Joint Commissioner on the grounds that it was filed beyond the two-year limitation period stipulated under Section 54 of the GST Act.
The court ruled that retaining tax collected without authority of law violates Article 265 of the Constitution. It emphasized that the excess tax paid due to a mistake should not be considered valid under Section 54. Consequently, the limitation period under Section 54 does not apply to such refund claims. The court quashed the rejection order, allowing Mohanty to file a new refund application, which the authorities must process promptly, or else face an interest penalty of 6%.
Order Date - 12 February 2026
Parties: Rajendra Narayan Mohanty Vs Joint Commissioner of State Tax and CT & GST Officer
Facts -
- Rajendra Narayan Mohanty, a registered taxpayer, faced proceedings under Section 74 for FY 2019–20 and had already discharged his tax liability on 08.02.2021 through DRC-03 by utilising his Credit Ledger.
- Later, under mistaken advice, he again deposited ₹6,01,645 each under CGST and OGST on 18.09.2022 through Cash Ledger for the same transactions, resulting in double payment.
- After the Section 74 proceedings were dropped on 08.11.2024 accepting his compliance, he applied for refund of ₹12,03,290/- on 23.08.2025.
- The Joint Commissioner rejected the refund on 22.10.2025 solely on the ground that it was filed beyond the two-year limitation under Section 54.
Issue -
- Whether refund of tax paid twice due to mistake can be rejected as time-barred under Section 54 of the GST Act?
Order -
- The Court held that tax collected without authority of law cannot be retained, as barred by Article 265 of the Constitution.
- Since the petitioner had admittedly paid tax twice for the same liability, the excess amount could not be treated as valid tax under Section 54.
- Limitation under Section 54 does not apply to refund claims arising from payments made under mistake of law.
- The rejection order was quashed, and the petitioner was permitted to file a fresh refund application, which must be processed promptly, failing which interest at 6% would apply.
