Order Date - 25 July 2025

Parties: M/S Sai Steel Vs The State of Bihar through the Principal Secretary, The Principal Secretary cum Commissioner, Department of State Taxes, Joint Commissioner of State Tax, (Audit), Joint Commissioner of State Tax, (Administration), Assistant Commissioner of State Tax, Joint Commissioner of State Tax, The Union of India, through the Under Secretary and The Government of India, Ministry of Finance (Department of Revenue)

Facts – 

• The Petitioner, M/s Sai Steel, had originally treated certain interstate supplies as intra-state and paid CGST and SGST for January 2018. During audit under Section 65 of the CGST/BGST Act, it was found that these were actually inter-state transactions. 
• The petitioner corrected the tax by paying IGST on 04.03.2023 through DRC-03 and later filed a refund claim on 17.01.2024 for the wrongly paid CGST and SGST. However, the refund was rejected on the ground that it was barred by limitation under Section 54.

Issue  – 

• Whether the refund of wrongly paid CGST and SGST later corrected by payment of IGST can be rejected under Section 54 due to limitation, despite the applicability of Section 77?

Order  – 

• The Divisional Bench of the Hon'ble High Court observed that on a bare reading of Section 77 of the CGST Act, 2017 read with Section 19 of the IGST Act and the clarificatory Circular, this Court has no iota of doubt that in the present case, the relevant date for counting the period of limitation would start from the date when the petitioner had deposited the tax under IGST Act, in the present case, the said date is 04.03.2023.
• The Respondent authority seems to have committed an error in taking a view that the period of two years would be  counted from the month of January 2018 when the amount on account of SGST and CGST were deposited with the Returns of the Financial Year 2017-18. If the order of the Respondent authority is allowed to remain in existence, it would amount to rendering Section 77 of the BGST/CGST Act, 2017 read with Section 19 of the IGST Act and clarificatory Circular No. 162/18/2021-GST redundant.
• The petitioner is entitled to get refund of the amount paid on account of SGST and CGST in January, 2018, together with interest at the rate of 6% per annum from a date which would be beginning after three months from the date of filing of the application for refund, till the date of payment. The Court awarded cost of litigation assessed at Rs.10,000/- (Rupees Ten Thousand/-).
• The Writ petition is allowed