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TMI Blog2025 (2) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the Circular i.e. from 03.08.2022. In that view of the matter, the refund claims dated 05.11.2022 and 07.11.2022, for whatever period of tax deposited, cannot be said to be time barred.
This Court in the case of M/S Gujarat State Police Housing Corporation Ltd. Versus Union of India & Anr [2024 (1) TMI 1409 - GUJARAT HIGH COURT] where it was held that 'Considering the above dictum of law, the amount of GST paid by the petitioner is admittedly paid as a self-assessment, which the petitioner was not required to pay as per the Notification No. 32/2017. Accordingly, in the facts of the case, the amount paid by the petitioner from electronic cash ledger is required to be refunded by the respondent authority and could not have been rejected on the ground of limitation under Section 54 (1) of the CGST Act.'
Conclusion - The State is not entitled to unjustly enrich itself with amounts collected from citizens which are not sanctioned as 'Tax' within the meaning of Article 265 of the Constitution of India. The taxes collected without legal authority must be refunded.
Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... tment of Goods and Services Tax, the Petitioner-Company is an assessee and a registered person with the GST Department from 01.07.2017. 4.2 During July, 2017 to July, 2022, the Petitioner -Company has deposited a total sum of Rs. 45,14,300/- as tax on notice pay recovery, in lieu of various employees who left the employment. This amount of tax has been deposited by the Petitioner from its own pockets and the GST on the amount of notice pay recovery was deposited by the Petitioner as and when such recovery was made. The amount deposited as GST, or any part thereof, has not been recovered by the Petitioner-Company from any of the employees leaving the employment. 4.3 The Union Government issued a Circular No. 178/10/2022-GST dated 03.08.2022, and clarified that such amount and such recovery was not chargeable to GST. At para 7.5 of this circular, the Government clarified that forfeiture of salary or payment of the bond amount in the event of an employee leaving employment before the minimum agreed period was not taxable. Hence, the amount of Rs. 45,14,300/- deposited by the Petitioner-Company as GST were therefore, not "tax". 4.4 Since the Government clarified that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the order of the Appellate Authority are liable to be quashed, set aside and consequent refunds must be directed to be paid to the petitioners. Mr. Dave, learned advocate further submitted that the Petitioner-Company kept on paying the Tax in question in lieu of services under the mistaken belief that the petitioner was liable to pay the tax. The respondents-authorities have accepted the Tax for all these years also under the mistaken belief that they were authorized to collect the tax. It was only when the Government finally clarified the position through its Circular No. 178/10/2022-GST, that it became apparent to both the citizen and the State that the "Tax" paid thus far, was not sanctioned under Article 265 of the Constitution of India. Further, as a matter of fact, it is inconceivable how any refund application could be filed before 03.08.2022. Therefore, the limitation in respect of such refund applications could only be calculated from 03.08.2022 and the respondents-authorities have erred in rejecting the refund applications filed by the petitioners soon after the aforesaid Circular dated 03.08.2022. 8. Mr. Param V. Shah, learned advocate appearing for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lerating the act of such premature quitting of employment but as penalties for dissuading the non-serious employees from taking up employment and to discourage and deter such a situation. Further, the employee does not get anything in return from the employer against payment of such amounts. Therefore, such amounts recovered by the employer are not taxable as consideration for the service of agreeing to tolerate an act or a situation. 9.1 From the aforesaid Circular, it is clear that the Government of India has clarified that the forfeiture of salary or payment of bond amount in the event of an employee leaving the employment before the minimum agreed period, was not taxable, inasmuch as, there was no supply of service by the employer in this situation and therefore, the recovery of notice pay by the employer was not taxable under the CGST Act. Since the aforesaid Circular came out on 03.08.2022, it has to be said that the petitioners could not have had the opportunity of filing of the refund claims in respect of the GST deposited by the Petitioner-Company, till such date. Therefore, the period of two years, for filing a claim, within the meaning of Section 54 of the CGST Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like this." "15. The learned counsel for the petitioners strongly relied on a Constitution Bench judgment of this Court in Mafatlal Industries Ltd. v. Union of India, 1997 (89) ELT. 247 (S.C.). That was a case where refund was claimed on the ground that tax/duty had been collected by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 and the Rules and Regulations or the notifications issued under such enactments. In such cases claims for refund had to be preferred under, and in accordance with, the provisions of the respective enactments before the authorities specified and within the period of limitation prescribed therein. Hence it was held that petition under Article 226 of the Constitution could not be entertained having regard to the legislative intention evidenced by the provisions of the said Act and the writ petition, if any, would be considered and disposed of in the light of and in accordance with the provisions of Section 11B of the Central Excises and Salt Act, 1944 stating that power under Article 226 has to be exercised to effectuate the rule of law and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow. We wish to add that even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case." 11.2 Reference may also be made to the decision of the Delhi High Court in Hind Agro Industries Limited v. Commissioner of Customs, 2008 (221) E.L.T. 336 (Del.), wherein it has been held thus : "10. There can be no doubt that the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in terms of the Customs Act at all because the payment made mistakenly was not under that Act. In the circumstances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited. The applications for refund having been made well within the period of three years' after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise." 11.3 In the light of the principles enunciated in the above decisions, having regard to the fact that in the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. Under the circumstances, the petitioner is justified in filing the present petition before this court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake." 9.3 This Court in the case of M/S Gujarat State Police Housing Corporation Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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