Bombay HC Orders ₹19.61 Lakh GST Pre-Deposit Refund To Mihika Pharmaceuticals After Demand Fell To ₹5,648

In brief

The question

1. Whether the petitioner was entitled to a refund of the pre-deposit after the confirmed demand had been reduced to ₹5,648 and that amount had been paid.

The court held

The Court allowed the petition and quashed the refund rejection order dated 14 July 2026.

It also directed

It directed the respondents to sanction and disburse a refund of ₹19,61,750 pursuant to the refund application within six weeks of communication of the order.

The wording of clause (iii) contains an apparent clerical inconsistency: after directing payment of the refund to the petitioner, it states that “the same amount” is to be refunded “to the Respondents”.

01Facts

The Assistant Commissioner of State Tax raised a demand of ₹3,66,03,378 for FY 2020–21. The petitioner appealed under Section 107 of the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), paying a pre-deposit.

pp. 1–3 · ¶ 1–2

The First Appellate Authority reduced the demand to ₹3,81,771, and later, on rectification under Section 161, reduced the confirmed demand to ₹5,648. The petitioner paid that amount and applied for a refund of ₹19,61,750, representing the pre-deposit it claimed was refundable. The Assistant Commissioner rejected the application in Form GST RFD-06.

pp. 1–3 · ¶ 1–2

The petitioner challenged that rejection, also alleging that no personal hearing had been granted.

pp. 1–3 · ¶ 1–2

02Issues

i.1. Whether the petitioner was entitled to a refund of the pre-deposit after the confirmed demand had been reduced to ₹5,648 and that amount had been paid.

pp. 4–5 · ¶ 6

ii.2. Whether the refund rejection order should be set aside, including in light of the petitioner’s contention that no personal hearing was granted.

p. 3 · ¶ 2 · p. 5 · ¶ 6

03Law Applied

Section 107 of the MGST Act provides for an appeal and the associated pre-deposit; Section 161 provides for rectification of an order.

p. 2 · ¶ 2

Relying on IBM India Pvt. Ltd. v. Union of India & Ors. and its reference to Nelco Limited v. Union of India, the Court applied the principle that an amount paid as a condition precedent to an appeal is in the nature of a security deposit, not duty, and is returnable whether the appellant succeeds wholly or partly.

pp. 3–4 · ¶ 3, 6

The petitioner also invoked Rule 92(3) of the CGST/MGST Rules concerning a personal hearing, but the Court did not separately decide that point.

p. 3 · ¶ 2

Provisions in the judgment · 2 · Linked ones open on LawLens

Maharashtra Goods and Services Tax Act, 2017 Section 107 Section 161

04Reasoning

The Court noted that the rectification order reducing the demand to ₹5,648 had attained finality and had not been challenged.

pp. 4–5 · ¶ 6

It also treated the petitioner’s payment of ₹19,61,750 as an admitted fact. Applying the principle that an appellate pre-deposit is security rather than duty, and noting that the amount remained with the Revenue, the Court concluded that the refund rejection could not stand.

pp. 4–5 · ¶ 6

The Court did not separately analyse the alleged denial of a personal hearing.

05Holding

The Court allowed the petition and quashed the refund rejection order dated 14 July 2026.

p. 5 · ¶ 6 and order clauses (i)–(iii)

It directed the respondents to sanction and disburse a refund of ₹19,61,750 pursuant to the refund application within six weeks of communication of the order.

p. 5 · ¶ 6 and order clauses (i)–(iii)

p. 5

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