Kirloskar Brothers’ ₹91 Lakh Excess-GST Refund Rejected After 7 Years; Tribunal Upholds Section 54’s Two-Year Limit

The Appellant supplied a canned motor pump to the Department of Atomic Energy under a contract and, on an invoice dated 16 March 2018, charged GST at 12% instead of the asserted applicable rate of 5%.

It paid the tax through its GSTR-3B return for March 2018, filed on 22 April 2018.

After discovering the error in 2024–25, it applied for a refund of ₹91,00,000 on 4 July 2025.

The Proper Officer rejected the claim as time-barred under Section 54 of the CGST Act, treating 22 April 2018 as the relevant date; the First Appellate Authority upheld that decision.

The Appellant appealed to the Tribunal, arguing, among other things, that the excess tax was collected without authority of law and that the refund was not barred by limitation.

Section 54(1) of the CGST Act requires a refund application to be made within two years of the relevant date; under the residuary provision in Explanation 2(h), the relevant date is the date of payment of tax.

Section 54(8) concerns payment of an otherwise admissible refund to the applicant in specified circumstances, including where the incidence of tax has not been passed on; it does not create an independent refund right or displace the limitation requirement.

The Tribunal considered Mafatlal Industries Ltd. v. Union of India, which recognises that certain claims concerning illegal or unauthorised levies may be pursued through constitutional or civil remedies, but does not itself remove applicable statutory restrictions in proceedings before tax authorities.

It also considered the Karnataka High Court Division Bench ruling in Assistant Commissioner of Central Taxes, Bengaluru v. M/s. Merck Life Science Pvt. Ltd., which held that Section 54’s two-year period is mandatory for the Proper Officer, while a belated claimant may seek relief under Article 226 of the Constitution.

The tax was reported and paid through the return filed on 22 April 2018.

Because Section 54 does not provide for the limitation period to begin when a mistake is discovered, the Tribunal rejected the Appellant’s proposed discovery-based date and treated 22 April 2018 as the relevant date.

The refund application, filed more than two years later, was therefore time-barred.

The Tribunal further held that the Proper Officer and Appellate Authority could not waive the statutory period, even if the Appellant maintained that the excess tax had been paid without authority of law.

The certificate concerning non-passing on of the tax incidence could address unjust enrichment, but could not overcome the limitation bar.

It upheld the First Appellate Authority’s order and dismissed the appeal.