Kolkata GST Tribunal Upholds Refund Of ₹1.1 Lakh Service-Tax Appeal Deposit Paid Through DRC-03, Holding GST’s Two-Year Limit Inapplicable To This Refund

Jhawar Suppliers’ service-tax demand for FY 2015–16 was appealed under the legacy tax regime.

Because of access problems with the ACES portal, it paid the statutory pre-deposit of ₹1,10,510 through Form DRC-03 on 27 May 2022, debiting its GST electronic cash ledger; it later paid the same amount through ICEGATE on 9 April 2024.

After the service-tax demand was set aside, the ICEGATE payment was refunded, but the refund application for the DRC-03 payment was rejected as time-barred under Section 54 of the CGST Act.

The First Appellate Authority allowed the refund, and the Revenue appealed to the Tribunal.

Section 35F of the Central Excise Act requires a pre-deposit for specified appeals; such a deposit is not payment of duty and is refundable when the appeal succeeds.

Section 54 of the CGST Act governs refunds of tax, interest, and other amounts within its scope, but the Tribunal held that its limitation period did not govern recovery of this legacy-law pre-deposit.

Relying on Comsol Energy Pvt. Ltd. v. State of Gujarat, the Tribunal stated that Section 54 does not apply to amounts collected without authority under the GST laws and referred to Section 17 of the Limitation Act for claims arising from mistake.

It also relied on Binani Cement Ltd. v. Union of India, Joshi Technology International v. Union of India and 3E Infotech Ltd. v. CESTAT concerning recovery of amounts paid under mistake of law, and on Suvidhe Ltd. v. Union of India and CBEC Circular No. 984/08/2014-CX for the propositions that a Section 35F pre-deposit is not duty and is not subject to unjust enrichment.

The Tribunal treated the ₹1,10,510 payment according to its stated purpose—as a Section 35F pre-deposit for a service-tax appeal—not as GST tax or a GST liability, notwithstanding that it was routed through Form DRC-03 and debited from the GST cash ledger.

On that basis, it found Section 54’s two-year limitation inapplicable and applied the cited authorities on refunds of amounts paid under mistake of law.

It further concluded that unjust enrichment did not bar the refund because the amount was a pre-deposit, rather than duty, and relied on Suvidhe and the CBEC circular.

It upheld the First Appellate Authority’s order allowing the refund and rejected the Revenue’s appeal.