Refund of Wrongly Paid IGST Allowed as Limitation Not Applicable | HC

Case Details: Merck Life Science (P.) Ltd. vs. Union of India [2025] 180 taxmann.com 593 (Karnataka)

Judiciary and Counsel Details

• S.R. Krishna Kumar, J.
• Bharat B. Raichandani & Raaghul Piraanesh, Advs. for the Petitioner.
• Smt. Swati Panduranga, Aravind V. Chavan, Smt Swati Purandara & Smt. Swati L. Kamat, Advs. for the Respondent.

Facts of the Case

The petitioner, provided intermediary services to foreign entities and initially discharged IGST, treating the supplies as inter-state/export transactions. Subsequently, the petitioner reassessed the same transactions as intra-State and discharged CGST and SGST liability. It was contended that the refund could not be denied as the liability for the transactions had been duly discharged under CGST and SGST, and that constitutional and legal principles prevented retention of tax without authority of law. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the constitutional mandate under Article 265 of the Constitution of India prohibits the collection or retention of tax without authority of law, and that principles of restitution and prevention of unjust enrichment required a refund of the IGST to the petitioner. The Court observed that limitation provisions under the IGST Act, operate as directory in such circumstances where liability has been discharged through CGST and SGST, and cannot bar the refund. The impugned orders were set aside, and the matter was remitted to the jurisdictional officer.

List of Cases Reviewed

• Lenovo (India) (P.) Ltd. v. Joint Commissioner of GST (Appeals-1) [2023] 156 taxmann.com 467/[2024] 101 GST 4/[2023] 79 GSTL 299 (Madras)/[(2023) 12 Centax 230 (Mad.)
• Louis Dreyfus Company (P.) Ltd. v. Union of India [2025] 177 taxmann.com 527/101 GSTL 329 (Andhra Pradesh)/(2025) 33 Centax 418 (A.P.)
• Nspira Management Services (P.) Ltd. v. Assistant/Deputy Commissioner of Central Tax [2025] 179 taxmann.com 125 (Andhra Pradesh) (para 20) followed

List of Cases Referred to

• Lenovo (India) (P.) Ltd. v. Joint Commissioner of GST (Appeals-1) [2023] 156 taxmann.com 467/[2024] 101 GST 4/[2023] 79 GSTL 299 (Madras) (para 6)
• Nspira Management Services (P.) Ltd. v. Asstt./Deputy Commissioner of Central Tax [2025] 179 taxmann.com 125 (Andhra Pradesh) (para 6)
• Louis Dreyfus Company (P.) Ltd. v. Union of India [2025] 177 taxmann.com 527/101 GSTL 329 (Andhra Pradesh) (para 6).