Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(AP) 16580

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
(Special Original Jurisdiction)

WRIT PETITION NO: 22135/2024

Between:
1. JWALA ENERGY RESOURCES PRIVATE LIMITED, 304, PRATHIMA APARTMENTS, R.K. BEACH ROAD, KRISHNA NAGAR, MAHARANI PETA, VISAKHAPATNAM-530002 GSTIN 37AADCJ2112L1ZP REPRESENTED BY ITS AUTHORISED SIGNATORY MR. RAJVIR SINGH JUNEJA
...PETITIONER
AND
1. THE ASSISTANT COMMISSIONERSGST, VISAKHAPATNAM DIVISION, KRUPAM MARKET CIRCLE ANDHRA PRADESH.
2. COMMISSIONER CGST, VISAKHAPATNAM 2ND FLOOR, CENTRAL EXCISE BUILDING, NEW GST BHAVAN, PORT AREA, VISAKHAPATNAM-530035.
3. THE STATE OF ANDHRA PRADESH, REPRESENTED BY ITS PRINCIPAL SECRETARY REVENUE CTII DEPARTMENT, SECRETARIAT, VELAGAPUDI, AMARAVATHI, GUNTUR DISTRICT.
...RESPONDENT(S):

WEDNESDAY, THE EIGHTH DAY OF APRIL TWO THOUSAND AND TWENTY SIX

PRESENT
THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO
THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR

Advocates:
For the Appellants/Petitioners: D S Sivadarshan
For the Respondents: Nagaraju Naguru, GP For Commercial Tax

When a tax levy is declared unconstitutional, the refund of such tax is not governed by statutory limitations under the GST Act, and the taxpayer is entitled to interest from the date of deposit as compensation for the loss of use of money.

Headnote:(A) Central Goods and Services Tax Act, 2017 - Sections 54 and 56 - Refund of tax collected under declared unconstitutional levy - Interest on refund - Petitioner sought refund of IGST paid on ocean freight after the Supreme Court declared the underlying levy unconstitutional - Authorities rejected interest claim, citing limitation under Section 54 - Held, when a levy is declared unconstitutional, the refund is not governed by the statutory limitations of refund provisions under the Act - Interest is payable as compensation for the loss of use of money from the date of deposit until the date of refund - Rate of 6% p.a. awarded. (Paras 9, 10, 12, 13, 15, 16)

Facts of the case:
The petitioner paid IGST on ocean freight charges on a reverse charge basis. Following the Supreme Court judgment in Mohit Minerals Pvt. Ltd. striking down the relevant notification, the petitioner sought a refund of the tax along with interest. While the principal amount was eventually refunded, the respondents rejected the claim for interest, asserting adherence to statutory refund procedures.

Findings of Court:
The Court held that the petitioner is entitled to interest from the date of deposit of the tax until the date of refund, as the tax was collected under an unconstitutional levy, rendering the statutory restrictions in the tax code inapplicable.

Issues: Whether interest is payable on a refund of tax collected under a levy subsequently declared unconstitutional, and whether the limitation period and interest provisions under the tax statute apply to such refunds.

Ratio Decidendi: Where a tax levy is held to be unconstitutional, the taxpayer is entitled to restitution for the loss of use of money from the date of payment. Such refunds are not circumscribed by the statutory time limits or conditions stipulated for ordinary tax refunds under the Act.

Result: Writ petition allowed.

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased topleased to issue an appropriate writ, order or direction particularly one in the nature of Writ of Mandamus and declare that the Impugned Order dated 07.06.2024 passed by the Respondent no.1 to the extent of not refunding the interest amount of Rs.20,50,911/-as unconstitutional, illegal, in violation of principles of natural justice, arbitrary and consequently direct the Respondents to forthwith refund the interest amount of Rs.20,50,911/- and pass

IA NO: 1 OF 2024

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased to direct the respondents to forthwith refund the interest amount of Rs.20,50,911/- pending the final disposal of the writ petition and pass

IA NO: 1 OF 2025

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to receive the counter copies on record by allowing the leave petition in the above writ petition and pass

IA NO: 2 OF 2025

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to grant leave to the respondent to file the counter affidavit and pass

Counsel for the Petitioner:

1.D S SIVADARSHAN

Counsel for the Respondent(S):

1.NAGARAJU NAGURU

2.GP FOR COMMERCIAL TAX

The Court made the following Order: (per Hon’ble Sri Justice R. Raghunandan Rao)

The petitioner had imported coal for the purposes of running its power generation unit. As for the purpose of importing coal, the petitioner had paid ocean freight charges to the suppliers of such coal, on C.I.F. basis. The Tax Authorities, relying upon Entry No.10 of Notification No.10 of 2017, had required the petitioner to pay G.S.T., on the freight paid by the petitioner, in these transactions.

2. The said Entry No.10 in Notification No.10 of 2017, came to be set aside, by a judgment of the Hon’ble High Court of Gujarat in the case of M/s. Mohit Minerals Pvt. Ltd. Vs. Union of India & another¹2020 (1) TMI 974, 2020 (33) G.S.TL. 321 (Guj.). The challenge to this order of the Hon’ble High Court of Gujarat ended in a dismissal of the Civil Appeal by the Hon’ble Supreme Court. The judgment of the Hon’ble Supreme Court is reported as Union of India & another Vs. M/s. Mohit Minerals Pvt. Ltd.²2022 (5) TMI 968, (2022) 10 SCC 700.

3. The petitioner sought refund of the G.S.T. paid by the petitioner, on the quantum of ocean freight paid, on reverse charge basis, for the period, 2018-2019.

4. The petitioner had also challenged the said levy, by way of W.P.No.4014 of 2021, filed before this Court. Apart from challenging the vires of Entry No.10, the petitioner had also sought a direction to the respondents to refund an amount of Rs.68,36,372/-, which was the I.G.S.T. paid on the freight charges. The said Writ Petition is still pending before this Court.

5. As the judgment of the Hon’ble Supreme Court striking down Entry No.10, had been delivered, on 19.05.2022, the petitioner sought refund of the I.G.S.T. amount, along with interest @6% p.a., by way of an application, filed on 07.07.2022. This application was not accepted, on the G.S.T.N. portal, forcing the petitioner to file subsequent applications. Finally, the application, dated 13.01.2023, was acknowledged.

6. Subsequently, the refund application was rejected, by an order, dated 22.08.2023, on the ground that, the application had been filed more than two (02) years from the date of payment of tax and would be barred, under Section 54(14)(2)(h) of the A.P.G.S.T. Act, 2017 (hereinafter referred to as ‘the Act’). It was also rejected, on the ground that, W.P.No.4014 of 2021, was still pending. Aggrieved by the said order, dated 22.08.202

Click Here to Read the rest of this document

2026 Supreme(Online)(AP) 16580

When a tax levy is declared unconstitutional, the refund of such tax is not governed by statutory limitations under the GST Act, and the taxpayer is entitled to interest from the date of deposit as compensation for the loss of use of money.

Cases Referred (2)