GST UPDATE

Hon’ble Court: HIGH COURT OF ANDHRA PRADESH
Case Title: Louis Dreyfus Company Private Limited v. Union of India
Petition No. & Citation: WRIT PETITION Nos:17220,

Hon’ble Judge(s)	R Raghunandan Rao
Date of Order	August, 2025
Outcome	In favour of the Appellant

Brief Facts of the Case

The petitioner imported goods on a Cost, Insurance and Freight (CIF) basis and discharged GST on ocean freight under the reverse charge mechanism in accordance with Notification Nos. 8/2017 and 10/2017. Subsequently, the validity of these notifications was challenged in the landmark case of Mohit Minerals Pvt. Ltd. v. Union of India delivered by Gujarat High Court, wherein the levy of GST on ocean freight in CIF contracts was held to be unconstitutional. The decision of the Gujarat High Court was later affirmed by the Hon'ble Supreme Court on 19.05.2022. Following the Supreme Court's judgment, the petitioner filed refund applications seeking refund of GST paid on ocean freight during 2017. However, the refund claims were rejected by the department as being time-barred under Section 54 of the CGST Act. The appellate authority also upheld the rejection. Aggrieved thereby, the petitioner approached the Andhra Pradesh High Court by means of Writ Petition.

Relevant Section

Section 54 of the CGST Act
Section 17(1) of the Limitation Act, 1963

Question before Hon’ble Court

Whether refund of GST paid on ocean freight under an unconstitutional levy can be denied merely because the refund application was filed beyond the limitation period prescribed under Section 54 of the CGST Act?
Whether limitation period prescribed under Section 54 is applicable in case of mistake of law?

Brief Arguments by Petitioner

The petitioner contended that:

The petitioner submitted that GST had been paid on ocean freight under the reverse charge mechanism solely because of Notification Nos. 8/2017-IGST (Rate) and 10/2017-IGST (Rate). Subsequently, the levy itself was declared unconstitutional by unconstitutional by the Gujarat High Court in Mohit Minerals Pvt. Ltd., which view was affirmed by the Hon'ble Supreme Court.

Any amount collected without authority of law cannot be treated as "tax". Once the notification was struck down, the payment assumed the character of money collected without authority of law and not tax legally payable under the GST enactments.

Section 54 applies only to refund of tax legally collected under the GST law. Where the levy itself is unconstitutional, the collection cannot be treated as tax. Therefore, the limitation period prescribed under Section 54 cannot be invoked to defeat a constitutional claim for refund.
Supreme Court clarified that the levy itself was illegal from its inception. Consequently, the payments made by the petitioner were payments made under a mistake of law. The petitioner argued that amounts paid under a mistake of law stand on a different footing from ordinary tax payments and therefore cannot be limitation period under Section 54 is not applicable on the same.

The petitioner strongly relied upon Article 265 of the Constitution of India, which provides that "No tax shall be levied or collected except by authority of law." The petitioner contended that once the notifications were declared unconstitutional, there remained no authority of law supporting the collection.

Reliance was placed on various decisions given by Hon’ble Gujarat High CourtComsol Energy Private Limited v. State of Gujarat or Madras High Court Decision in Lenovo India Pvt. Ltd. v. Joint Commissioner of GST (Appeals) which held that Limitation under Section 54 would not apply on amounts paid under mistake of law. Further, the phrase "may make an application before the expiry of two years" used in Section 54(1), is directory rather than mandatory.

Brief Arguments by Respondent

The department argued that:

Section 54 specifically prescribes a limitation period of two years.
Refund applications filed beyond that period are not maintainable.
The judgment in Mohit Minerals should operate prospectively from 19.05.2022.
Taxes paid prior to that date cannot automatically become refundable.

Cases Relied Upon

Case Laws	Citation
Mohit Minerals Pvt. Ltd. v. Union of India	2020 SCC OnLine Guj 736
Union of India v. Mohit Minerals Pvt. Ltd.	61 GSTL 257 (SC)
Comsol Energy Private Limited v. State of Gujarat	2020 SCC Online Guj 3601 = (2021) 55 GSTL 390 (Guj.)
Lenovo (India) Pvt. Ltd. v. Joint Commissioner of GST (Appeals-I), Chennai	(2024) 121 GSTR 268 = 2023 SCC OnLine Mad 7810
State of Madhya Pradesh v. Bhailal Bhai	AIR 1964 SC 1006
Binani Cement Ltd. v. Union of India	(2013) 288 ELT 193 (Guj)

Findings and Judgement

Upon careful analysis of the Section 54 of the CGST Act, 2017 and placing reliance upon various precedent judgements, the Hon’ble High Court gave the following analysis:

Mohit Minerals Judgement Applicable Retrospectively

Any judgment, creating the fresh law would apply prospectively. However, in the instant judgement, Hon'ble Supreme Court is only declaring the law and is not creating any fresh law. Further, the judgements operate retrospectively until the Supreme Court does not invoke concept of prospective overruling. There is no such declaration in the case of Gujarat Minerals and hence it applies retrospectively.

Tax Collected Without Authority of Law is Not "Tax"

It held that once the levy itself is declared invalid, any amount collected thereunder ceases to have the character of tax. Such collection becomes a payment made under a mistake of law.

Constitutional Protection Under Article 265 Prevails

The Court emphasized that collection of tax without legal authority violates Article 265 of the Constitution which mandates that no tax shall be levied or collected except by authority of law.

Section 54 Does Not Apply to Amount collected under Mistake of Law

Where the levy itself is unconstitutional, the amount paid cannot be treated as tax and therefore the limitation prescribed under Section 54 cannot be invoked. The Court specifically endorsed the Gujarat High Court's view in the case of Binani Cement Ltd. v. Union of India, (2013) 288 ELT 193 (Guj) that such claims are governed by broader principles relating to recovery of money paid under mistake of law rather than by Section 54 of the CGST Act.

Accordingly, the petition was allowed.

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Relevant Section

Question before Hon’ble Court

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Cases Relied Upon

Findings and Judgement

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