The Hon’ble Andhra Pradesh High Court in the case of Louis Dreyfus Company Private Limited v. Union of India & Ors. [W.P. Nos. 17220, 17224, 17226, 17229 & 17232 of 2024, order dated August 14, 2025] held that the refund application filed beyond the two-year limitation period, prescribed under Section 54 of the CGST Act for GST paid on ocean freight charges is maintainable in view of the retrospective operation of the Supreme Court judgment in Union of India vs. Mohit Minerals, which struck down the levy of GST on ocean freight as unconstitutional.
Facts:
Louis Dreyfus Company Private Limited (“the Petitioner”), a registered person engaged in import of agricultural products for domestic sale, had paid GST on ocean freight charges in 2017 based on Notification Nos. 8/2017-IGST and 10/2017-IGST. These notifications were challenged and struck down by the Gujarat High Court in Mohit Minerals Pvt. Ltd. (2020 SCC OnLine Guj 736), subsequently upheld by the Supreme Court on May 19, 2022, in Union of India vs. Mohit Minerals (61 GSTL 257).
The Petitioner filed refund applications for the GST paid on ocean freight on March 30, 2023, beyond the statutory two-year limitation period under Section 54 of the CGST Act. These applications were rejected by the original authority and the appellate authority, leading to dismissal of appeals by a common order dated February 27, 2024.
The Petitioner challenged the rejection through these writ petitions, contending that refund claims should not be barred by Section 54 limitation as the tax payment was not legally leviable and under mistake of law.
The Respondents contended that Section 54 imposes a strict two-year limitation for refund applications.
Issue:
Whether the Supreme Court’s judgment in Union of India vs. Mohit Minerals operates retrospectively, thereby making the refund claim for IGST paid on ocean freight, even if filed beyond the two-year limitation under Section 54, maintainable?
Held:
The Hon’ble Andhra Pradesh High Court in W.P. Nos. 17220, 17224, 17226, 17229 & 17232 of 2024 held as under:
- Observed that, any judgment declaring the law operates both retrospectively and prospectively unless the Supreme Court specifically declares prospective operation, which was not done in Union of India vs. Mohit Minerals.
- Noted that, the retrospective effect means that non-leviable tax paid prior to the judgment can be claimed as refund, notwithstanding Section 54’s limitation period.
- Held that, where GST levy itself is found invalid (as on ocean freight post-Mohit Minerals), payment made is not tax but amounts to payment under mistake of law.
- Directed setting aside of rejection orders and appellate dismissal order, and remanded to the Assistant Commissioner of Tax to reconsider refund applications dated March 30, 2023, without considering limitation.
- Held that the principle that no tax can be collected without authority of law (Article 265 of the Constitution), and taxes collected illegally are subject to refund irrespective of statutory limitation and ordered refund application to be decided within four weeks from receipt of the order.
Our Comments:
This judgment aligns with the fundamental tax principle that tax collected without legal authority is not a valid tax and must be refunded without limitation constraints. The Gujarat High Court in Comsol Energy Private Limited vs. State of Gujarat [R/SPECIAL CIVIL APPLICATION NO. 11905 of 2020 order dated December 21, 2020], held the refund of IGST on illegally collected ocean freight GST was held maintainable beyond limitation. Similarly, the Madras High Court in Lenovo (India) Pvt. Ltd. vs. Joint Commissioner of GST (2024 SCC OnLine Mad 7810) considered Section 54’s limitation directory in nature, allowing refund claims beyond two years in appropriate cases.
The Andhra Pradesh High Court’s reliance on the absence of any express prospective declaration in the Supreme Court’s Mohit Minerals ruling reinforces that judgments invalidating tax levy operate retrospectively to protect taxpayers’ rights. This also ensures the legal safeguard against unjust enrichment by tax authorities on invalid taxes and underscores the judiciary’s role in enabling restitution despite procedural limitations, which is crucial in GST jurisprudence.
Relevant Provisions:
Section 54 of the Central Goods and Services Tax Act, 2017
“54. Refund of tax-
(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:
Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in such form and manner as may be prescribed.”
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