[Cites 13, Cited by 0]
Gujarat High Court
Indian Potash Limited vs The Union Of India on 16 January, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
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C/SCA/11004/2024 JUDGMENT DATED: 16/01/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11004 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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INDIAN POTASH LIMITED & ANR.
Versus
THE UNION OF INDIA & ORS.
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Appearance:
MS. AMRITA THAKORE FOR MR BHAVESH B CHOKSHI(3109) for the
Petitioner(s) No. 1,2
MS HETAL G PATEL(11032) for the Respondent(s) No. 3,4
NOTICE SERVED for the Respondent(s) No. 2
NOTICE UNSERVED for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 16/01/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. Rule. Learned Senior Standing Counsel Ms. Hetal Patel
waives service of notice of rule on behalf of the respondents.
2. A short issue is involved in this writ petition and the
same is taken up for final hearing for final disposal today.
3. The petitioner, while importing the fertilizers had paid
freight on CIF (Cost, Insurance and Freight) basis wherein the
value of freight is included in the assessable value of goods
imported. Adhering to Entry 10 of RCM Notification
No.10/2017- Integrated tax (Rate) dated 28.07.2017, the
petitioner had paid GST for freight services on reverse charge
mechanism. Consequentially, availed credit in Form GSTR 3B
of respective months.
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4. While placing reliance on the judgment of this Court in
the case of Mohit Minerals Pvt. Ltd vs. Union of India, [2020
(33) G.S.T.L. 321 (Guj.)], the petitioner filed the refund
application under Section 54 of the Central Goods and Service
Tax Act, 2017 (hereinafter referred to as 'CGST Act, 2017) of
the IGST paid on ocean freight on reverse charge basis.
5. On receipt of the refund application, initially the
adjudicating authority issued show-cause notices dated
3.11.2020 and 6.11.2020, proposing to reject the refund
application. Ultimately, it culminated into proceedings before
the appellate authority, which remanded the matter back to
the adjudicating authority vide order dated 07.12.2020 passed
in Order-in-Appeal No.147 to 160/22-23 dated 18.11.2022.
Again the petitioner submitted refund application on
16.12.2022 for an amount of Rs.83,74,751.64. The respondent
No.3 issued a show-cause notice to the petitioner. It is
interesting to note that the show-cause notice does not bear
any date, however, the appellate order refers to the show-
cause notice dated 30.01.2023.
6. Thereafter, the adjudicating authority passed an order
rejecting the refund application dated 15.02.2023, which was
challenged by the petitioner by filing an appeal before the
appellate authority and ultimately the same was disposed of
by the appellate authority vide order dated 30.10.2023.
7. At the outset, learned advocate Ms. Amrita Thakore
appearing for the petitioner, while pointing out to the
judgment of this Court in the case of Comsol Energy Pvt.
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Ltd vs. State of Gujarat, 2021 (55) G.S.T.L 390 (Guj) as well
as judgment in the case of Mohit Minerals Pvt. Ltd. (supra)
has submitted that while disposing of the appeal of the
petitioner, the appellate authority has fell in error in directing
the adjudicating authority to verify the admissibility of the
refund claim in respect of period of limitation, which is
impermissible in view of the judgments of this Court.
8. It is also submitted that in fact the appellate authority as
well as the adjudicating authority refers to the opportunity of
hearing granted to the petitioner on 03.02.2023, which is also
incorrect, as the show-cause notice does not refer to such
date and the petitioner was never heard. Thus, it is urged that
the petition may be allowed.
9. In response to the above submissions, learned Senior
Standing Counsel Ms. Hetal Patel has submitted that the
petition may not be entertained in view of the order passed by
the appellate authority, which is in fact, in favour of the
petitioner and the petitioner is only called upon to submit
necessary documents.
10. We have heard learned advocates appearing for the
respective parties. The averments of the learned advocates
appearing for the respective parties hinges on the observation
made in Paragraph No.12 of the appellate order dated
30.10.2023, which is as under:
"12. I also find that the adjudicating authority has not
mentioned anything about the limitation period of the refund
claim filed by the appellant. Therefore, the adjudicating
authority is hereby directed to process the refund application
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of the appellant and also verify the admissibility of the refund
claim in respect of period of limitation."
11. Thus, while disposing of the appeal of the petitioner,
which was filed assailing the order dated 08.02.2023, the
appellate authority has directed the adjudicating authority to
process the refund application of the petitioner and also to
verify the admissibility of the refund claim in respect of period
of limitation.
12. At this stage, upon noticing the facts of the judgment of
the Comsol Energy Pvt. Ltd. (supra), we find that the case
of the petitioner is also covered. In the case of Comsol
Energy Pvt. Ltd. (supra), the petitioner filed the refund
application Form RFD-01 on-line on month of February, 2018
and March, 2018, after the judgment of this Court in case of
Mohit Minerals Pvt. Ltd. (supra), which was decided on
23.01.2020. Since the refund was not allowed, Comsol Energy
Pvt. Ltd. filed a writ petition, which was ultimately allowed by
the Coordinate Bench of this Court by considering the array of
the judgments. One of the judgments is regarding Joshi
Technologies International vs. Union of India, 2016 (339)
E.L.T 21 (Guj). The relevant observations made by this Court
in the case of Comsol Energy Pvt. Ltd. (supra) are as
under:
"9. Similar situation arose in the case of Joshi Technology
International vs. Union of India, reported in 2016 (339) ELT 21
(Guj), wherein this Court held that the statutory time limit provided
under Section 11B of the Central Excise Act is not applicable to the
claim of refund of duty paid under mistake as the same was paid
under mistake of law and, therefore, such claim is considered as
outside purview of enactment. It was held that general provisions
provided under the Limitation Act is applicable to claim refund of
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such duty. The relevant paragraphs of the decision are given as
under :
"14.4 Thus, in view of the principles enunciated by the
Supreme Court in Salonah Tea Co. Ltd. v. Superintendent of
Taxes, Nowgong (supra), in case where money is paid by
mistake, the period of limitation prescribed is three years
from the date when the mistake was known. Besides, section
17 of the Limitation Act inter alia provides that when a suit
or application is for relief from the consequences of a
mistake, the period of limitation would not begin to run until
the plaintiff or applicant has discovered the mistake, or
could, with reasonable diligence, have discovered it.
Therefore, in case where money is paid under a mistake, the
limitation would begin to run only when the applicant comes
to know of such mistake or with reasonable diligence could
have discovered such mistake. Adverting to the case at hand,
the mistake is in the nature of a mistake of law. It appears
that the legal position was not clear and hence, pursuant to
representations made by the trade and field formations, the
CBEC was required to issue the circular dated 07.01.2014
clarifying the issue. As noticed earlier, the petitioner had all
along, right from July 2004 been paying Education Cess and
subsequently, from the year 2007 was paying Secondary and
Higher Secondary Education Cess, till April 2014. It was only
when the Circular dated 07.01.2014 came to be issued by
the CBEC, clarifying the issue, that the petitioner came to
know about its mistake. Considering the nature of the
mistake and the fact that the issue was not free from doubt
till the above circular came to be issued by the CBEC, it also
cannot be said that the petitioner could with reasonable
diligence have discovered the mistake. It appears that it is
only sometime after the Education Cess and Secondary and
Higher Secondary Education Cess came to be paid for the
month of April 2014 that the petitioner came to know about
its mistake and in July 2014, it filed the application for
refund before the second respondent. Since the period of
limitation begins to run only from the time when the
applicant comes to know of the mistake, the application
made by the petitioner was well within the prescribed period
of limitation. Moreover, as discussed hereinabove, the
retention of the Education Cess and Secondary and Higher
Secondary Education Cess by the respondents is without
authority of law and hence, in the light of the decision of this
court in Swastik Sanitarywares Ltd. v. Union of India
(supra), the question of applying the limitation prescribed
under section 11B of the CE Act would not arise.
19 xx xx xx
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TO SUMMARISE:-
- Merely because the provisions of the Central
Excise Act, 1944 and the rules framed
thereunder for collection and refund viz., the
machinery provisions have been incorporated in
the OID Act for collection and refund of the cess
levied thereunder, it cannot be inferred that the
Oil Cess imposed under the provisions of the
OID Act assumes the character of central excise
duty. The finding recorded by the adjudicating
authority that the Oil Cess is in the nature of
excise duty, is erroneous and contrary to the
law laid down by this court in Commissioner v.
Sahakari Khand Udyog Mandli Ltd. (supra).
- xx xx xx
- xx xx xx
- In the facts of the present case, the refund is
claimed on the ground that the amount was
paid under a mistake of law and such claim
being outside the purview of the enactment, can
be made either by way of a suit or by way of a
writ petition. The petitioner was, therefore,
justified in filing the present petition before this
court against the order passed by the
adjudicating authority rejecting its claim for
refund of the amount paid under a mistake.
- Since Oil Cess is not a duty of excise, the
amount paid by the petitioner by way of
Education Cess and Secondary and Higher
Secondary Education Cess, cannot in any
manner be said to be a duty of excise inasmuch
as what was paid by the petitioner was not a
duty of excise calculated on the aggregate of all
the duties of excise as envisaged under the
provisions of section 93 of the Finance Act,
2004 and section 138 of the Finance Act, 2007.
Thus, the amount paid by the petitioner would
not take the character of Education Cess and
Secondary and Higher Secondary Education
Cess but is simply an amount paid under a
mistake of law. The provisions of section 11B of
the Central Excise Act, 1944 would, therefore,
not be applicable to an application seeking
refund thereof. The petitioner was therefore,
wholly justified in making the application for
refund under a mistake of law and not under
section 11B of the Central Excise Act, 1944.
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- Since the provisions of section 11B of the Act
are not applicable to the claim of refund made
by the petitioner, the limitation prescribed
under the said provision would also not be
applicable and the general provisions under the
Limitation Act, 1963 would be applicable.
Section 17 of the Limitation Act inter alia
provides that when a suit or application is for
relief from the consequences of a mistake, the
period of limitation would not begin to run until
the plaintiff or applicant has discovered the
mistake, or could, with reasonable diligence,
have discovered it. Since the period of
limitation begins to run only from the time
when the applicant comes to know of the
mistake, the application made by the petitioner
was well within the prescribed period of
limitation. Moreover, since the very retention of
the Education Cess and Secondary and Higher
Secondary Education Cess by the respondents
is without authority of law, in the light of the
decision of this court in Swastik Sanitarywares
Ltd. v. Union of India (supra), the question of
applying the limitation prescribed under section
11B of the CE Act would not arise.
- Even in case where any amount is paid by way
of self assessment, in the event any amount has
been paid by mistake or through ignorance, it is
always open to the assessee to bring it to the
notice of the authority concerned and claim
refund of the amount wrongly paid. The
authority concerned is also duty bound to
refund such amount as retention of such
amount would be hit by Article 265 of the
Constitution of India which mandates that no
tax shall be levied or collected except by
authority of law. Since the Education Cess and
Secondary and Higher Secondary DejaVu
SerifEducation Cess collected from the
petitioner is not backed by any authority of law,
in view of the provisions of Article 265 of the
Constitution, the respondents have no authority
to retain the same."
xx xx xx
11. The issue is squarely covered by the decision of this Court in
the case of Gokul Agro Resources Ltd. vs. Union of India (Special
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Civil Application No.1758 of 2020, decided on 26.02.2020),
wherein this Court directed the respondent to pass an appropriate
order in the refund application preferred by the assessee without
raising any technical issue, within a period of four weeks. The
relevant paragraph of the finding of this Hon'ble Court is as
under :
"6 We may only say that since the Notification has been
struck down as ultra vires, as a consequence of the same,
the writ applicant seeks refund of the amount paid towards
the IGST. However, for this purpose, the writ applicant will
have to prefer an appropriate application addressed to the
competent authority. If any such application is preferred for
the refund of the amount, the authority concerned shall
immediately look into the same and pass an appropriate
order in accordance with law keeping in mind the decision of
this Court rendered in the case of Mohit Minerals (supra).
The competent authority shall not raise any technical issue
with regard to the claim for refund of the IGST amount. Let
this exercise be undertaken within a period of four weeks
from the date of receipt of the writ of this order."
12. Similarly, this Court, in the case of Bharat Oman Refineries
Ltd. vs. Union of India (Special Civil Application No.8881 of 2020,
decided on 18.8.2020) directed the respondent to sanction the
refund of the IGST paid by the assessee pursuant to the Entry
No.10 of the Notification No.10/2017-IGST dated 28.06.2017
declared to be ultra vires in the case of Mohit Minerals Pvt. Ltd.
(supra).
13. In view of the aforesaid, this writ-application succeeds and is
hereby allowed. The deficiency memo issued in the prescribed form
RFD-03 vide Nos.ZD240720008807J and ZD240720008830U both
dated 17.07.2020 are hereby quashed and set-aside.
14. The respondent is directed to process the refund claim filed in
the prescribed form RFD-01 online portal for the month of
February 2018 and March 2018 for an amount of Rs.93.54 lakh
along with simple interest at the rate of 6% per annum.
13. Thus, we are of the opinion that in light of the settled
legal precedents, the appellate authority was not required to
make the observations in Paragraph No.12 of the appellate
order relating to limitation. It appears that the petitioner is
also not offered any opportunity of hearing since the show-
cause notice dated 30.01.2023 does not refer to any date of
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03.02.2023 on which the petitioner was asked to remain
present for personal hearing. The petitioner in his writ
petition has categorically averred that the petitioner was
never afforded opportunity of hearing as it is impossible to do
so within a period of 3 days from the issuance of show-cause
notice. On this count also, the impugned order is required to
be quashed and set-aside. We are not remanding the matter
as it was remanded on earlier occasion and in light of the
settled legal precedent, the impugned order dated 30.10.2023
is hereby quashed and set-aside. The respondents are directed
to process the refund claim of the petitioner filed in
prescribed Form RFD-01 through online portal for the month
of July, 2017, along with consequential interest @6% p.a.
The necessary orders shall be passed within a period of
12 weeks from the date of receipt of this Order of this Court.
Rule made absolute. No order as to costs.
(A. S. SUPEHIA, J)
(PRANAV TRIVEDI,J)
SAJ GEORGE/DB/31
