Uttarakhand HC Orders Refund of Wrongly Deducted GST

M/s Rungta and Sons (a Kashipur-based firm) filled a writ petition to the High Court of Uttarakhand for a writ of mandamus directing the respondents to refund a GST amount of Rs 10,23,484 wrongly deducted from their security deposit. This deduction was made by the Uttarakhand Seeds and Tarai Development Corporation Ltd at the time of purchase by the petitioner of the rejected seeds of wheat and paddy in the year 2017.

The case of the petitioner was based on an Advance Ruling of the Appellate Authority for GST in M/s Sam Overseas that stated: Rejected wheat or paddy seeds would not attract GST unless sold in unit containers that were branded with the registered brand name. The petitioner argued that the seeds, which were sold without any branding or unit packaging, did not owe any GST, and claimed a refund. The Corporation acknowledged its liability for the refund but had not acted since it had applied to the State Tax Department for the refund but had not received it.

Since neither side disputed the transaction’s non-taxability, the Court stated the department could not be allowed to hold the amount indefinitely. Several representations to the contrary were served, and the Court expressly directed them to do so in WPMS No. 1272 of 2020, but no refund had come in as evidenced by the apparent administrative abandonment of the requirement in a period of nearly a decade.

The petition calling on the Corporation to file a refund application in Form RFD-01 within two weeks was dealt with by the Court, pursuant to which the department was instructed to return the amount forthwith and the Corporation was also instructed to turn over the refund to the petitioner within two weeks. The Court vigorously upholds the principle that admitted taxes may not be withheld indefinitely on procedural grounds. The Petition stand disposed of.