In W.P.(C) 6793/2023 -DEL HC- Delhi High Court allows DMRC to claim refund of GST mistakenly deposited for Surat metro rail project services
Justice Vibhu Bakhru & Justice Tara Vitasta Ganju [18-09-2023]

Read Order: Delhi Metro Rail Corporation Ltd V. The Additional Commissioner, Central Goods and Services Tax Appeals II & Ors

Chahat Varma

New Delhi, September 29, 2023: The Delhi High Court has ruled in favour of the Delhi Metro Rail Corporation (DMRC), allowing them to claim a refund of Rs. 2,90,520, which it had mistakenly deposited as GST for services related to the preparation of a Detailed Project Report for the Surat Metro Rail Project.

In the said case, the refund request of DMRC was denied by the GST authorities, citing that it was filed beyond the stipulated two-year period prescribed by Section 54(1) of the Central Goods and Services Tax Act, 2017 (CGST Act).

In a nutshell, DMRC had been engaged by the Surat Municipal Corporation to prepare a project report for the development of the Surat Metro Rail Project in Gujarat. As part of its engagement, DMRC provided services for the preparation of a Detailed Project Report for the project, invoicing a total of Rs. 19,04,520 for their services. This invoice included a GST component of Rs. 2,90,520, calculated at an 18% rate. While the Surat Municipal Corporation paid Rs. 16,14,000 against the invoice, they did not remit the GST amount included in it. To ensure compliance with statutory provisions, DMRC deposited the sum of Rs. 2,90,520 with the GST Authorities. Following these events, the Surat Municipal Corporation informed DMRC that, according to Notification no.12/2017 - Central Tax (Rate) dated 28.06.2017 issued by the Ministry of Finance, Government of India, the services billed were not subject to GST. Accordingly, DMRC filed an application for refund.

The division bench of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju pointed out that Section 54 of the CGST Act applies exclusively to claiming refunds for taxes paid under the CGST Act. Consequently, any amount collected by the Revenue without the legal authority is not considered as tax collected by them, rendering Section 54 inapplicable.

The bench determined that DMRC was not liable to pay GST for the services related to the preparation of the Detailed Project Report. Therefore, the sum of Rs. 2,90,520, which DMRC had deposited under the erroneous belief that the services were subject to taxation, could not be retained by the GST Department.

The bench further clarified that the period of limitation for applying for a refund, as prescribed under Section 54 of the CGST Act, does not apply when GST is not chargeable, and when it is established that an amount has been deposited due to a mistake of law.

In light of these findings, the GST Department was directed to process DMRC's refund claim for the amount of Rs. 2,90,520.