Refund disputes remain one of the busiest areas of GST litigation. This digest brings together 11 recent rulings of High Courts and GSTAT benches on inverted duty structure refunds, refunds on closure of business, export of services, refunds to homebuyers and recovery of refunds said to be erroneous.
Each entry links to our detailed post on that judgment, with facts, the reasoning and practical takeaways.
Key trends from these rulings
- Tribunals are refusing to let para 3.2 of Circular 135/05/2020 defeat inverted duty refunds where the inversion arises from higher-rated packing, chemicals or other inputs (Teesta Agro, HP Cotton Casuals).
- On closure of business, the Sikkim High Court allowed refund of unutilised ITC, and the Allahabad High Court directed a cash refund instead of a re-credit for a closed company.
- Limitation for refunds is being read fairly: where APL-04 was uploaded late, the upload date was treated as the relevant date (Panila Chem); a homebuyer's claim was held within time under Circular 188/20/2022.
- A refund granted on the basis of a binding advance ruling cannot later be recovered as 'erroneous'; but a refund that is genuinely erroneous attracts interest at 18% (Hindalco).
- Credit notes for returned goods are correctly deducted from turnover in the inverted duty formula under Rule 89(5) (Rajshahi Banijya).
Inverted duty structure refunds
- GSTAT Kolkata - Teesta Agro: GSTAT Kolkata upholds ₹63.19 lakh inverted duty refund: 18% packing material is an input; Circular 135/2020 cannot override section 54(3)(ii).
- GSTAT Kolkata - HP Cotton Casuals: GSTAT Kolkata: IDS refund cannot be denied because input and output share an HSN; para 3.2 of Circular 135/2020 covers only rate reductions.
- GSTAT Kolkata - Rajshahi Banijya: GSTAT Kolkata dismisses Revenue appeal: credit notes of ₹39.58 lakh for returned goods are correctly deducted from turnover in an inverted duty refund.
Refund on closure of business
- Sikkim HC - SICPA India: Sikkim HC allows refund of Rs 4.37 crore ITC lying unused after a manufacturer closed its Sikkim unit: no express bar in section 49(6) or 54, tax cannot be retained.
- Allahabad HC - Vossloh Cogifer: Allahabad HC directs cash refund of ₹1.10 crore re-credited to the credit ledger of a company that had closed business and surrendered GST registration.
Export, homebuyer and other refunds
- GSTAT Principal Bench - Navitas Eduservices: GSTAT Principal Bench grants Navitas refunds of about ₹1.41 crore with interest, holding its services are export, and says FAA cannot remand in disguise.
- GSTAT Dehradun - homebuyer refund on cancelled flat: GSTAT Dehradun allows ₹4.32 lakh GST refund to a homebuyer after flat booking was cancelled; claim within time under Circular 188/20/2022-GST, with interest.
- Gujarat HC - Panila Chem: Gujarat HC allows refund of ₹5.41 lakh: where APL-04 was uploaded two years late, the upload date is the relevant date under section 54. Interest at 6%.
- GSTAT Lucknow - Torrent Gas: GSTAT Lucknow dismisses Torrent Gas appeal: road restoration charges paid to PWD for laying a pipeline attract GST under RCM. Facts, ruling and takeaways.
Recovery of refunds said to be erroneous
- GSTAT Dehradun - refund under advance ruling: GSTAT Dehradun dismisses Revenue appeals: refund of excess GST granted under an unchallenged Advance Ruling cannot be recovered later under section 73.
- GSTAT Raipur - Hindalco: GSTAT Raipur upholds ₹44.51 lakh interest at 18% on ₹90.35 lakh inverted duty refund held erroneous after VKC Footsteps; section 73 and 50 apply.
What businesses should do now
- If your inverted duty refund was rejected only because input and output share an HSN, appeal relying on Teesta Agro and HP Cotton Casuals.
- Before closing a GSTIN, work out the ITC balance and consider a refund claim; keep the sale and reversal records ready.
- Track the date of upload of appellate orders (APL-04) as it can decide the limitation for consequential refunds.
- Where a refund is challenged later, check whether it was granted under an advance ruling or a binding circular.
Frequently asked questions
Can a refund of inverted duty be denied because input and output are the same goods?
Two GSTAT Kolkata rulings held that para 3.2 of Circular 135/2020 applies only to rate reductions and cannot block refunds where higher-rated inputs cause the inversion.
Is ITC refundable when a business closes?
The Sikkim High Court allowed such a refund, holding there is no express bar in sections 49(6) and 54 and tax cannot be retained without authority of law.
Need help with a GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This digest summarises judgments and orders added to our case law library in October 2026. Each linked post explains one ruling in more detail. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.