Decided 15 October 2026. The GSTAT has dismissed the Uttarakhand State Tax department's appeals seeking to recover, as an 'erroneous refund', GST refunded to a mining contractor on the basis of an Advance Ruling. The Tribunal held that a binding, unchallenged Advance Ruling held the field, that a later circular cannot override it, and that grounds not raised in the show cause notice cannot be argued in second appeal.
Case at a glance
| Case | State Tax, Uttarakhand v. Kuldeep Butola |
| Forum | GSTAT, Dehradun (Division Bench Court II) |
| Appeal No. | APL/1/DHR/2026 and connected appeal |
| Date of order | 15 October 2026 |
| Period | FY 2017-18 and 2018-19 |
| Key provisions | Sections 54, 73, 75(7) and 103 CGST Act; Rule 89(2)(m) |
| Result | Revenue appeals dismissed; refund upheld |
Facts of the case
The respondent extracts and trades sand, gravel and boulders under rights granted by Garhwal Mandal Vikas Nigam (GMVN) against royalty. GMVN charged GST at 18% on its licensing service.
On the respondent's application, the Advance Ruling Authority ruled on 06.01.2020 that a lower rate applied for 01.07.2017 to 31.12.2018. The respondent claimed and received refund of the excess tax. Later the department issued a section 73 notice treating the refund as erroneous, relying on a circular. The first appellate authority set aside the demand.
Issue before the Tribunal
Can a refund granted in line with a binding Advance Ruling be recovered under section 73 as an erroneous refund, and can new grounds be raised in second appeal?
What the Tribunal held
- The Advance Ruling, a quasi-judicial ruling binding under section 103 and never challenged, held the field when the refund was granted and when the notice was issued. It prevails over a later circular.
- A refund made in accordance with law at the time is not 'erroneous'; settled matters cannot be reopened merely because the department's view changed.
- The department's new pleas, that only the supplier (GMVN) could claim refund and that there was unjust enrichment, were not in the show cause notice. Section 75(7) bars confirming a demand on grounds not in the notice.
- In any case, a recipient who bears the tax can claim refund; the respondent filed a CA certificate under Rule 89(2)(m) and reversed the ITC in its credit ledger, so there was no unjust enrichment.
Practical takeaways for taxpayers
- An Advance Ruling in your favour is strong protection; keep it on record when claiming refunds based on it.
- Read the SCN carefully: the department cannot later add new grounds such as unjust enrichment if they were not in the notice.
- When a recipient claims refund of excess tax charged by a supplier, file a CA certificate on non-passing of incidence and reverse the related ITC.
Frequently asked questions
Can the department recover a refund granted under an Advance Ruling?
GSTAT Dehradun held such a refund is not erroneous and cannot be recovered under section 73 where the ruling was binding and unchallenged.
Can a recipient claim refund of excess GST charged by the supplier?
Yes, if the recipient bore the tax and has not passed it on, supported by a CA certificate and reversal of the related ITC.
Facing a similar GST dispute?
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This summary is based on the order of the GST Appellate Tribunal, Dehradun (Division Bench Court II) in Appeal No. APL/1/DHR/2026 and connected appeal. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.