Introduction
The harmless mistake of inadvertently missing transactions whilst filing for tax refunds is a common one. The question is whether it would be possible for a taxpayer to file a later application if he or she had requested a refund for a wider tax period, without causing any procedural irregularity.
The Hon’ble Bombay High Court in the case of Valmet Flow Control Pvt. Ltd. v. Union of India & Ors., Writ Petition No. 14685 of 2025 handed down on 22 April 2026, clearly and favourably answered this question: That there is no bar on filing of second refund application under Section 54(1) of CGST Act, provided it is within two years of limitation period and the claim itself is valid.
The judgment is important not for its originality and novelty, but because it clearly refrains from allowing the department to put in place an “illusory bar” by resorting to overly technical interpretations of circulars and procedural practice in the interpretation of the provisions relating to the refund of GST. In this ruling, the Division Bench of Justice G. S. Kulkarni and Justice Aarti Sathe has ruled that the entitlements to refunds cannot be denied on mere technicalities when statutory conditions are satisfied.
Background and Procedural History
Valmet Flow Control Pvt. Ltd., (hereinafter “petitioner”) a Maharashtra registered entity under GST had applied for a refund for the period 26 July 2022 to 31 September 2022 through application no. AA270424145558Z dated 26 April 2024. On this application refund was sanctioned. However, the petitioner later realised that they had unintentionally forgotten to include an invoice which had been received on 22 August 2022. This invoice came up to Rs. 1,10,52,474 which has equal parts of CGST and SGST.
The petitioner made a separate refund application on 9 August 2024, for this invoice within two years of the issue of the invoice, which is well within the limitation as prescribed under Section 54(1) of the CGST Act. This application came to be rejected by the Assistant Commissioner, CGST and Central Excise, Division – III, Thane Rural, on 3 April 2025 stating that this second application made for the period of August 2022 was not maintainable, as already a first refund application was filed and decided for July 2022 to September 2022.
The rejection of the second refund application was challenged by the petitioner in the Hon’ble Bombay High Court under Article 226 of the Constitution of India, seeking to set aside the rejection order and seek direction for sanctioning the refund including interest as per the provisions of Sections 56 of CGST Act.
Statutory Framework
The main statutory provision before the Hon’ble Court was Section 54(1) of the CGST Act which provides that any person desiring to claim refund of tax, interest or any amount may make an application in the prescribed form and manner before the expiration of 2 years from the relevant date.
Notably, even the respondents concur that the second application had been made within the two-year limitation period. The respondents’ argument, however, was that CBIC circulars, including Circular Nos. 125/44/2019-GST, 135/05/2020-GST, 197/09/2023-GST and Instructions No. 03/2022-GST, imposed additional procedural conditions, and that the approach of the officer was justified in light of these circulars. The Hon’ble Court took the view that the omission to expressly or by implication impose any restrictions on the filing of multiple refund applications for the same tax period or part of it in the plain language of Section 54(1) of the Act.
The Court’s Analysis: No Bar on Second Applications
The Hon’ble Court’s reasoning was based on two broad reasons, which stood on their own in favour of the petitioner. The Hon’ble Court first held that there was no bar to filing multiple refund applications under Section 54(1), especially in the event of inadvertent omissions. Technicalities should not be allowed to stand in the way of a taxpayer’s otherwise legitimate right to a refund. The Court commented that this was in contravention of the purpose of the provision and that this was the sole reason the application had to be considered maintainable.
Secondly, the Hon’ble Court did not recognize the doctrine of ‘res judicata’ or any such doctrine for refund proceedings. The Court explained that in respect to any particular refund application for any particular invoice or over any particular period of time, there was no room for invoking doctrine of res judicata. This would, in the words of the Court, render the provisions of refund under the CGST Act as an “illusory bar” and its purpose would be defeated.
The Court also noted that the omission in Shree Renuka Sugars Limited v. State of Gujarat was “arithmetical error” as compared to “fault” on the part of the petitioner in the present case. The Hon’ble Court was not convinced with this separation. As held by the Bombay High Court in Shree Renuka Sugars v Union of India (WP No. 2310 of 2024), refusal of a substantive entitlement to refund on technicality when the underlying conditions are met, is impermissible.
Binding Precedent and Departmental Uniformity
The judgment of the Hon’ble High court is of high significance due to the Court’s wider comments on the responsibility of the department to abide by the High Court’s conclusions on issues of law that have become final and binding positions of law. The Hon’ble Court observed that the Supreme Court in its Special Leave Petition did not accept the petitioner’s plea for setting aside its decision in the case of Shree Renuka Sugars and hence, the same was binding on the department. In spite of this, the adjudicating officer had effectively declined to follow it
Similarly, the Bombay High Court in Maneklal Chunilal & Sons Ltd. v. Commissioner of Income Tax (Central) Bombay (AIR 1954 Bom 135) and Commissioner of Income Tax, Bombay City-II v. Jayantilal Ramanlal (1982) 137 ITR 257, reiterated that the decisions of other High Courts on the interpretation of all-India statutes are ordinarily to be followed, unless it can be said that the judgment was ‘per incuriam.’
The Court also noted that the department’s general approach of taking opposing positions on uniform matters before various High Courts on matters which have already been finally settled by courts create judicial chaos and litigation. The Bench urged the Government of India to address this through the National Litigation Policy, so that a uniform position is maintained in settled questions of the law arising under Central legislation, particularly in tax matters.
Outcome of the matter
The Hon’ble Court allowed the writ petition. The impugned order dated 3 April 2025 was set aside and quashed. The petitioner was granted an opportunity of hearing and the refund application filed on 9 August 2024 was restored to the file of Assistant Commissioner (CGST & Central Excise), Division – III, Thane Rural for a fresh decision on merits in accordance with law. The petitioner’s right to claim the interest under Section 56 of the CGST Act was specifically preserved.
AMLEGALS Remarks
The decision in the Valmet Flow Control case resolves a practical and common issue in the GST refund realm. Registered persons and exporters often find themselves in a situation where the invoice is skipped from their refund application for one or more of the following reasons: clerical error, system limitation, and difficulty in managing large volumes of transactions for multiple quarters. It is clear from the judgment that a second application filed within the limitation period and for the tax period of the earlier application but for the omitted invoices, cannot be rejected on the basis that the tax period has already been covered by an earlier application.