2-year limitation period under Section 54 of the CGST Act not applicable to cases of refund of tax paid by mistake

Last updated: 06 November 2025

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The Andhra Pradesh High Court has ruled that the two-year time limit under Section 54 of the CGST Act does not apply to refunds of tax paid by mistake on exempt services. Such payments are considered made without legal authority, not as 'due tax'. The court stated that refund eligibility must be decided through a proper adjudication process, not just by defect memos citing limitation periods.

Court :
The Hon'ble Andhra Pradesh High Court in the case of Nspira Management Services Private Limited v. Assistant Deputy Commissioner of Central Tax [Writ Petition Nos.18287 & 14905 of 2024, order dated September 26, 2025] held that the two-year limitation period prescribed under Section 54 of the CGST Act, 2017 does not apply to refund applications for tax paid by mistake on exempt services, as such payment is not "due tax" but one made without authority of law by virtue of Article 265 of the Constitution.

Brief :
The Hon'ble Andhra Pradesh High Court in the case of Nspira Management Services Private Limited v. Assistant Deputy Commissioner of Central Tax [Writ Petition Nos.18287 & 14905 of 2024, order dated September 26, 2025] held that the two-year limitation period prescribed under Section 54 of the CGST Act, 2017 does not apply to refund applications for tax paid by mistake on exempt services, as such payment is not "due tax" but one made without authority of law by virtue of Article 265 of the Constitution.

Citation :
Writ Petition Nos.18287 & 14905 of 2024, order dated September 26, 2025

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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