The Bombay High Court has directed the Maharashtra tax authorities to refund ₹3,14,58,422 paid by IBM India Pvt. Ltd. as a GST pre-deposit, after the company succeeded in getting 64% of the original tax demand dropped in appeal.
A Division Bench of Justices M. S. Karnik and Sandesh D. Patil held that the pendency of a proposed challenge against the remaining tax demand could not justify withholding the refund relating to the portion already set aside.
Background of the Case
The dispute arose from an adjudication order dated February 21, 2024, which confirmed a tax demand of ₹48,96,54,949 against IBM India.
IBM challenged the order before the First Appellate Authority under the Maharashtra Goods and Services Tax Act, 2017. On March 17, 2025, the appeal was partly allowed. The appellate authority dropped a demand of ₹31,45,84,219, approximately 64% of the original demand, while confirming ₹17,50,70,729.
IBM thereafter sought a refund of ₹3,14,58,422, representing 10% of the demand that had been dropped.
The tax department rejected the claim, reasoning that IBM had expressed an intention to challenge the surviving demand before the GST Appellate Tribunal and therefore the appellate proceedings had not attained finality.
Court's Observation
The High Court disagreed with this reasoning. It noted that IBM's proposed further challenge concerned only the portion of the appellate order that had gone against it.
The Bench observed:
“To the extent of Rs.31,45,84,219/- the proceedings have attained finality. The reasoning of the authority that the proceedings have not attained the finality only because the petitioner proposes to challenge that part of the order which has gone against it is fallacious.”
The Court further held that the department itself had not challenged the dropping of the ₹31.45 crore demand. Therefore, the portion of the appellate order favourable to IBM had attained finality.
The Bench also noted that a statutory pre-deposit made for pursuing an appeal is in the nature of security and not tax duty. Once the corresponding demand is set aside, the amount attributable to that demand becomes refundable.
Court's Decision
The Court held that IBM was entitled to a proportionate refund of the pre-deposit corresponding to the demand that had been dropped.
It observed that once the ₹31,45,84,219 demand stood set aside, a statutory right accrued in IBM's favour to receive ₹3,14,58,422. The Court also recorded that IBM did not press its claim for interest after agreeing to accept the principal refund.
Accordingly, the Bombay High Court allowed the writ petition, quashed the impugned refund-rejection order, and directed the authorities to process and refund ₹3,14,58,422 to IBM within six weeks from communication of the order.
Case Details
Case Title: IBM India Pvt. Ltd. v. Union of India & Ors.
Case Number: Writ Petition (L) No. 38052 of 2025
Judges: Justice M. S. Karnik and Justice Sandesh D. Patil
Decision Date: 28 August 2026
