The Defence Ministry was paid Rs 500 crore by the Union government as the amount was adjusted from the Rs 1602.56 crore assistance given to the state government from its share in the National Disaster Relief Fund (NDRF) for dealing with the floods last September.
The state government was informed about the Rs 500 crore bill by the Union Home Ministry through a letter dated February 6.
Over 300 people died and more than 12 lakh people were affected in the floods that devastated large parts of Kashmir, including Srinagar.
More than two lakh people, including tourists and non- Kashmiri labourers, were rescued and essential supplies like food, water and medicine were air-dropped in what the armed forces called "Operation Megh Rahat".
"I have checked with the Ministry of Defence. No such bill has been raised. There is no truth in the reports," the then Union Home Secretary Anil Goswami had said in October.
The matter was first reported by a local English daily in last October.