Facts of the Case:

In this case, the petitioner filed refund applications under Section 54 of the Gujarat Goods and Services Tax Act, 2017 for multiple tax periods ranging from August 2018 to January 2019. These refund claims were filed within the statutory period of limitation as prescribed under Section 54, as extended by notifications issued in view of the COVID-19 pandemic. However, the refund applications were rejected by the adjudicating authority by orders dated 23.11.2022 solely on the basis of Circular No. 181/13/2022-GST dated 12.11.2022, which clarified that the restriction introduced by Notification No. 09/2022-State Tax (Rate), effective from 18.07.2022, would apply to all refund applications filed after that date, irrespective of the period to which the refund related.

The appellate authority affirmed the rejection on the same ground, holding that since the refund applications were filed after 18.07.2022, the petitioner was not entitled to refund. The Petitioner aggrieved approached the High Court challenging the validity of the impugned circular and the consequential rejection of refund claims.

During the hearing, it was admitted by the State that identically worded circulars had already been quashed by coordinate benches of the High Court in earlier decisions, including Ascent Meditech and Patanjali, wherein such circulars were held to be ultra vires Section 54 and violative of Article 14.

Issue:

Whether Paragraph 2(2) of Circular No. 181/13/2022-GST dated 12.11.2022, which denies refund claims pertaining to periods prior to 18.07.2022 solely on the ground that the refund applications were filed after that date, is ultra vires Section 54 of the GST Act and violative of Article 14 of the Constitution of India.

Held that:

The Court observed that Section 54 grants a statutory right to claim refund within a prescribed limitation period and that such right cannot be curtailed by an executive circular. Once the underlying notification itself was expressly made prospective, refund claims relating to earlier tax periods could not be denied merely because the applications were filed after the cut-off date. 

The Court further held that the impugned circular creates an artificial classification among assessees based solely on the date of filing of refund applications, despite all applications being filed within the statutory limitation period, thereby violating Article 14 of the Constitution. Accordingly, Paragraph 2(2) of the circular was struck down. The orders rejecting the refund claims and the appellate orders affirming such rejection were quashed and set aside.

The High Court held that Paragraph 2(2) of Circular No. 181/13/2022-GST is arbitrary, discriminatory, and ultra vires Section 54 of the GST Act.

Case Name: M/s. Akash Agro Industries Limited Versus State of Gujarat & Ors. dated 04.12.2025

To read the complete judgement 2025 Taxo.online 3319