Facts of the Case:

In this case, the CGST Department filed five appeals against the common Order-in-Appeal dated 28.06.2024 passed in favour of M/s B.L. Agro Oil Industries Ltd., concerning refund of accumulated ITC arising from an inverted duty structure. The respondent manufactures and supplies edible oil and had been claiming refund under Section 54(3) read with Rule 89(5) of the CGST Rules.

By Notification No. 14/2022-Central Tax dated 05.07.2022, Rule 89(5) was substituted so as to include ITC relating to input services in the computation of refund under the inverted duty structure. Relying upon the amended formula, the respondent filed five differential/supplementary refund claims for September 2018, November 2018, December 2018, January 2019 and March 2019, aggregating to substantial amounts, although the original refund claims for the respective periods had already been filed.

The proper officer rejected the claims, inter alia, on the grounds that refund claims for the same periods had already been filed and the portal did not permit re-filing under the same category; Circular No. 181/13/2022-GST dated 10.11.2022 stated that the amendment was prospective; and certain ITC relating to commission and vehicle maintenance was allegedly inadmissible.

The First Appellate Authority allowed the claims, holding that the amended Rule 89(5) applied to refund applications filed after 05.07.2022, irrespective of the period in which the ITC had accumulated. It also held that a supplementary refund claim could not be rejected merely because the GST portal did not provide a separate mechanism for filing such a claim.

Issue:

Whether the substituted formula under Rule 89(5), introduced by Notification No. 14/2022-Central Tax dated 05.07.2022, applies to refund applications filed after 05.07.2022 where the underlying ITC had accumulated during an earlier period? Also, whether a supplementary/differential refund claim can be rejected merely because an earlier refund claim for the same period had already been filed or because the GST portal does not permit filing another claim under the same category?

Held That:

The Tribunal rejected all five departmental appeals and upheld the First Appellate Authority’s order allowing the refund claims.

A. Date of refund application, and not period of accumulation of ITC, is relevant

The Tribunal held that the relevant date for determining the applicability of the substituted Rule 89(5) formula is the date of filing of the refund application, rather than the period during which the ITC had accumulated.

Since all five differential refund applications were filed after 05.07.2022, the substituted formula introduced by Notification No. 14/2022-Central Tax was applicable, notwithstanding that the accumulated ITC related to periods prior to 05.07.2022. Thus, accumulation of ITC in an earlier period did not, by itself, disentitle the taxpayer from claiming refund under the substituted formula.

The Tribunal relied, inter alia, upon Ascent Meditech Ltd., wherein the Gujarat High Court had held the amendment to Rule 89(5) to be curative and clarificatory and applicable retrospectively to refund/rectification applications filed within the limitation period under Section 54(1). The Tribunal also noted that the Department’s SLP against the said judgment had been dismissed by the Supreme Court on 28.03.2025.

The Tribunal further referred to Ratan Melting & Wire Industries for the principle that a circular cannot override statutory provisions where the two are inconsistent. Accordingly, Circular No. 181/13/2022-GST, insofar as it stated that the amendment was prospective, could not prevail over the statutory/judicial position considered by the Tribunal.

B. Supplementary refund claim cannot be rejected merely because an earlier claim was filed

The Tribunal found that neither the show-cause notice nor the adjudication order identified any specific statutory provision prohibiting a supplementary/differential refund claim merely because an earlier refund claim for the same period had already been filed.

It held that refund under Section 54 is a substantive statutory benefit, whereas the manner of filing the application is procedural. Therefore, where the taxpayer otherwise satisfies the substantive conditions for refund, the claim cannot be rejected merely because the GST portal does not provide a specific category or mechanism for filing a supplementary claim.

The Tribunal relied upon the Gujarat High Court’s decision in Renuka Sugar Ltd., where a supplementary claim for the differential amount of refund, arising from an earlier inadvertent short claim, was held not to be liable for outright rejection merely because the portal did not permit another claim under the same category. The taxpayer was permitted to submit the claim manually for examination on merits.

Accordingly, the Tribunal concluded that the differential refund claims had to be examined on their substantive merits, rather than rejected merely on procedural or technological grounds.

Case Name: Ajit Kumar Minz Versus M/s. B.L. Agro Industries Limited, Director. dated 18.09.2026

Citation No. 2026 Taxo.online 2965