Facts of the Case:

In this case, the petitioner challenged the appellate order passed under Section 107. The petitioner had claimed refund of accumulated unutilised Input Tax Credit (ITC) for May 2021 on account of an inverted duty structure under Section 54(3) of the Act. The refund application was filed on June 16, 2023.

The proper officer rejected the refund application by order dated June 5, 2024 relying on Circular No. 181/13/2022-GST dated November 10, 2022 issued by the Central Government and the corresponding State Circular dated November 14, 2022. The circulars clarified that restrictions imposed by Notification No. 1397-FT dated August 23, 2022 would apply to all refund applications filed on or after July 18, 2022. The appellate authority upheld the rejection. Aggrieved, the petitioner approached the High Court.

The petitioner contended that the right to claim refund accrued upon filing the return under Section 39, and the application was filed within two years from the “relevant date” as defined under Explanation 2(e) to Section 54. It was argued that the executive circulars could not retrospectively curtail a vested statutory right. Reliance was placed on several High Court decisions including Patanjali Foods Ltd. v. Union of India, Vaibhav Edibles Pvt. Ltd. v. State of U.P., Shree Arihant Oil and General Mills v. Union of India, and M/s Priyanka Refineries Pvt. Ltd. v. Deputy Commissioner ST, as well as the Supreme Court decision in Kusum Ingots & Alloys Ltd. v. Union of India.

Issue:

Whether the clarificatory Circulars dated November 10, 2022 and November 14, 2022 could be applied retrospectively to deny refund of accumulated unutilised ITC, when the petitioner’s right to claim refund had already accrued and the application was filed within the limitation period prescribed under Section 54(1) of the CGST/WBGST Act, 2017.

Held that:

The Court held that the petitioner’s right to claim refund accrued on June 20, 2021, being the due date for filing return under Section 39, which constituted the “relevant date” under Explanation 2(e) to Section 54. Since the refund application was filed on June 16, 2023, it was well within the two-year limitation prescribed under Section 54(1). The Court observed that although limitation provisions are generally retrospective, a provision that curtails an existing limitation period cannot take away an accrued right. An executive circular cannot retrospectively restrict a statutory right already conferred by the legislature. The Court relied on consistent views taken by various High Courts, including Patanjali Foods Ltd., Vaibhav Edibles Pvt. Ltd., Shree Arihant Oil & General Mills, and M/s Priyanka Refineries Pvt. Ltd., holding that refund claims filed within the statutory period cannot be denied merely because they were filed after issuance of the circular.

Accordingly, the impugned orders dated July 27, 2023 and May 11, 2024 were set aside. The proper officer was directed to reconsider the refund application on merits, without being influenced by the clarificatory circulars.

Case Name: M/s. Adani Wilmer Limited & Anr. Versus Assistant Commissioner of State Tax & Ors. dated 25.02.2026