Facts of the Case:

In this case, the petitioner engaged in the business of refilling and sale of edible oil and ghee and is duly registered under the CGST and SGST Acts, 2017. Due to the nature of its business, the rate of tax on inward supplies was higher than the rate applicable on outward supplies, resulting in an inverted duty structure. Consequently, the petitioner became entitled to a refund of accumulated input tax credit under Section 54(3)(ii) of the CGST/SGST Act, 2017. Under Section 54(1), a refund application is required to be filed within two years from the “relevant date”. For refund of unutilized ITC under an inverted duty structure, the definition of “relevant date” under Explanation (2)(e) to Section 54 originally meant the end of the financial year in which such refund claim arose. However, by the CGST (Amendment) Act, 2018 (Act 31 of 2018), effective from 01.02.2019, the definition was substituted to mean the due date for furnishing the return under Section 39 for the period in which the refund claim arises.

The petitioner’s refund claims pertained to the period July 2017 to March 2019 (FY 2017–18 and FY 2018–19). According to the petitioner, for the period July 2017 to January 2018, the un-amended provision applied, permitting filing of the refund claim up to 31.03.2020 (two years from the end of FY 2017–18). For February 2018 onwards, even under the amended provision, the limitation would expire in March 2020 or thereafter.

The petitioner filed a consolidated refund application on 02.02.2021. The claim was rejected by the adjudicating authority primarily on the ground of limitation, and partly on the ground of ineligible inputs for the period January 2019 to March 2019. The appellate authority also rejected the appeal vide order dated 30.09.2022, without considering CBIC Notification No. 13/2022–Central Tax dated 05.07.2022, which excluded the period from 01.03.2020 to 28.02.2022 for computation of limitation in terms of Section 168A of the CGST Act, pursuant to the COVID-19 pandemic and Supreme Court’s suo motu orders.

Issue:

Whether the amendment to Section 54 effective from 01.02.2019, which altered the definition of “relevant date”, can be applied retrospectively to refund claims relating to periods prior to the amendment. Whether the refund application filed on 02.02.2021 was barred by limitation in view of CBIC Notification No. 13/2022–Central Tax excluding the COVID period.

Held that: 

The Court held that the amendment to Section 54 which substituted the definition of “relevant date” with effect from 01.02.2019 cannot operate retrospectively to divest or curtail vested rights which had already accrued to the petitioner for periods prior to the amendment. The right to claim refund for July 2017 to January 2018 had crystallized under the un-amended provision, which allowed a two-year limitation from the end of the relevant financial year.

Relying upon settled principles of statutory interpretation and Supreme Court judgments, including Harshit Harish Jain v. State of Maharashtra,  M.P. Steel Corporation, and Prism Cement Ltd., the Court reiterated that a statute is presumed to be prospective unless expressly made retrospective. A subsequent amendment reducing the period of limitation cannot extinguish an accrued or vested right. Procedural amendments cannot be applied in a manner that renders an existing remedy illusory or nugatory.

The Court noted that CBIC Notification No. 13/2022–Central Tax dated 05.07.2022 expressly excluded the period from 01.03.2020 to 28.02.2022 for computation of limitation for refund applications under Section 54, with retrospective effect from 01.03.2020. The Court held that for the period February 2018 to December 2018, even under the amended provision, the statutory deadline fell within the excluded COVID period. For the period July 2017 to January 2018, since the limitation expired in March 2020 under the un-amended law, the exclusion under the said Notification squarely applied. Accordingly, the refund application filed on 02.02.2021 was within limitation for the period July 2017 to December 2018.

The Court found that the refund claim for January 2019 to March 2019 was rejected merely on the assertion that no eligible inputs were received, without recording any reasoned or specific findings. Such rejection was held to be unsustainable, particularly when the claim was otherwise within limitation.

Case Name: Bharat Oil Traders Versus Assistant Commissioner & anr. dated 30.12.2025

To read the complete judgement 2025 taxo.online 3531