Retrospective Notification on GST ITC Refund due to Ledger Mismatch cannot Bar Application Made After Issue Date: Supreme Court [Read Order]

The Supreme Court of India summarily dismissed a batch of Special Leave Petitions filed by the Assistant Commissioner of Central Taxes, refusing to interfere with the decision of the Andhra Pradesh High Court wherein it rectified a notification concerning the availability of Goods and Services Tax (GST) Input Tax Credit (ITC) refunds in cases of mismatch in the tax credit ledger.

Gemini Edibles and Fats India (Gemini Edibles) was the petitioner in three writ petitions instituted before the Andhra Pradesh High Court. The processes were initiated when authorities rejected ITC refund applications submitted by Gemini Edibles and Fats India Limited and other manufacturers of edible oils.

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The Government had at first promulgated Notification No.5/2017, setting out a list of goods which would not be eligible for claiming refund under Section 54 of the CGST Act; the list was further expanded through Notification No. 9/2022-Central Tax (Rate) dated 13.07.2022 and contained various kinds of edible oils and specialty fats apart from coal, lignite and more.

The provisions of the Notification were further enhanced via Circular No. 181/13/2022-GST dated 10 November 2022 which clarified that no application for refund, under Section 54 of the CGST Act would be permissible after 13.07.2022 in relation to the products of the petitioners.

Gemini Edibles, represented by Karan Talwar contended that neither of the referned notifications had placed an explicit bar, yet the circular promulgated such a bar on refund applications filed after 13.07.2022.

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A Division Bench of Justice R. Raghunandan Rao and Justice Maheswara Rao Kuncheam of the Andhra Pradesh High Court carefully examined the relevant legal framework, including Section 54 of the CGST Act and observed that the restrictions imposed by Notification No. 9/2022 were prospective, effective only from 18.07.2022, and could not prohibit claims relating to earlier periods.

It held that the clarification in Circular No. 181/13/2022-GST, insofar as it imposed a bar on such applications, was illogical and contrary to law, and accordingly deserved to be struck down to that extent. The High Court further directed GST authorities to reconsider and process refund claims on their merits without reference to the disputed circular.

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In the present matter before the Supreme Court, a Bench of Chief Justice Sanjiv Khanna and Justice Sanjay Kumar upon hearing the counsel, opined that the apex court was not inclined to interfere with the impugned judgment and hence the special leave petitioners were disposed of, thus sustaining the judgment of the ANdhra Pradesh High Court.

To Read the full text of the Order CLICK HERE

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