GST Rule 89(5) Refund Formula Amendment Applies Retrospectively: Andhra Pradesh HC Remands Adani Wilmar’s Case [Read Order]
The High Court held that the amended Rule 89(5) refund formula is clarificatory and applies retrospectively and remanded refund claims for fresh consideration.
The Andhra Pradesh High Court held that the amended refund formula under Rule 89(5) of the CGST Rules, introduced to address anomalies in cases of inverted duty structure, is clarificatory in nature and applies retrospectively and remanded the refund claims.
AWL Agri Business Limited (formerly Adani Wilmar Limited), the petitioner is engaged in importing edible oil, refining and packing it, and selling it in the domestic market. It had filed refund applications for accumulated input tax credit arising from inverted duty structure for November 2018, March 2019, and April 2019.
These refund claims were rejected by the adjudicating authority and the appeals filed by the petitioner were also dismissed by the appellate authority.
The petitioner approached the High Court challenging the appellate orders. The petitioner’s counsel argued that Rule 89(5) was under reconsideration and that the GST Council later accepted that there were anomalies in the refund formula and approved an amendment following the Supreme Court’s decision in VKC Footsteps case. They argued that the amendment was clarificatory and should apply to earlier refund periods also.
The department argued that the amendment was only prospective and cannot apply to the petitioner’s case since the rejection and appellate orders were passed before the amendment. The department relied on a GST circular which stated that the amended formula would apply only from 5 July 2022.
The Division Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar observed that the petitioner had continued to pursue the refund claims and that the amendment was brought to remove defects in the refund formula.
Also Read:Employer Loan Tax Rule in Income Tax Rules Draft 2026: SBI Rate Method Explained
The court pointed out that the Gujarat High Court had already set aside the circular to the extent it said the amendment was not clarificatory and once a circular is set aside by one High Court, it does not survive anywhere in the country.
The court explained that the amendment to Rule 89(5) must be treated as clarificatory and applicable to earlier periods also. Even though the orders were passed before the amendment, the refund claims were still under dispute.
The court set aside the rejection and appellate orders and sent the matter back to the primary authority to reconsider the refund claims by applying the amended Rule 89(5). The writ petitions were allowed and no costs were imposed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
