“Relevant Period” to be Applied Consistently while computing GST ITC, Turnover and Adjusted Turnover for Refund: Madras HC [Read Order]

The Madras High Court recently clarified the meaning of “relevant period” for the refund formula under Rule 89(4) of the Central Goods and Service Tax Rules, 2017, holding that the relevant period must be applied consistently to all components for computation, including net input tax credit (ITC), Turnover, and Adjusted Total Turnover.

The petitioner, M/s. Sea 6 Energy Private Limited (Sea 6 Energy) - a company engaged in the manufacture and sale of biostimulants and potash.

The company operates in a seasonal manner, and had filed a refund claim of accumulated ITC for the month of March 2025 arising from zero-rated supplies. However, the claim was partially rejected by the department, leading to this present petition.

The petitioner, represented by G. Natarajan sought the sanction of the refund contending that the officer’s approach was contrary to Section 54 of the CGST Act, Rule 89(4) of the CGST Rules, and was in violation of Articles 14, 19(1)(g), and 265 of the Constitution of India.

Standing Counsel R. Gowri Shankar represented the revenue and filed a detailed counter-affidavit.

After hearing both sides, Justice G.R. Swaminathan at the outset perused the contents of Rule 89 (4) of the CGST Rules which provides for granting refund of input tax credit abnd the formula therein.

The court noted that the expression “relevant period” is found in the definition of each of the terms found in the formula, and thus the expression should also be uniformly construed.

Justice Swaminathan noted that the petitioner wanted to construe the expression “relevant period” as March as far as the turn over is concerned. However, when it came to net ITC, the petitioner wanted the court to hold that the petitioner is entitled to full ITC accumulated around the year but availed in March.

“The petitioner has to understand and apply the expression “relevant period” consistently in respect of all the terms including ITC as well as turn over and also the adjusted turn over.”

Considering that the petitioner had been labouring under a misconception, the petitioner was permitted by the Court to make a fresh application to the respondents, wherein the formula laid down would be applied to compute the ITC refund claims.

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