Supreme Court Upholds Andhra Pradesh HC Order set aside GST Refund Rejection Order [Read Judgement]

The Supreme Court upheld the Andhra Pradesh High Court’s order quashing the Goods and Services Tax (GST) refund rejection order. The Special Leave Petition (SLP) was filed against the said order, for which the court refused to interfere and dismissed the same.

The Chief Justice and Justice Sanjay Kumar were considering the SLP arising from the final judgment and order dated 29-01-2025 passed by the High Court of Andhra Pradesh at Amravati which was in favour of assessee, Gemini Edibles and Fats India Limited & Anr.

The assessee who were the petitioner before the High Court are engaged in the business of manufacturing, distributing and branding of edible oils and specialty fats in India. In the process of the manufacture of these products, the petitioners had sourced various raw materials on which GST had already been paid. It so transpired that the rate of GST payable on edible oils and specialty fats was lower than the rate of tax levied on the inputs or raw materials sourced by the petitioner.

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The petitioners, on the ground that their products fall into the category of inverted duty structure, had filed applications for refund of the input tax credit, under Section 54 of the CGST Act, for the periods prior to 18.07.2022. These applications were rejected by the 1st respondent, in the respective writ petitions, by way of various orders.

In all the rejection orders, the ground of rejection was that Circular No.181/13/2022-GST, dated 10.11.2022 had clarified that no application for refund, under Section 54 of the CGST Act, would be permissible, after 18.07.2022, in relation to the products of the petitioners. The petitioners have approached this Court, challenging the aforesaid orders of rejection as well as Circular No.181/13/2022-GST, dated 10.11.2022, apart from No.9/22-Central Tax (Rate), dated 13.07.2022.

The Government, by Notification No.5/2017 dated 28.07.2017, had initially set out a list of goods which would not be eligible for claiming refund under Section 54 of the CGST Act. Subsequently, this list was increased by inclusion of various other goods, by Notification No.9/2022 dated 13.07.2022. The goods, so included, were various kinds of edible oils and specialty fats apart from coal, lignite etc. This notification came into force on 18.07.2022.

While clarifying that the notification is prospective, the Government went on to state that applications cannot be made after 18.07.2022. The High Court found that the said clarification is neither logical nor in accordance with the understanding of law in such cases.

The High Court held that Circular No.181/13/2022-GST, dated 10.11.2022, would have to be struck down, to the extent of the clarification that the restriction imposed by the Notification, dated 13.07.2022, would be applicable in respect of all refund applications filed on or after 18.07.2022. The High Court set aside the impugned orders of rejection of refund.

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