Case Law Details
Adani Wilmer Limited & Anr. Vs Assistant Commissioner of State Tax & Ors. (Calcutta High Court)
The Calcutta High Court considered a writ petition challenging an appellate order dated May 11, 2024 passed under Section 107 of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017. The petitioner, a supplier of goods including edible oil, had sought refund of accumulated unutilised Input Tax Credit (ITC) arising from an inverted duty structure.
The petitioner had applied for refund of unutilised ITC for the tax period of May 2021. The refund arose because the tax rate on inputs used in manufacturing the petitioner’s products was higher than the rate applicable to the outward supplies. The application for refund was filed before the relevant GST authority on June 16, 2023.
The proper officer rejected the refund claim by an order dated June 5, 2024. The rejection was primarily based on a clarificatory circular issued by the Central Government on November 10, 2022 and a corresponding State circular issued on November 14, 2022. These circulars clarified that restrictions imposed by a notification dated August 23, 2022 would apply to all refund applications filed on or after July 18, 2022. Relying on these circulars, the authority concluded that the petitioner was not entitled to the refund.
The petitioner challenged the rejection before the appellate authority under Section 107 of the GST Act. However, the appellate authority dismissed the appeal and upheld the reasoning of the original authority. Aggrieved by the appellate order, the petitioner approached the Calcutta High Court through the present writ petition.
The petitioner argued that the Central and State circulars issued in November 2022 could not be applied retrospectively to curtail a right that had already accrued under Section 54(1) of the GST Act. It was contended that the right to claim refund arose when the petitioner filed its return under Section 39 of the Act. Once such cause of action had accrued and the law provided a specific time period for claiming refund, that period could not be curtailed by an executive circular with retrospective effect.
The petitioner also relied on several High Court judgments which had held that the retrospective application of the circulars was inconsistent with Section 54(1) of the GST Act. These included decisions of the Gujarat High Court, Allahabad High Court, Rajasthan High Court, and Andhra Pradesh High Court. It was also pointed out that the Supreme Court had not interfered with the Andhra Pradesh High Court decision in one such matter.
Further, the petitioner referred to an order passed by the appellate authority in its own case in November 2025 where refund had been allowed in a similar situation by relying on the same judicial precedents. The petitioner also relied on a judgment of the Supreme Court which held that when a High Court interprets a Central circular in a particular manner, such interpretation should be followed by authorities across the country.
The counsel appearing for the Central GST authorities, State GST authorities, and the Union of India did not substantially oppose the submissions made on behalf of the petitioner.
The Court examined the relevant provisions of the GST Act. Section 54(1) provides that any person claiming refund of tax may file an application within two years from the relevant date. Section 54(3) allows a registered person to claim refund of unutilised input tax credit where the credit has accumulated due to the rate of tax on inputs being higher than the rate on output supplies, subject to certain conditions.
The explanation to Section 54 defines “relevant date” for different types of refund claims. For refund of unutilised ITC under an inverted duty structure, the relevant date is the due date for furnishing the return under Section 39 for the period in which the claim arises.
Applying this provision, the Court noted that the due date for filing the return for the relevant tax period was June 20, 2021. Accordingly, June 20, 2021 constituted the relevant date for calculating the limitation period under Section 54(1). Since the refund application had been filed on June 16, 2023, it was within the two-year limitation period prescribed under the Act.
The Court observed that the petitioner’s right to claim refund had accrued when the return was filed and that right would continue until the expiry of the statutory limitation period under Section 54(1). The Court referred to the principle that although limitation laws generally apply retrospectively, an exception exists where a provision curtails an already existing limitation period for an accrued cause of action. In such cases, retrospective application is not permissible.
In the present case, the Court held that the petitioner’s cause of action to claim refund arose on the date of filing the return. Therefore, the statutory time period available under Section 54(1) could not be curtailed by applying an executive circular retrospectively.
The Court also noted that several High Courts had consistently held that a refund claim filed within the statutory time limit cannot be denied merely because the application was filed after the issuance of the circular, provided the right to claim refund had accrued earlier. The Court found no reason to take a different view.
In light of these findings, the Court set aside the orders passed by the adjudicating authority and the appellate authority. The Court directed the proper officer to reconsider the petitioner’s refund application on merits in accordance with law.
The Court further directed that the reconsideration should be carried out without being influenced by the clarificatory circulars dated November 10, 2022 and November 14, 2022. The authority was asked to complete the exercise as expeditiously as possible, preferably within six weeks from the date of communication of the order.
With these directions, the writ petition was disposed of. No order as to costs was made.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. This writ petition assails an order in appeal dated May 11, 2024 passed by the appellate authority under Section 107 of the West Bengal Goods and Services Tax, 2017/Central Goods and Services Tax, 2017 (hereafter “the said Act of 2017”).
2. The petitioner no.1 (hereafter “the petitioner”) is a supplier of certain goods including edible oil.
3. The petitioner had applied for refund of accumulated unutilised Input Tax Credit (ITC) for the month of May 2021 arising from inverted duty structure. To wit, the rate of tax on inputs used by the petitioner was higher than the rate of tax on the outward supplies of the manufactured foods of the petitioner. Such application for refund of unutilised ITC as aforesaid was filed before the relevant GST authority on June 16, 2023.
4. The said application was rejected by the proper officer by an order dated June 5, 2024. The main reason for rejection of the petitioner’s claim for refund was a clarificatory circular bearing no.181/13/2022-GST dated November 10, 2022 issued by the Central Government and the corresponding State circular bearing no.13/2022 dated November 14, 2022 whereby it had been clarified, (while referring to the restrictions imposed by notification no.1397-FT dated August 23, 2022) that – “restriction imposed by the said notification would be applicable in respect of all refund applications filed on or after 18.07.2022.”
5. Feeling aggrieved by the said order of rejection, the petitioner approached the appellate authority.
6. The appellate authority also dismissed the petitioner’s appeal by the order impugned, thereby agreeing with the reasons cited by the original authority. Being thus aggrieved, the petitioner is now before this Court by way of the present writ petition.
7. Mr. Majumdar, learned senior advocate appearing for the petitioner submits that the Central Circular dated November 10, 2022 and the State Trade Circular dated November 14, 2022 cannot be applied retrospectively so as to curtail the petitioner’s right to claim refund that had accrued to the petitioner in terms of the provisions of Section 54(1) of the said Act of 2017.
8. It is submitted by Mr. Majumdar that upon filing the petitioner’s return under Section 39 of the said Act of 2017, the cause of action to claim refund arose. It is submitted that once such cause of action has accrued, and the legislature has granted a time within which claim of benefit of refund can be made, such time could not have been subsequently curtailed by an executive circular with retrospective effect.
9. In support of his contention that the retrospectivity attributed to the said circulars has been found to be inconsistent with the legislative mandate of Section 54(1) of the said Act of 2017 by several High Courts across the country, Mr. Majumdar has relied on the following judgments: –
1. Patanjali Foods Ltd. v. Union of India, reported at (2025) 28 Centax 75 (Guj),
2. Vaibhav Edibles Pvt. Ltd. v. State of U.P. reported at (2025) 37 Centax 199 (All.),
10. He also relies on an order dated May 9, 2025 passed by the Hon’ble Supreme Court on a batch of petitions, the lead case whereof was Assistant Commissioner of Central Taxes & Ors. v. Gemini Edibles and Fats India Limited & Another, reported at (2025) 143 GSTR 644 (SC) to demonstrate that the order passed by the Hon’ble Andhra Pradesh High Court in the case of M/s Priyanka Refineries Pvt. Ltd. (supra) had not been interfered with by the Hon’ble Supreme Court.
11. He further relied on an order dated November 27, 2025 passed by the appellate authority under Section 107 of the said Act of 2017 in the petitioner’s own case where in a similar situation, claim of refund of the petitioner had been allowed relying on the judgments of the Hon’ble Andhra Pradesh in the case of M/s Priyanka Refineries Pvt. Ltd. (supra) (SLP where against had been dismissed by the Hon’ble Supreme Court) and the Division bench of Hon’ble High Court at Rajasthan in the case of Shree Arihant Oil and General Mills (supra).
12. It is submitted by Mr. Majumdar, learned senior advocate that in view of the judgment of the Hon’ble Supreme Court in the case of Kusum Ingots & Alloys Ltd. v. Union of India, reported at 2004 (168) E.L.T. 3 (S.C.) once a High Court has interpreted a Central Circular in a certain way, the same should be followed by the concerned authorities throughout the territory of India.
13. Banerjee, learned advocate appearing for the respondent CGST authorities, Mr. Sanyal, learned advocate appearing for the respondent SGST authority and Mr. Kundalia, learned senior advocate appearing for the Unioin of India do not have much resistance to offer to the submissions made by Mr. Majumdar.
14. Heard learned advocates appearing for the respective parties and considered the material on record.
15. Sections 54(1) and 54(3) of the said Act of 2017 which are relevant for the present case provide as follows: –
“SECTION 54. Refund of tax. – (1) Any person claiming refund of any tax and interest, if any paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.”
…………. ………….. …………… ……………….
(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:
Provided that no refund of unutilised input tax credit shall be allowed in cases other than-
(i) zero rated supplies made without payment of tax;
(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:
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Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.
16. The Explanation to Section 54 of the said Act of 2017 defines “relevant date”. For the purpose of the present case, Explanation 2(e) is relevant. The same reads thus: –
2. “relevant date means”
(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under Section 39 for the period in which such claim for refund arises;”
17. In terms of the aforesaid provisions, due date for the petitioner to file its returns under Section 39 of the said Act of 2017 would be June 20, 2021. Therefore June 20, 2021 would be the relevant date in terms of the aforesaid Explanation to Section 54(1) of the said Act of 2017 and that being so the petitioner’s application for refund made on June 16, 2023 was well within the two years’ timeframe mentioned in Section 54(1) of the said Act of 2017.
18. Thus the petitioner had applied within the period prescribed under Section 54(1) of the said Act of 2017 upon right to claim refund having accrued to the petitioner.
19. It is settled law that although, ordinarily, law of limitation applies retrospectively, yet there are certain exceptions to the rule. One such exception is that a provision that curtails the existing period of limitation would be inapplicable to accrued causes of action. (see: Harshit Harish Jain and Another v. State of Maharashtra and Others reported at (2025) 3 SCC 365). In the present case, the cause of action (i.e. cause of action to apply for refund) accrued to the petitioner on the date the petitioner filed its return. Such right to claim refund would continue till the expiry of the period mentioned in Section 54(1) of the said Act of 2017. The same could, therefore, not have been curtailed by an executive circular by giving it retrospective effect.
20. The judgment rendered by the Hon’ble Andhra Pradesh High Court in the case of M/s Priyanka Refineries Pvt. Ltd. (supra), the Hon’ble Allahabad High Court in the case of Vaibhav Edibles Pvt. Ltd. (supra), the Hon’ble Rajasthan High Court in the case of Shree Arihant Oil & General Mills (supra) and the Hon’ble Gujarat High Court in the case of Patanjali Goods Ltd. (supra) in unison state that merely because an application for refund had been made subsequent to the circular but within the time prescribed under Section 54(1) of the said Act of 2017, the same would not disentitle the registered tax prayer from claiming refund, if such person was otherwise eligible to return and his right to claim refund had arisen/accrued prior to the said circulars. There is no good reason for this Court to take a divergent view.
21. In view of the aforesaid, the orders impugned dated July 27, 2023 passed by the adjudicating authority and May 11, 2024 passed by appellate authority stand set aside. The proper officer shall now consider the petitioner’s application for refund on merits and shall deal with the same, in accordance with law, without being inhibited by the aforesaid clarificatory circulars dated November 10, 2022 and November 14, 2022 as expeditiously as possible and preferably within a period of six weeks from the date of communication of this order.
22. WPA 27066 of 2024 stands disposed of with the above observations. No costs.
23. Urgent certified photocopy of this order, if applied for, be supplied as expeditiously as possible.
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