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
