Summary: The High Court of Jammu & Kashmir and Ladakh in Bharat Oil Traders v. Assistant Commissioner & Anr. held that the amendment to Explanation (2)(e) of Section 54 of the CGST Act, effective February 1, 2019, cannot be applied retrospectively to deny refund claims arising from pre-amendment periods. The Court ruled that changing the “relevant date” for claiming refund of unutilized input tax credit under an inverted duty structure from the end of the financial year to the due date of return filing cannot extinguish vested rights accrued before the amendment. It emphasized that statutory amendments affecting limitation periods are prospective unless expressly stated otherwise. The Court also noted that the petitioner’s claims were within the extended limitation period granted under Notification No. 13/2022. Accordingly, the rejection of the refund as time-barred was held unsustainable, the impugned order was set aside, and the matter was remanded for fresh consideration in accordance with law.
Facts:
Bharat Oil Traders, engaged in refilling/sale of edible oil/ghee registered under CGST/SGST Acts (“the Petitioner”) filed refund application dated February 2, 2021 under section 54(3)(ii) CGST Act claiming accumulated unutilized ITC on account inverted duty structure for period July 1, 2017-March 31, 2019.
The Assistant Commissioner & Appellate Authority (“the Respondents”) rejected refund application on ground time-barred and further the appellate order dated September 30, 2022 rejected the claim without considering Notification No.13/2022-CT dated July 5, 2022.
The Petitioner contended that amended Section 54(1) and the Explanation 2(e), w.e.f. Feb 1, 2019 are only prospective application and not retrospective unless beneficial to the assessee. Therefore, the unamended “relevant date” applies pre-amendment accrual periods being the relevant period in the facts in hand.
Aggrieved by rejection refund application for ITC accumulated inverted structure as time-barred ignoring pre-amendment vested rights and also COVID extension the Petitioner approached Court by writ petition praying set aside impugned appellate order dated September 30, 2022.
Issue:
Whether amendment to Explanation (2)(e) of section 54(3)(ii) CGST Act w.e.f. Feb 1, 2019 curtailing “relevant date” for inverted duty ITC refunds from FY-end to monthly return due date u/s 39 applies retrospectively to claims pertaining pre-amendment periods filed post-amendment?
Held:
The Hon’ble High Court of Jammu & Kashmir and Ladakh in WP(C) No. 192/2023 held as under:
- Observed that, the right to claim refund with respect to period preceding the amendment cannot be curtailed by the amendment. The amended Section cannot operate retrospectively so as to take away a vested right.
- Further held that, the vested right of the petitioner cannot be unilaterally revoked or curtailed by a subsequent amendment to the statute unless the amendment expressly provides for retrospective application. Even though the amendment came into force on February 01, 2019, it cannot curtail the rights vested in the petitioner.
- Observed that, the amendment to Section 54 which changed the definition of “relevant date” cannot be applied retrospectively to the period prior to the amendment to curtail the petitioner’s right to refund within the originally stipulated time.
- Noted that, the refund claim for July 2017 to December 2018 are not barred by limitation as it falls within the extended limitation period afforded by Notification No. 13/2022 dated July 5, 2022. Further noted that the refund claim from January to March 2019 is also not barred by limitation under Section 54.
- Held that, the retrospective application of the amendment would deprive the petitioner to claim refund, as this right had been vested with the Petitioner and directed that, the impugned order dated September 30, 2022 is set aside and the matter is remanded back to the appellate authority for fresh determination in accordance with law.
Our Comments:
The High Court rested its reasoning on the settled principle that statutory amendments curtailing limitation periods cannot retrospectively extinguish accrued or vested rights unless expressly provided. In this context, the Court relied upon and applied the ratio of Harshit Harish Jain & Anr. v. State of Maharashtra & Ors. [2025 INSC 104], wherein the Supreme Court held that an amendment reducing the limitation period for refund cannot retrospectively defeat a vested cause of action, particularly where the right had accrued prior to the amendment.
The Court further relied upon M.P. Steel Corporation v. Commissioner of Central Excise, as extracted in Vinod Gurudas Raikar v. National Insurance Co. Ltd. [(1991) 4 SCC 333], to hold that while limitation laws are procedural, a shorter limitation period introduced by amendment cannot be applied to render an accrued right nugatory.
Relevant Provisions:
Section 54 of the Central Goods And Services Tax Act, 2017
“(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.”
Explanation (2)(e) of the Central Goods and Services Tax Act, 2017 before amendment (Until January 31, 2019)
“the end of the financial year in which such claim for refund arises;”
Explanation (2)(e) of the Central Goods and Services Tax Act, 2017 w.e.f February 01, 2019
“the due date for furnishing of return under Section 39 for the period in which such claim for refund arises.”
CBIC Notification No. 13/2022–Central Tax dated July 05, 2022
“(ii) excludes the period from the 1st day of March, 2020 to the 28th day of February, 2022 for computation of period of limitation under sub-section (10) of section 73 of the said Act for issuance of order under subsection (9) of section 73 of the said Act, for recovery of erroneous refund.
This notification shall be deemed to have come into force with effect from the 1st day of March, 2020.”
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