Priyanka Refineries Private Limited Vs Deputy Commissioner (ST) (Andhra Pradesh High Court)
In a significant ruling for manufacturers facing an “inverted duty structure,” the Andhra Pradesh High Court has set aside a GST Circular that restricted input tax credit (ITC) refunds for edible oils and specialty fats. The judgment, delivered in a batch of four writ petitions filed by Priyanka Refineries Private Limited and similar entities, clarifies that applications for ITC refunds related to periods before July 18, 2022, remain valid, even if filed after that date.
The petitioners are engaged in manufacturing edible oils and specialty fats, products on which the Goods and Services Tax (GST) rate is lower than the tax paid on their raw materials (inputs). This scenario is known as an ‘inverted duty structure,’ and Section 54(3) of the CGST Act typically allows for a refund of accumulated ITC in such cases.
Priyanka Refineries had filed applications for refund of ITC under Section 54 for various periods prior to July 18, 2022. However, these applications were rejected by the tax authorities. The rejections were primarily based on Circular No. 181/13/2022-GST, dated November 10, 2022, which clarified that no refund application would be permissible after July 18, 2022, for products like edible oils, as they were included in Notification No. 9/22-Central Tax (Rate), dated July 13, 2022. This notification, effective July 18, 2022, made manufacturers of these goods ineligible for such refunds.
