Case Law Details
AWL Agri Business Limited Vs Joint Commissioner (Andhra Pradesh High Court)
The petitioner, engaged in importing edible oil and supplying it domestically after refining and packing, sought refunds of accumulated input tax credit (ITC) arising from an inverted duty structure for November 2018, March 2019, and April 2019. Three separate refund applications were rejected by the adjudicating authority on the ground that Rule 89(5) of the CGST Rules precluded such refund. Appeals filed against these rejections were also dismissed on 25 February 2022. Aggrieved, the petitioner approached the Andhra Pradesh High Court through writ petitions.
Before the Court, the petitioner pointed out that the appellate authority had recorded submissions that Rule 89(5) was under reconsideration and requested that the appeals be kept pending until a decision by the GST Council. Subsequently, in its meeting held on 28/29 June 2022, the GST Council, pursuant to observations of the Supreme Court in Union of India vs. VKC Footsteps India Pvt. Ltd., took cognizance of anomalies in the refund formula under Rule 89(5) and accepted the Law Committee’s recommendation to amend it. The petitioner contended that the amendment was clarificatory in nature and therefore retrospective, warranting remand of the matter for fresh consideration under the modified formula.
The respondents argued that the amendment was prospective and could not apply since the original and appellate orders were passed prior to the amendment. Reliance was placed on Circular No.181/13/2022-GST dated 10 November 2022, which clarified that the amendment would apply prospectively from 5 July 2022.
The petitioner referred to the judgment of the Gujarat High Court in Tirth Agro Technology Pvt. Ltd. vs. Union of India, which had set aside the said circular to the extent it stated that the amendment to Rule 89(5) was not clarificatory. The Andhra Pradesh High Court observed that once a circular is set aside by one High Court, it stands set aside for the entire country.
In light of these facts, the Court held that the amendment to the formula under Rule 89(5) is clarificatory in nature and therefore retrospective. Although the rejection and appellate orders were passed before the amendment, the petitioner had continued to pursue the refund claims. Accordingly, the writ petitions were allowed. The Court set aside the primary authority’s rejection orders dated 13 January 2021, 24 March 2021, and 9 June 2021, as well as the appellate orders dated 25 February 2022. The refund applications were remanded to the primary authority for fresh consideration by applying the modified formula under Rule 89(5) of the GST Rules. Pending miscellaneous petitions were closed, and no order as to costs was made.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
The petitioner imports edible oil and supplies the same in the domestic market after refining and packing the said oil. The petitioner, sought refund of accumulated input tax credit on account of inverted duty structures for the periods November, 2018, March, 2019 and April, 2019, by way of three separate applications. These applications were rejected by the adjudicating authority on the ground that Rule 89(5) of the CGST Rules precludes grant of such refund. Aggrieved by the same, the petitioner approached the appellate authority, by way of three separate appeals, which also came to be dismissed, on 25.02.2022. Aggrieved by the said order of dismissal, the petitioner has now approached this Court, by way of the present writ petitions.
2. As all these writ petitions have been filed by the same writ petitioner and raise the same issues are being disposed of, by way of this common order.
3. Heard Sri Karan Talwar, learned counsel appearing for the petitioner and Smt. N. Santhi Chandra, the learned Standing Counsel appearing for the respondents.
4. The learned counsel for the petitioner would draw the attention of this Court to paragraph No.12 of the order in appeal. The appellate authority, in this paragraph, recorded the submissions of the petitioner that Rule 89(5) was being reconsidered and that the appeals be kept pending till the GST council decides on the matter. It appears that the GST council, in its meeting held on 28/29.06.2022 pursuant to the observations of the Hon’ble Supreme Court in its order, dated 13.09.2021, in Union of India vs. VKC Footsteps India Pvt. Ltd.,1 took cognizance of the anomalies in the formula prescribed under Rule 89(5) and accepted the recommendation of the Law Committee which had suggested an amendment in the formula. The learned counsel for the petitioner would contend that in view of this change, which is clarificatory in nature, it would only be appropriate to remand the matters back, to the original authority, for applying the modified formula.
5. Smt. N. Santhi Chandra, the learned Standing Counsel would contend that the modification of the formula is not retrospective and the same cannot be relied upon, by the petitioner, inasmuch as both the original orders of rejection and the appellate orders had been passed even before the amendment to the formula. The learned Standing Counsel would also rely upon the Circular No.181/13/2022-GST, dated 10.11.2022 wherein a clarification was issued by the Principal Commissioner (GST) that the amendment to the formula would only be prospective w.e.f.05.07.2022.
6. Learned counsel for the petitioner has now drawn our attention to the judgment of the Hon’ble High Court of Gujarat in the case of Tirth Agro Technology Pvt. Ltd. Vs. Union of India.2 In this judgment, the Hon’ble High Court of Gujarat had set aside the said circular to the extent that it clarifies that the amendment to Rule 89(5) is not clarificatory in nature. It is settled law that once a circular is set aside by one High Court, the same would stand set aside for the entire country.
7. In view of the aforesaid facts and submissions, it is clear that the amendment to the formula in Rule 89(5) has to be treated to be clarifictory in nature and consequently would be retrospective. In the present case, though the orders of rejection as well as the appellate order were passed prior to the amendment, the fact remains that the petitioner had continued to agitate his claims in regard to the refund sought by the petitioner.
8. In view of the above, these Writ Petitions are allowed setting aside the orders of rejection dated 09.06.2021, 13.01.2021 and 24.03.2021 passed by the primary authority as well as the appellate orders, dated 25.02.2022 and the applications of the petitioner, for refund, shall be considered by the primary authority afresh and by applying the modified formula in Rule 89(5) of the GST Rules.
As a sequel, pending miscellaneous petitions, if any, shall stand closed. There shall be no order as to costs.
Notes:
1 (2022) 2 SCC 603
2 2025 (1) TMI 719:2024:GUJHC:71361-DB
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