GST Rule 89(5) Amendment Held Retrospective, AP HC Set Aside Refund Rejection

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.