‘Relevant Period’ Must Be Applied Uniformly for ITC & Turnover Refund Computation: Madras HC

Sea 6 Energy Private Limited Vs Assistant Commissioner of Central Taxes (Madras High Court)

The writ petition was decided by the Madras High Court and concerned the computation of refund of accumulated Input Tax Credit (ITC) under Rule 89(4) of the CGST Rules, 2017. The petitioner, a company engaged in the manufacture and sale of biostimulants and potash, is a seasonal industry and an exporter of zero-rated goods. For the month of March 2025, the petitioner applied for a refund of accumulated ITC arising from zero-rated exports. The claim was only partially allowed by the tax authorities, leading to the filing of the present writ petition challenging the order dated 24.06.2025.

The dispute centered on the interpretation and application of the term “relevant period” used in the refund formula prescribed under Rule 89(4). The petitioner sought to treat March 2025 as the relevant period for computing turnover of zero-rated supplies, while simultaneously claiming the benefit of the entire ITC accumulated over the year but availed during March. The respondent authorities opposed this approach.

The Court examined Rule 89(4) in detail and noted that the expression “relevant period” is embedded uniformly in the definitions of “Net ITC,” “Turnover of zero-rated supply of goods,” “Turnover of zero-rated supply of services,” and “Adjusted Total Turnover.” The Rule expressly defines “relevant period” as the period for which the refund claim has been filed. The Court held that this expression cannot be interpreted differently for different components of the formula.