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TMI Blog2025 (3) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... atory and ultra-vires Section 54 of the GST Act as well as violating Article 14 of the Constitution of India. The circular itself states that the notification dated 13.7.2022 has prospective effect - Mere fact that the refund application was filed after 13.7.2022 cannot result in denial of refund to the Petitioner even though the refund application was filed within the statutory period of limitation. The circular creates an artificial class amongst assessees based on the date of filing of refund application even though the refund application is filed within the statutory period of limitation and the refund is pertaining to the same period. Para 2 of the impugned circular is therefore grossly discriminatory and violative of Article 14 of the Constitution of India as well as ultra-vires Section 54 of the GST Act.
Conclusion - The impugned para 2(2) of the Circular No. 181/13/2022-GST dated 10.11.2022 was struck down as it was ultra-vires Section 54 of the GST Act and violated Article 14 of the Constitution.
Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable penalty under Section 122 of the Act. 7. The petitioner thereafter filed a detailed reply in Form GST- DRC-06 and sought a personal hearing. By way of Order-in-Original dated 10.09.2024, the respondent No.4 confirmed the demand of Rs.1,70,07,091/- towards erroneous refund and interest thereon under Section 50 of the Act, along with a further penalty of Rs.17,00,709/-. 8. Aggrieved by the aforesaid order, the petitioner has filed the present petition seeking the following reliefs :- "A. This Hon'ble Court may be pleased to strike down and declare the impugned para 2(2) of Circular no. 181/13/2022-GST dated 10.11.2022 (annexed at Annexure A) in so far as it provides that the restriction on claim of refund as per Notification No. 9/2022-Central Tax dated 13.7.2022 will apply to all refund applications filed after the date of notification even if they pertain to prior period as being ultra-vires Section 54 of the GST Acts as well as grossly discriminatory, arbitrary and violating Article 14 of the Constitution of India; B. This Hon'ble Court may be pleased to issue writ of certiorari or writ in the nature of certiorari or any other appropriate writ or order qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 321 (SC), wherein the court considered the grant of benefit of the circular to a taxpayer. In the said decision, following its earlier decision reported in Commissioner of Central Excise, Bangalore v. M/s. Mysore Electrical Industries Ltd. reported in 2006 (204) ELT 517 (SC), the Hon'ble Supreme Court held that a beneficial circular has to be applied retrospectively, while an oppressive circular has to be applied prospectively. This means that when a circular is against the assessees, they have the right to claim enforcement of the same prospectively. 10.2. The same view was taken by the Hon'ble Himachal Pradesh High Court in the decision reported in 2009 (236) ELT 47 (H.P.) (Commissioner of Central Excise v. Himachal Aluminium Pvt. Ltd.), wherein paragraph No.4, it was held that Notifications that may affect the rights of the parties are treated as prospective in nature unless the notification itself clearly indicates that it will have retrospective effect. 10.3. Again in the case of, M/s Poulose and Mathen v. Collector of Central Excise 1997 (90) E.L.T. 264 (S.C.), the Hon'ble Supreme Court held that "Where two opinions are possible, the assessee should be given th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1B. 1508 Ground-nut oil and its fractions, whether or not refined, but not chemically modified. 1C. 1509 Olive oil and its fractions, whether or not refined, but not chemically modified. 1D. 1510 Other oils and their fractions, obtained solely from olives, whether or not refined, but not chemically modified, including blends of these oils or fractions with oils or fractions of heading 1509 1E. 1511 Palm oil and its fractions, whether or not refined, but not chemically modified. 1F. 1512 Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether or not refined, but not chemically modified. 1G. 1513 Coconut (copra), palm kernel or babassu oil and fractions thereof, whether or not refined, but not chemically modified. 1H. 1514 Rape, colza or mustard oil and fractions thereof, whether or not refined, but not chemically modified. 1I. 1515 Other fixed vegetable or microbial fats and oils (including jojoba oil) and their fractions, whether or not refined, but not chemically modified. Vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sub-section (9) of section 73 of the said Act, for recovery of erroneous refund; (iii) excludes the period from the 1st day of March, 2020 to the 28th day of February, 2022 for computation of period of limitation for filing refund application under section 54 or section 55 of the said Act. 2. This notification shall be deemed to have come into force with effect from the 1 day of March, 2020." 11.3 Circular dated 10.11.2022 issued by the GST Policy Wing reads as under:- To The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All) Madam/Sir, Subject: Clarification on refund related issues-reg. Attention is invited to sub-section (3) of section 54 of CGST Act, 2017, which provides for the refund of unutilized input tax credit in cases where credit is accumulated on account of rate of tax of inputs being higher than the rate of tax on output supplies i.e. on account of inverted duty struc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on refund of unutilised input tax credit on account of inverted duty structure in case of certain goods falling under chapter 15 and 27 vide Notification No. 09/2022-Central Tax (Rate) dated 13.07.2022, which has been made effective from 18.07.2022, would apply to the refund applications pending as on 18.07.2022 also or whether the same will apply only to the refund applications filed on or after 18.07.2022 or whether the same will be applicable only to refunds pertaining to prospective tax periods? Vide Notification No. 09/2022-Central Tax (Rate) dated 13.07.2022, under the powers conferred by clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act, 2017, certain goods falling under chapter 15 and 27 have been specified in respect of which no refund of unutilised input tax credit shall be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplies of such specified goods (other than nil rated or fully exempt supplies). The said notification has come into force with effect from 18.07.2022. The restriction imposed vide Notification No. 09/2022-Central Tax (Rate) dated 13.07.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, then refund pertaining to period prior to 13.7.2022 cannot be affected by such notification. Section 54(1) of the GST Act clearly gives a time limit of 2 years for filing of the refund application and such time limit was extended by notification no. 13/2022 because of the Covid-19 pandemic. The application filed by the Petitioner was within the statutory period of limitation and the same was pertaining to period prior to 13.7.2022. Mere fact that the refund application was filed after 13.7.2022 cannot result in denial of refund to the Petitioner even though the refund application was filed within the statutory period of limitation. The circular creates an artificial class amongst assessees based on the date of filing of refund application even though the refund application is filed within the statutory period of limitation and the refund is pertaining to the same period. Para 2 of the impugned circular is therefore grossly discriminatory and violative of Article 14 of the Constitution of India as well as ultra-vires Section 54 of the GST Act. 12. In view of the discussion hereinabove, the present petition succeeds and is accordingly allowed. The impugned para 2(2) of the Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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