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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 ..... nder the inverted duty structure scheme, as per Section 54(3) of the Central/Gujarat Goods and Services Tax Act, 2017 (for short "GST Act"). 4. Notification No.9/2022-Central Tax, dated 13.07.2022, was issued by the Central Government, notifying certain goods, including edible oil, as ineligible for a refund under the inverted duty structure. The said Notification was made effective from 18.07.2022. The petitioner submitted a refund application dated 05.12.2023 for the period from February 2021 to March 2021 under Section 54(3) of the GST Act. According to the petitioner, the said refund application was within the limitation period as per Section 54(1) of the Act, read with Notification No.13/2022 dated 05.07.2022, which extended the period for filing the refund application. 5. On 27.12.2023, the petitioner received a show cause in Form GST-RFD-08 proposing to reject the refund application on the ground that there was an existing demand against the petitioner on the GST portal. The petitioner replied to the said show cause notice, pointing out that the demands had been withdrawn pursuant to the direction of the NCLT. Thereafter, the respondent accepted the petitioner's explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision dated 17.10.2024, passed by this Court in the case of Ascent Meditech Ltd. v. Union of India in Special Civil Application No. 17298 of 2024. According to Mr. Sheth, learned Counsel, this Court, in Ascent Meditech Ltd. (supra), had struck down paragraph No. 2(1) of the same Circular dated 10.11.2022 on the ground that an artificial class cannot be created on the basis of date of filing of the refund application. According to Mr. Sheth, learned Counsel, since the impugned order dated 10.09.2024, withdrawing the refund, was passed solely on the basis of the impugned Circular, the order is illegal and deserves to be struck down. Mr. Sheth, learned Counsel, further submitted that the refund that was sanctioned to the petitioner has not been reviewed nor appealed against and, hence, has attained finality. Therefore, also the show cause notice issued under Section 73 of the Act for recovery of such refund is wholly without jurisdiction. 10. Mr. Sheth, learned advocate has submitted with great vehemence that the circulars are issued to clarify legal issues, but, where the circular tends to confuse the taxpayer even more by providing two or more understandings or opinions, in such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e class and should not be equated with the regular adjudication order. The review mechanism of the refund order is an internal mechanism of the Department for safeguarding revenue loss against erroneous refund. Therefore, the issuance of show cause notices in cases of erroneously granted refunds is perfectly justified and falls within the purview of Section 73(10) of the Act. 11. DISCUSSION AND FINDINGS :- 11.1 Notification No.09/2022 -Central Tax dated 13.07.2022 reads as under:- "G.S.R. (E). In exercise of the powers conferred by clause (ii) of the proviso to sub-section of section 54 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Departm of Revenue), No. 5/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 677(E), dated 28th June, 2017, namely :- In the said notification, (i) in the opening paragraph, in the proviso, in clause (i), for the words and figure "serial number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including peat litter), whether or not agglomerated" Thus, it is clear from the bare perusal of the Notification that "this Notification shall come into force on the 18th day of July, 2022" 11.2 Notification No.13/2022- Central Tax dated 05.07.2022, reads as under:- "G.S.R.......(E). In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) and section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) and in partial modification of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), No.35/2020-Central Tax, dated the 3 April, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 235(E), dated the 3rd April, 2020 and No.14/2021-Central Tax, dated the 1st May, 2021, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 310(E), dated the 1st May, 2021, the Government, on the recommendations of the Council, hereby,- (i) extends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "CGST Act"), hereby clarifies the issues as under : S. No. Issue Clarification 1. Whether the formula prescribed under sub-rule (5) of rule 89 of the CGST Rules, 2017 for calculation of refund of unutilised input tax credit on account of inverted duty structure, as amended vide Notification No. 14/2022-Central Tax dated 05.07.2022, will apply only to the refund applications filed on or after 05.07.2022, or whether the same will also apply in respect of the refund applications filed before 05.07.2022 and pending with the proper officer as on 05.07.2022 Vide Notification No. 14/2022-Central Tax dated 05.07.2022, amendment has been made in sub-rule (5) of rule 89 of CGST Rules, 2017, modifying the formula prescribed therein. The said amendment is not clarificatory in nature and is applicable prospectively with effect from 05.07.2022. Accordingly, it is clarified that the said amended formula under sub-rule (5) of rule 89 of the CGST Rules, 2017 for calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed and set aside. The Circular No. 181/22 dated 10.11.2022 so far as it clarifies that the amendment is not clarificatory in nature is quashed and set aside and it is held that the Notification No. 14/2022 is applicable retrospectively as the amendment brought in Rule 89(5) of the Rules is curative and clarificatory in nature and the same would be applicable retrospectively to the refund or rectification applications filed within two years as per the time period prescribed under section 54(1) of the Act. Rule is made absolute to the aforesaid extent. " 11.5 Thus, it is seen that this Court in Ascent Meditech(supra) has struck down para 2(1) of the same Circular dated 10.11.2022 on the ground that an artificial class of assessees cannot be created on the basis of date of filing of refund application. 11.6 By that exact logic, Para 2(2) of the impugned circular dated 10.11.2022 in so far as it provides that the restriction contained in notification no. 13.7.2022 will apply to all the refund applications filed after 13.7.2022, even though they are pertaining to a period prior to the date of notification, is wholly arbitrary, discriminatory and ultra-vires Section 54 of the GST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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