Refund claims cannot be barred by an artificial filing-date cutoff when the statutory limitation is otherwise satisfied

A refund claim filed for an earlier tax period could not be denied merely because the application was submitted after the notification date, where it was otherwise within the statutory limitation under section 54. Paragraph 2(2) of Circular No. 181/13/2022-GST was held invalid for creating an artificial and discriminatory cutoff, and was struck down as ultra vires the Gujarat GST Act and violative of Article 14. As the refund rejections and appellate orders rested on that circular, they could not survive and the refund applications were directed to be processed in accordance with law.

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Issues: (i) Whether paragraph 2(2) of Circular No. 181/13/2022-GST dated 12.11.2022, insofar as it denies refund claims filed after the date of the notification though relating to an earlier period, is valid under section 54 of the Gujarat Goods and Services Tax Act, 2017 and Article 14 of the Constitution of India; (ii) Whether the rejection of the petitioner's refund applications and the appellate orders could stand once the circular was held to be invalid.

Issue (i): Whether paragraph 2(2) of Circular No. 181/13/2022-GST dated 12.11.2022, insofar as it denies refund claims filed after the date of the notification though relating to an earlier period, is valid under section 54 of the Gujarat Goods and Services Tax Act, 2017 and Article 14 of the Constitution of India.

Analysis: The impugned circular adopted the date of filing of the refund application as the decisive factor, even where the claim related to a period for which refund was otherwise filed within the statutory time limit under section 54. The earlier decisions relied upon had already held that such a classification creates an artificial distinction between similarly situated claimants and is not supported by the statutory scheme. A refund claim pertaining to a pre-notification period could not be denied merely because the application was filed after the notification date, when the claim was otherwise within limitation.

Conclusion: Paragraph 2(2) of the circular is invalid and is struck down as being ultra vires section 54 of the Gujarat Goods and Services Tax Act, 2017 and violative of Article 14 of the Constitution of India.

Issue (ii): Whether the rejection of the petitioner's refund applications and the appellate orders could stand once the circular was held to be invalid.

Analysis: The refund rejections were founded on the impugned circular and on the premise that the applications were time-barred because they were filed after the stated cut-off date. Once the circular-based rationale was found unsustainable, the consequential rejection orders could not survive. The refund claims were required to be processed in accordance with law, and the claim could not be denied on limitation solely on the basis of the struck-down circular.

Conclusion: The rejection orders and the appellate orders are quashed and the refund applications are to be processed in accordance with law.

Final Conclusion: The petitioner succeeds, the circular-based embargo on refund claims is removed, and the matter is sent back for reconsideration of the refund applications on their merits without treating the applications as barred merely because of the filing date.

Ratio Decidendi: A refund claim filed within the statutory period under section 54 cannot be denied by an administrative circular that creates an artificial and discriminatory cutoff based solely on the date of application filing for claims relating to an earlier tax period.

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