Refund of accumulated input tax credit after clarificatory amendment to Rule 89(5) applied retrospectively; orders set aside.

Clarificatory amendment to the refund formula in GST rules was treated as clarificatory and retrospective, requiring application of the modified formula to calculate refund of accumulated input tax credit arising from an inverted duty structure. Prior rejection and appellate orders were set aside by the HC and the refund claims must be reconsidered afresh by the primary authority applying the modified formula. The decision directs remand for fresh consideration without creating new factual findings.

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Issues: Whether the amendment to the formula in Rule 89(5) of the CGST Rules is clarificatory and retrospective in effect, and whether prior orders rejecting refund claims under the pre-amendment formula should be set aside and remitted for fresh consideration applying the modified formula.

Analysis: The petitioner sought refund of accumulated input tax credit on account of inverted duty structure for specified periods; original and appellate authorities rejected the claims under the then-applicable text of Rule 89(5). A High Court judgment setting aside an administrative circular that characterised the amendment as non-clarificatory was relied upon to treat the amendment as clarificatory and retrospective. The petitioner had continued to pursue the refund claims after the earlier orders, and the amendment to the formula was held to address anomalies in the pre-existing computation.

Conclusion: The orders of rejection and the appellate orders are set aside and the refund applications are to be considered afresh by the primary authority applying the modified formula in Rule 89(5) of the CGST Rules.

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