Non-retrospective application of administrative circulars: clarificatory circulars cannot defeat accrued refund rights; claim maintainable if filed within limitation.

Clarificatory circulars issued in November 2022 cannot be applied retrospectively to curtail an accrued statutory right to refund of unutilised input tax credit; applying the statutory provision defining the relevant date for refund, the petitioner's relevant date was June 20, 2021 and the refund application filed June 16, 2023 fell within the two year limitation, so the circulars cannot defeat the claim. The impugned rejection orders were set aside and the refund application is to be considered on merits without being inhibited by the circulars.

---

---

Issues: (i) Whether clarificatory circulars dated November 10, 2022 and November 14, 2022 could be applied retrospectively to deny a refund claim of accumulated unutilised input tax credit where the right to claim accrued prior to the circulars and the refund application was filed within the two years' period prescribed by Section 54(1) of the Central Goods and Services Tax Act, 2017.

Analysis: The Court identified Section 54(1) (time limit of two years from the relevant date for filing refund applications), Section 54(3) (refund of unutilised input tax credit) and Explanation 2(e) to Section 54 (defining the relevant date for refund of unutilised input tax credit as the due date for furnishing return under Section 39) as the statutory framework. Applying Explanation 2(e), the Court held that the petitioner's relevant date was June 20, 2021 and the refund application filed on June 16, 2023 fell within the two-year period under Section 54(1). The Court noted the general principle that limitations may operate retrospectively but recognised the exception that a provision or executive act which curtails an already accrued cause of action cannot be given retrospective effect to defeat that accrued right. The Court reviewed consistent High Court decisions holding that if the right to claim refund accrued prior to the circulars, a subsequent clarificatory circular purporting to restrict refunds for applications filed on or after a specified date cannot deny the claim where the statutory limitation period had not expired. The Court found no reason to diverge from those decisions and applied the settled principle to the facts of the petitioner's case.

Conclusion: The clarificatory circulars dated November 10, 2022 and November 14, 2022 cannot be applied retrospectively to curtail the petitioner's statutory right to claim refund which had accrued prior to those circulars; the petitioner's refund application filed within two years of the relevant date is maintainable. The impugned orders of rejection are set aside and the refund application is to be considered on merits by the proper officer without being inhibited by the circulars.

---