https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=762931 https://www.taxtmi.com/caselaws?id=762931 Refund of unutilized input tax credit - refund application filed by the petitioner was rejected by the impugned order dated 24.08.2023 relying upon Circular dated 10.11.2022 on the ground that new formula can apply only to refund applications filed after 05.07.2022 - HELD THAT:- Comparing the amendment with the unamended Rule 89 (5), it is clear that for the inverted rated supply of goods and service instead of the adjusted total turnover the words ITC availed on inputs and input services has been substituted. Thus, the adjusted total turnover which is defined in sub-clause (b) as per the sub-rule (4) has been given a go-by. Therefore, numerator and denominator are made in harmony which was not there prior to the amendment which had resulted anomaly in the formula - Thus, it is apparent that the amendment made by the Notification No. 14/2022 is clarificatory only as per the decision of the GST Council pursuant to the direction issued by the Hon ble Apex Court. The impugned Circular No. 181/2022 dated 10.01.2022 which provides the clarification is contrary to the purport of the amendment brought on statute pursuant to the recommendation of the GST Council as per the direction issued by the Hon ble Apex Court to remove the anomaly in the formula in Rule 89 (5). Reliance placed by the petitioner on the decision in case of Allied Motors (P.) Ltd [ 1997 (3) TMI 9 - SUPREME COURT ] would be squarely applicable in the facts of the case wherein the Hon ble Apex Court has held In fact the amendment would not serve its object in such a situation unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained. In case of Collector of Central Excise, Shilong vs. Wood Craft Products Ltd [ 1995 (3) TMI 93 - SUPREME COURT ], the Hon ble Apex Court has held that a clarificatory notification would take effect retrospectively and such a notification merely clarifies the position. Clarificatory notifications have been issued to end the disputes between the parties. Therefore, Notification No. 14/2022 dated 05.07.2022 cannot be applied prospectively for the refund claim which were made within two years as prescribed under section 54 (1) of the GST Act. It is not in dispute that the petitioner has filed refund claims within two years as stipulated in section 54 (1) of the Act. Considering the provisions of the GST Act, the same would be applicable in the facts of the case irrespective of the notification issued by the CBIC pursuant to the decision taken by the GST council as per the direction issued by the Hon ble Supreme Court. The petitioner cannot be denied the refund as per the provision of 54 (3) of the Act only because the petitioner has been granted the refund prior to 05.07.2022 as it would create a discrimination resulting into inequality between the assesses who have been granted refund prior to 05.07.2022 and the assesses who have applied for refund after 05.07.2022. The impugned circular is therefore contrary to the provisions of the Act as it cannot be said that the refund applications filed after 05.07.2022 would only be entitled to the benefit of the amended Rule 89 (5) of the Act - In the facts of the case the petitioner has made rectification applications for refund as per new amended formula within two years. Moreover, as held by this Court in the decisions in case of Shree Renuka Sugars Ltd (supra) and in case of Pee Gee Fabrics Ltd [ 2023 (9) TMI 905 - GUJARAT HIGH COURT ], there is no embargo on preferring second refund application if the petitioner is entitled to the same within the period of two years. The impugned order dated 24.08.2023 is hereby quashed 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. Petition allowed. Case-Laws GST Thu, 17 Oct 2024 00:00:00 +0530