2025 (9) TMI 968

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.... application for refund of the tax paid under State Goods and Service Tax (hereinafter referred to as 'the SGST'), on raw materials such as Mustard Oil etc, purchased upto 18.07.2022. 2. The petitioner-firm is engaged in manufacture of edible oil purchased mustard oil etc., falling under HSN Code 1514 on payment of applicable GST. 3. A Notification No. 09/2022-Central Tax (Rate) dated 13th July, 2022 was issued providing that accumulated Input Tax Credit shall not be allowed in relation to various items including HSN Entry No. 1514 which was made enforceable from prospective date i.e. 18.07.2022. 4. On the ground that its products fall into the category of inverted duty structure, the petitioner has filed application(s) for refund ....

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....rd of Indirect Taxes and Customs (hereinafter referred to as 'the CBITC'), the petitioner is not entitled for the refund as claimed. 9. Mr. Mahaveer Bishnoi, learned Additional Advocate General appearing for the State also adopted the argument advanced by Mr. Rajat Arora. 10. Heard learned counsel for the parties. 11. Section 5(3) of the Act of 2017 provides for a situation where the Input Tax Credit available in the electronic cash ledger of a registered person can be refunded, if the rate of tax on the final product is lower than the rate of tax payable on the inputs used for manufacture of such final product. This system is popularly known as "inverted duty structure". 12. It is not in dispute that by way of Notification date....

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.... sub-section (3) of section 54 of the CGST Act, 2017, certain goods falling under chapter 15 and 27 have been specified in respect of which no refund of unutilised input tax credit shall be allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on the output supplied of such specified goods (other than nil rated or fully exempt supplies). The said notification has come into force with effect from 18.07.2022. The restriction imposed vide Notification No. 09/2022-Central Tax (Rate) dated 13.07.2022 on refund of unutilised input tax credit on account of inverted duty structure in case of specified goods falling under chapter 15 and 27 would apply prospectively only. Accordingly, it is....

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.... the date of enforceability of the notification is illegal and contrary to section 54 of the Act of 2017. 17. Furthermore, the restriction of refund claim qua the application filed upto 18.07.2022 creates two classes - one, the application for refund (for period 18.07.2022) filed up to 18.07.2022 and those filed after 18.07.2022. Denial of an assessee's right in relation to the application filed after 18.07.2022 amounts to apparent discrimination. Such classification is without any rationale and intelligible criteria. According to us, the assessee's right to claim refund cannot be restricted in the manner provided in the Circular impugned, as it would take away substantial statutory right of the assessee. 18. Input Tax Credit is an in....