TaxTMI 
TaxTMI 
2026 (4) TMI 1649
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.... made in the petition are required to be noted, which read thus : "(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and quash and set aside the Order-in-Appeal No. SG/JC/GST/189-195/RGD/APP/ 23-24, dated 31.10.2023 (viz. Impugned Order 1) issued by the Respondent no. 2; (b) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and quash and set aside the Order-in-Originals (i) ZK2703230279662 dated 16.0.2023, (ii) ZL2703230279895 dated 16.03.2023, (iii) ZK2703230280751 dated 16.03.2023, (iv) ZI2703230280517 dated 16.03.2023, (v) ZM2703230280028 dated 16.03.2023, (vi) ZG2703230280417 dated 16.03.2023 and (vii) ZM2703230280973 dated 16.03.2023, all issued by the Respondent no. 3; (c) this Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate wr....
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....s ('CGST Rules' for short). 5. It needs to be noted that, according to the Petitioner, as permissible in law, such refund claims were filed under which the Petitioner claimed refund of Rs. 12,47,92,403/- as per the details set out in the different refund applications. On such refund applications, the Petitioner was issued show cause notices dated 29th Jun3 2021 and 15th July 2021 in Form GST RFD-08 proposing to reject the refund applications dated 5th June 2021 and 8th June 2021. The show cause notices were responded by the Petitioner, inter alia, setting out the Petitioner was become entitled for refund, are set out under the law and rules applicable. Personal hearing was granted to the Petitioner, which ultimately culminated into rejection of the refund claims of the Petitioner by orders dated 30th July 2021 and 6th August 2021 in form GST RFD-06. However, the decision dated 24th July 2020 rendered by the Gujarat High Court in VKC Footsteps India Pvt. Ltd Vs. Union of India (supra), which was assailed by the Union of India before the Supreme Court, resulted in the reversal of the decision of the Gujarat High Court in Union of India Vs. VKC Footsteps India Pvt.Ltd 2021(52)-GSTL....
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.... would be required to be set aside and the proceedings, inasmuch as the Appellate Authority has not taken into consideration the Notification No. 14/2022 dated, dated 5th July 2022 read with Circular No. 181/13/2022-GST, dated 10th November 2023 and more importantly nature of clarification which has been issued, which is directly relevant insofar as the Petitioner's claim for refund is concerned, which itself was filed on 5th June 2021 and 8th June 2021. He submitted that in fact the Appellate Authority was required to consider that the issue was no more res integra in view of the decision as rendered by the Gujarat High Court in Ascent Meditech Limited Vs. Union of India 2024(24)-Centax-405 (Guj) whereby in similar circumstances the Court had set aside the orders passed by the authority while holding that Notification No. 14/2022 was applicable retrospectively, considering that the amendment brought in to Rule 89(5) of the GST Rules was curative in nature and the same would be applicable retrospectively to the refund claims on the rectification applications filed within two years as per time prescribed under Section 54 of the GST Act. In reaching of such conclusion, Their Lordship....
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.... of the ITC on input services, such as assumption skewed the formula in favour of the revenue. The Apex Court had, therefore urged the GST Council to reconsider the formula. 7.3 The issue was deliberated by the Law Committee and in the absence of any empirical data, Law Committee had recommended to consider utilization of ITC on account of inputs and input services for payment of output tax in the same ratio in which the ITC has been availed on inputs and input services during the said tax period and to use this deduction to revise the formula prescribed in Rule 89(5) as suggested by the Hon'ble Supreme Court. Accordingly, Law Committee recommended the following amendment in formula prescribed in Rule 89(5) : Maximum Refund Amount = (Turnover of inverted rated supply of goods and services) x Net ITC + Adjusted total Turnover) - (tax payable on such inverted rated supply of goods and services x (Net ITC+ITC availed on inputs and input services). The Council agreed with the recommendation of the Law Committee." 10. In pursuance of the decision of the GST Council, the CBIC issued Notification (Notification No. 14/2022, dated 5th July 2022) notifying CGST ....
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....022-Central Tax, dated 5-7-2022. 2. Whether the restriction placed on refund of unutilised input tax credit on account of inverted duty structure in case of certain goods falling under Chapters 15 and 27 vide Notification No. 9/2022-Central Tax (Rate), dated 13-7-2022, which has been made effective from 18-7-2022, would apply to the refund applications pending as on 18-7-2022 also or whether the same will apply only to the refund applications filed on or after 18-7-2022 or whether the same will be applicable only to refunds pertaining to prospective tax periods ? Vide Notification No. 9/2022-Central Tax (Rate), dated 13-7-2022, under the power conferred by clause (ii) of the first proviso to sub-section (3) of Section 54 of the CGST Act, 2017, certain good falling under Chapters 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 supplies of such specified goods (other than nil rated or fully exempt supplies). The said notification has come into force with effect from 18-7-2022. The restriction impo....
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....n such context it was held that Notification No. 14/2022, dated 5th July 2022 cannot be applied prospectively for the refund claim which were made within two years as prescribed under Section 54(1) of the CGST Act. The following observations as made by the Court in that regard are required to be noted, which read thus : "41. Having heard learned advocates for the respective parties and having considered the facts of the case and 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 turn over" the words "ITC availed on inputs and input services" has been substituted. Thus, the "adjusted total turn over" which is defined in subclause (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. 42. 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. 43. Therefore, impugned Circular....
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.... 14. This view has been accepted by a number of High Court. In the case of Commissioner of Income-Tax v. Chandulal Venichand ([1994] 73 Taxman 349/209 ITR 7 (Gujarat)), the Gujarat High Court has held that he first proviso to section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductable. This decision deals with assessment year 1984-85. The Calcutta High Court in the case of Commissioner of Income-tax v. Sri Jagannath Steel Corporation ([1991] 191 ITR 676 (Calcutta)), has taken a similar view holding that the statutory liability for sales-tax actually discharge after the expiry of accounting year in compliance with the relevant stature is entitled to deduction under Section 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High Court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. union of India and Ors. ([1991] 54 Taxman 521/189 ITR 70 (Patna).), It wa....
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....d 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. As per the provisions of section 54(1) read with section 54(3) of the Act if the assessee has made refund application within the prescribed period of two years, then the assessee would be entitled to the refund as per the amended formula which has been notified w.e.f. 05.07.2022. 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 (supra), there is no embargo on preferring second refund application if the petitioner is entitled to the same within the period of two years. 48. In view of the foregoing reasons, 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 ....
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....is accordingly dismissed. 4. Pending application(s), if any, stands disposed of." 15. Similar view was taken by Gujarat High Court in Filatex India Ltd and another Vs. Union of India and others 2025 (5)-TMI-256 (Guj). 16. In our opinion, certainly the clear position of law which was brought about by Notification No. 14/2022, dated 5th July 2022 and as held by the decision of Gujarat High Court in Ascent Meditech Ltd Vs. Union of India (supra), which has attained finality, would certainly hold the field. We are in complete agreement with the contentions as urged by Mr. Paranjape that the findings which are recorded by the Appellate Authority, cannot be held to be valid in view of the clear interpretation as made to Notification No. 14/2022 by which an amendment made by Rule 8 of the Amended Rules, 2022 to Rule 89(5) of CGST Rules, 2017, as noted hereinabove, necessarily was required to be applied even in the context of such applications which were made prior to 5th July 2022. The present refund applications were filed on 5th June 2022 and 8th June 2022. The impugned appellate order clearly shows that there was no application of mind to such legal issues including to t....