Refund Claims for ITC Accrued Before 18.07.2022 Cannot Be Denied Solely for Being Filed After That Date, as Notification Allowing ITC Applies Prospectively | HC

Case Details: Priyanka Refineries (P.) Ltd. v. Deputy Commissioner St - [2025] 171 taxmann.com 240 (Andhra Pradesh)

Judiciary and Counsel Details

• R. Raghunandan Rao & Maheswara Rao Kuncheam, JJ.
• Karthik Ramana Puttamreddy, Karan Talwar for the Petitioner.
• Harinath N, Dy. Solicitor General of India, Santhi Chandra, Sr. Standing Counsel for CBIC, B.V.S. Chalapati Rao, M Uma Devi, Central Govt Counsel for the Respondent.

Facts of the Case

The petitioner, a manufacturer, distributor, and brander of edible oils and specialty fats in India, was subject to an inverted duty structure wherein the GST rate on raw materials used in the manufacturing process was higher than the GST rate applicable to the final products. Consequently, the petitioner filed refund claims under Section 54 of the CGST Act for the accumulated Input Tax Credit (ITC) pertaining to periods before 18-07-2022. However, the refund claims were rejected by the tax authorities, citing Circular No. 181/13/2022-GST, which interpreted Notification No. 9/2022-Central Tax (Rate) dated 13-07-2022 to mean that no refunds could be granted for applications filed after 18-07-2022, even if the ITC had accrued before the said date. Aggrieved by this rejection, the petitioner filed a writ petition before the Andhra Pradesh High Court, challenging the denial of refund claims.

High Court Held

The Hon’ble Andhra Pradesh High Court held that the said notification expanding the list of goods ineligible for refunds was to be applied prospectively from 18-07-2022. Therefore, ITC accumulated before 18-07-2022 remained eligible for refund, and the restriction imposed could not be applied retrospectively to deny refund applications merely because they were filed after the cut-off date. The Court further ruled that the restriction on refund claims based solely on the date of filing rather than the period of accrual was contrary to the statutory provisions and had to be set aside. Consequently, the impugned order rejecting the refund claims was quashed.

List of Cases Reviewed

• Mohinder Singh Gill and Ors. v. Chief Election Commissioner, New Delhi and Ors(Para 13) followed