SC Upholds Retrospective Application of Amended Rule 89(5)

Case Details: Union of India vs. Tirth Agro Technology (P.) Ltd. - [2025] 176 taxmann.com 1007 (SC)

Judiciary and Counsel Details

• Manoj Misra and Ujjal Bhuyan, JJ.
• N. Venkataraman, A.S.G., Gurmeet Singh Makker, AOR, V.C.
• Bharathi, Digvijay Dam, Ms. Prerna Dhal and Gautam Kumar, Advs. for the Petitioner.

Fact of the Case

The petitioner, being the Department, had initially sanctioned refund claims filed by the assessee under Rule 89(5) of the CGST Rules for unutilised input tax credit on account of inverted duty structure, computed as per the formula prevailing at the time of claim. Subsequent to the amendment of Rule 89(5) vide Notification No. 14/2022-Central Tax, dated 05-07-2022 , the assessee filed rectification applications seeking differential refund based on the revised formula. These applications were rejected by the jurisdictional officer on the ground that refunds had already been disbursed under the pre-amended formula, and that the amendment was prospective in nature, as clarified by Circular No. 181/13/2022-GST, dated 10-11-2022. The assessee contended that denial of refund under the amended formula solely on the ground of earlier sanction would result in arbitrary and unequal treatment between similarly placed taxpayers. The High Court, relying on its ruling in Ascent Meditech Ltd. v. Union of India [2024] 168 taxmann.com 691 / [2025] 93 GSTL 85 (Gujarat), held that such discrimination was impermissible under the statutory scheme of section 54(3). It accordingly held that the amended formula under Notification No. 14/2022 must apply to all applications made within the prescribed two-year period, irrespective of when originally filed. It further observed that the amendment, being aimed at removing anomalies, was curative and clarificatory in nature, and therefore to be applied retrospectively. The matter was accordingly placed before the Supreme Court.

SC Held

The Hon’ble Supreme Court held that the High Court’s reliance on Ascent Meditech Ltd. was well-founded, noting that the said judgment had already been subjected to scrutiny in Union of India v. Ascent Meditech Ltd. [2025] 173 taxmann.com 154 / 109 GST 613 / 98 GSTL 4 (SC) and the challenge had been dismissed. It was also observed that the fact of such dismissal had not been disclosed in the present special leave petition, which was filed subsequent to such dismissal. In view of this omission and the binding precedent already in place, the Court held that there was no ground to interfere and accordingly dismissed the petition.

List of Cases Reviewed

• Tirth Agro Technology (P.) Ltd. v. Union of India [2025] 176 taxmann.com 793 (Gujarat) (Para 3) – SLP dismissed

List of Cases Referred to