Adm Agro Industries INDIA PVT. LTD. vs. Union Of INDIA

Facts

The petitioner, ADM Agro Industries India Pvt. Ltd., challenged an order dated 21.06.2024 (FORM GST RFD-06) passed by respondent No.3, which rejected its refund claim for the period December 2020 to March 2021. The rejection was based on the claim being time-barred under Section 54 of the CGST Act. The petitioner also challenged Circular No.181/13/2022-GST dated 10.11.2022. This was the second round of litigation, with a previous High Court order directing the respondents to consider the date of filing manual refund applications as the relevant date for limitation. The petitioner filed online refund applications for the period in question on 21.04.2024, claiming a refund of Rs.67,47,186/- for unutilized Input Tax Credit (ITC) due to an inverted tax structure.

Held

The Court held that the issue was no longer res integra, relying on the decisions in 'M/s. Akash Agro Industries Limited' and 'Ascent Meditech Ltd.'. It was held that paragraph 2(2) of Circular No.181/13/2022-GST dated 10.11.2022 is ultra vires Section 54 of the CGST Act and Article 14 of the Constitution of India, as it creates an artificial classification of assessees based on the filing date of the refund application, irrespective of whether the application is within the statutory limitation period and pertains to a period prior to the notification. The Court found that the amendment brought in Rule 89(5) of the CGST Rules, 2017, via Notification No.14/2022, was curative and clarificatory and applicable retrospectively. Consequently, the impugned order dated 21.06.2024 was quashed and set aside. The matter was remanded to the Adjudicating Authority to process the refund application in accordance with law within twelve weeks, with a clarification that the refund shall not be rejected on the ground of limitation. The order was confined to the present petitioner as their appeal was filed within the prescribed period of limitation.

Key Issues

1. Whether the impugned order dated 21.06.2024 rejecting the refund claim for the period December 2020 to March 2021 as time-barred under Section 54 of the CGST Act is valid? 2. Whether Circular No.181/13/2022-GST dated 10.11.2022, to the extent it renders refund claims filed after 13.07.2022 time-barred even if pertaining to periods prior to that date, is ultra vires Section 54 of the CGST Act and Notification No.9/2022-Central Tax (Rate) dated 13.07.2022? Petitioner's Arguments: The petitioner argued that the issue is covered by previous decisions of the High Court in 'Patanjali Foods Ltd. Vs. Union of India & Ors.' and 'M/s. Akash Agro Industries Limited Vs. State of Gujarat & Ors.'. They contended that paragraph 2(2) of Circular No.181/13/2022-GST was struck down in these cases as it created an artificial classification and was discriminatory, violating Article 14 of the Constitution and Section 54 of the CGST Act. They also relied on a previous High Court order that considered manual filing dates for limitation. The refund application was filed within the statutory two-year period from the relevant date. Revenue's Arguments: The revenue argued that the refund claim was rejected as it was not filed within two years from the relevant date. They contended that Circular No.181/13/2022-GST was issued under Section 168(1) of the CGST Act for uniformity and cannot be considered ultra vires Section 54. They also stated that Notification No.9/2022-CT (Rate) had prospective effect, and the authority was bound by laid-down stipulations. However, the revenue could not dispute the settled legal position cited by the petitioner.