The circular imposing restrictions on GST refund applications based on submission dates creates unreasonable classifications contrary to the statutory entitlement under Section 54, thus is unsustainable in law.

JUDGMENT

In both these cases, the challenge raised is against the Circular No.181/13/2022-GST dated 10.11.2022, issued by the Central Board of Indirect Taxes and Customs, wherein, a clarification was issued by the Government, to the Notification No.09/2022-Central Tax (Rate) dated 13.07.2022.

2. The common facts in these writ petitions are as follows:

The petitioners are entities registered under the provisions of the CGST, IGST and Kerala State GST Act. They are engaged in the processing and trading of edible oil. According to the petitioners, they were eligible for refund of tax, based on Inverted Duty Structure, which refers to a situation where, the rate of tax on the inputs purchased is more than the rate of tax on the output supplies. According to the petitioner, they were claiming the same, right from the inception. However, as per notification No.09/2022-Central Tax (Rate) dated 13.07.2022, which was issued by the Government in exercise of powers under Clause (ii) of the Proviso to Sub-Section (3) of Section 54 of the Central Goods and Services Tax Act, 2017 , certain goods were exempted from the provisions of refund under Inverted Duty Structure as referred to above, and the said notification was issued by modifying the earlier notification No.5/2017 Central Tax (Rate) dated 28.06.2017. In said notification dated 28.06.2017, the edible oil was not included and thus it was an item to which refund could be claimed.

3. Later, as per the modification issued vide notification dated 13.07.2022 referred to above, among other goods, edible oil was included, thereby the said item was excluded from the eligible list of goods for seeking the refund under Inverted Duty Structure. In the said notification, it was specifically mentioned that, the same will come into force on 18.07.2022. Subsequently, a Circular No.181/13/2022-GST dated 10.11.2022 was issued in clarification of the notification dated 13.07.2022, wherein, it is mentioned that, the restriction imposed vide notification dated 13.07.2022, on refund of unutilized Input Tax Credit, on account of the Inverted Duty Structure in case of specified goods falling under Chapter XV and XXVII would apply prospective only. Accordingly, it was clarified that, the restriction imposed by the said notification would be applicable in respect of all refund applications filed on or after 18.07.2022, and would not apply to refund applications filed before 18.07.2022. Thus, as a consequence of the same, the applications submitted after the date of 18.07.2022, seeking refund in respect of transactions which occurred prior to 18.07.2022 were declined. In both these cases, the respective applications submitted by the petitioners for refund were rejected on the ground that the applications were submitted after 18.07.2022. It was in these circumstances the petitioners have approached this Court by filing these writ petitions.

4. A counter affidavit was filed by the respondents, disputing the averments contained in these writ petitions and also opposing the reliefs sought. In the counter affidavit, the respondents have reiterated that, by virtue of the powers conferred upon the Government under Clause (ii) of the Proviso to Sub-Section (3) of Section 54 of the CGST Act, the Government is competent to issue the notifications referred to above and the clarification made on the notification, as per Circular dated 10.11.2022, are well within their powers.

Therefore, dismissal of the writ petitions was sought.

5. I have heard Sri.A. Kumar, the learned senior counsel appearing for the petitioner in W.P.(C) No.17723/2023, Sri.P.S Soman, the learned counsel appearin