Background of the Case:
The case concerns refund of Input Tax Credit (ITC) under Section 54(3) of the CGST Act, 2017, due to inverted duty structure for the period February 2018 to August 2018.
The issue arose because Rule 89(5) (formula for refund in inverted duty structure cases) was amended via Notification No. 14/2022-Central Tax dated 5-7-2022.
Initially, refund was granted using the old formula before the amendment came into effect.
Facts of the Case:
Tirth Agro filed refund claims prior to 5-7-2022 and received refund based on the old formula.
After the amendment, they filed rectification applications claiming additional refund as per the new formula.
The refund was denied by the department on the ground that the CBIC Circular dated 10-11-2022 clarified that the amendment is not clarificatory, hence applicable only prospectively.
Gujarat High Court's Decision:
Relied on its earlier decision in Ascent Meditech Ltd. v. UOl, which held:
The amended Rule 89(5) is curative and clarificatory, hence applies
The CBIC Circular No. 181/22/2022-GST dated 10-11-2022 declaring prospective application is contrary to law and was quashed.
Assessees who filed refund applications within two years should be entitled to refund as per amended Rule 89(5).
Also held that rectification applications for differential refund are valid within the statutory time limit.
Supreme Court's Ruling:
Supreme Court dismissed the SLP by the Union of India.
Observed that:
The Ascent Meditech case, which the High Court relied upon, had already been challenged and dismissed by the Supreme Court on 28 March 2025.
The present SLP filed in June 2025 failed to disclose this fact.
Based on these facts, the Court found no reason to interfere and dismissed the SLP, thereby upholding the High Court's decision.
GST Case Law Union of India v. Tirth Agro Technology (P.) Ltd.
Citation-2025 TAXONATION 1923 (SUPREME COURT)(Click here to read full case law)
CA Naredra Gupta
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