The applicant has sent refund requests under section 54 of the Gujarat GST Act, 2017, for several tax periods from August 2018 to January 2019. These refund requests were made within the allowed time limit set by section 54, which was extended by notifications related to the COVID-19 pandemic.
Adjudicating authority rejected the refund applications by order on 23.11.2022 based on Circular No. 181/13/2022-GST dated 12.11.2022, which mentioned that the restriction introduced by Notification No. 09/2022-State Tax (Rate), w.e.f 18.07.2022, would be applicable for all GST refund applications filed after that date, irrespective of the period to which the refund related.
On the same ground, the appellate authority affirmed the rejection, keeping that as the refund applications were submitted post 18.07.2022, thus the applicant was not qualified for the refund. The applicant dissatisfied approached the Gujarat High Court contesting the validity of the impugned circular and the consequential rejection of refund claims.
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The State at the time of hearing considered that identically worded circulars had been quashed earlier by coordinate benches of the High Court in earlier decisions, along with Ascent Meditech and Patanjali, wherein such circulars were held to be ultra vires Section 54 and violative of Article 14.
Issue:
Whether Paragraph 2(2) of Circular No. 181/13/2022-GST dated 12.11.2022, which refuses the refund claims of periods before 18.07.2022 on the ground that the refund applications were filed after that date, is ultra vires Section 54 of the GST Act and violative of Article 14 of the Constitution of India.
Held That:
The Court stated that Section 54 provides a statutory right to claim a refund within a specified limitation period and that such right cannot be curtailed by an executive circular. Once the underlying notification itself was made prospective, refund claims of earlier tax periods cannot be denied only because the applications were filed after the cut-off date.
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An artificial classification among taxpayers has been formed by the impugned circular based on the filing date of refund applications, even after all applications were submitted in the statutory limitation period, thereby violating Article 14 of the Constitution. Thereafter, Paragraph 2(2) of the circular was struck down. The orders denying the refund claims and the appellate orders affirming such rejection were quashed and set aside.
HC ruled that Paragraph 2(2) of Circular No. 181/13/2022-GST is arbitrary, discriminatory, and ultra vires Section 54 of the GST Act.
| Case Title | M/s. Akash Agro Industries Limited Versus State of Gujarat & Ors. |
| Application Number | 4912 of 2025 |
| For Petitioner | Yuvraj G Thakore (7785) |
| For Respondent | Ms Shrunjal Shah, AGP |
| Gujarat High Court | Read Order |
