The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow, has dismissed five appeals filed by the CGST Department and upheld relief granted to an edible-oil manufacturer on differential refund claims aggregating approximately ₹5.71 crore arising from an inverted duty structure.
The Division Bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) held that there was no sufficient ground to interfere with the findings of the First Appellate Authority, which had directed the sanction of the refunds after arithmetical verification.
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The bench accepted that there is no restriction under the GST law against filing a supplementary refund claim where the substantive conditions are satisfied and the claim is made within the limitation prescribed under Section 54 of the Central Goods and Services Tax Act, 2017.
The dispute arose from refund claims filed by a manufacturer and supplier of edible oils falling under Chapter 15 of the Customs Tariff. The company had accumulated unutilised input tax credit because the tax rate on its inputs was higher than the rate applicable to its outward supplies.
The five claims related to October 2019, December 2019, January 2020, July-August 2020 and September 2020. Their respective amounts were ₹1.90 crore, ₹1.70 crore, ₹85 lakh, ₹36 lakh and ₹90 lakh, taking the total amount in dispute to approximately ₹5.71 crore.
The claims sought the differential refund said to have become available following Notification No. 14/2022-Central Tax dated July 5, 2022, which substituted the formula contained in Rule 89(5) of the CGST Rules for calculating refunds arising from an inverted duty structure.
The amended formula addressed the treatment of input-service credit in the computation of the maximum refund amount. The central issue before the Tribunal was whether the amended formula could be applied to refund or rectification applications filed after July 5, 2022 in relation to earlier tax periods.
The proper officer had initially issued deficiency memos on the ground that the refund applications had been filed manually instead of electronically in Form GST RFD-01 on the common portal.
In the first round of appeals, the appellate authority remanded the matters and directed the officer to decide the manual applications on their merits after following the principles of natural justice. Following the remand, the company re-filed the five claims under the category “on account of Order in Appeal.”
The proper officer thereafter issued show-cause notices in Form GST RFD-08 and rejected the claims. The rejection was founded principally on the allegedly prospective operation of the amended formula, the restriction introduced for certain goods under Notification No. 09/2022-Central Tax (Rate), limitation and objections to the classification of some entries in the annexure of input services.
The Additional Commissioner (Appeals), Noida, by an order dated July 3, 2025, set aside the rejection orders and directed that the refunds be sanctioned, subject to arithmetical verification. The CGST Department then carried the matter to GSTAT through five second appeals.
The Department argued that the company had already filed refund claims for the same tax periods and that it could not subsequently seek an additional amount through supplementary claims.
It contended that the formula introduced through Notification No. 14/2022 was prospective and could not govern supplementary applications connected with earlier refund proceedings. Reliance was placed on Circular No. 181/13/2022-GST dated November 10, 2022, which stated that the amended formula would apply to refund applications filed on or after July 5, 2022.
The Department also invoked Notification No. 09/2022-Central Tax (Rate), effective July 18, 2022, which restricted refunds of accumulated ITC in respect of specified goods under Chapters 15 and 27. Since the taxpayer manufactured Chapter 15 goods, the Department maintained that applications filed after July 18, 2022 could not be allowed.
It further alleged that certain items shown in the service annexure were actually inputs and that the relevant credit had already been considered while processing the original claims. According to the Department, limitation alone could not establish substantive eligibility for the refund.
The company submitted that Section 54 of the CGST Act and Rule 89 of the CGST Rules do not prohibit a supplementary or differential refund application, provided it is filed within the applicable limitation period.
It argued that the amendment to Rule 89(5) was curative because it removed an anomaly in the earlier refund formula. The company relied substantially on the Gujarat High Court’s ruling in Ascent Meditech Ltd. v. Union of India, which held that the 2022 amendment was curative and clarificatory and would apply retrospectively to refund or rectification applications filed within the statutory period.
The company also pointed out that the Supreme Court had dismissed the Department’s special leave petition against the Ascent Meditech ruling on March 28, 2025.
On the restriction introduced from July 18, 2022, the company argued that it could not be used to deny the refund of ITC accumulated before that date. It further submitted that a departmental circular could not curtail a benefit otherwise available under the Act.
Regarding the annexure, the taxpayer maintained that even if some items were treated as inputs rather than input services, the eligible refund would not decrease and the entire claim could not be rejected on that basis.
The Tribunal noted that all the refund applications involved in the appeals had been filed after July 5, 2022. It referred to judicial authorities dealing with substituted provisions and amendments that remove defects or anomalies in an existing scheme.
GSTAT placed particular reliance on the Gujarat High Court’s decision in Ascent Meditech. The High Court had quashed Circular No. 181/13/2022-GST to the extent it characterised the amendment as non-clarificatory and had held that Notification No. 14/2022 would apply retrospectively to refund or rectification applications filed within the two-year period under Section 54(1).
The Tribunal recorded that the Supreme Court dismissed the Department’s special leave petition against that judgment. It consequently accepted the position that the amendment was curative and clarificatory in nature and could govern eligible refund or rectification applications filed within the statutory period.
The Bench also referred to the Supreme Court’s decision in Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries for the principle that an administrative circular cannot prevail over statutory provisions. Where a circular conflicts with the Act or the rules, the statutory framework must prevail, it observed.
Rejecting the Department’s objection to a second claim for the same period, the Tribunal held that the legal framework did not impose a restriction on filing a supplementary refund application.
It relied on the Gujarat High Court’s ruling in Renuka Sugar Ltd., where an assessee had initially claimed a lower refund because of an arithmetical error and later sought the omitted amount. The High Court had held that a supplementary claim satisfying the substantive conditions could not be rejected merely because the portal did not permit a second application for the same month and forced the taxpayer to use another category or a manual process.
The Tribunal thus endorsed the principle that a procedural or technical limitation on the portal cannot extinguish an otherwise admissible refund claim. The authority must examine the claim on its merits, including the underlying credit, computation and limitation.
The First Appellate Authority had found that the refund claims were within time after applying Notification No. 13/2022-Central Tax dated July 5, 2022. That notification excluded the period from March 1, 2020 to February 28, 2022 while computing the limitation for refund applications under Section 54.
After giving effect to this exclusion, the claims for the five periods between October 2019 and September 2020 fell within the prescribed time. GSTAT found no reason to disturb this conclusion.
The Tribunal also agreed that the entire refund could not be rejected merely because some entries described in the service annexure might properly be classified as inputs. The entries and their corresponding credit were required to be classified correctly and the eligible amount recomputed after verification.
Concluding that the First Appellate Authority had examined all relevant questions and supported its conclusions with the provisions of the CGST Act, the CGST Rules and applicable judicial decisions, GSTAT upheld the order dated July 3, 2025.
Accordingly, all five appeals filed by the CGST Department were rejected. The direction to sanction the refunds, after verification of the arithmetic and the eligible quantum, therefore remains in force.
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