In a major relief to Patanjali Foods, the Gujarat High Court has upheld the Rs.1.7 Crore utilised Input Tax Credit (ITC) refund and rejected the department’s recovery.
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that exact logic, Para 2(2) of the circular dated 10.11.2022 provides that the restriction contained in notification no. 13.7.2022 will apply to all the refund applications filed after 13.7.2022, even though they are pertaining to a period prior to the date of notification, is wholly arbitrary, discriminatory and ultra-vires Section 54 of the GST Act as well as violating Article 14 of the Constitution of India.
The petitioner/assessee is in the business of manufacture and sale of edible oil. According to the petitioner, the rate of tax on output supplies made by the petitioner exceeds the rate of tax on input supplies. Therefore, the petitioner qualifies for refund under the inverted duty structure scheme, as per Section 54(3) of the Central/Gujarat Goods and Services Tax Act, 2017.
Notification No.9/2022-Central Tax, dated 13.07.2022, was issued by the Central Government, notifying certain goods, including edible oil, as ineligible for a refund under the inverted duty structure. The Notification was made effective from 18.07.2022. The petitioner submitted a refund application dated 05.12.2023 for the period from February 2021 to March 2021 under Section 54(3) of the GST Act.
According to the petitioner, the refund application was within the limitation period as per Section 54(1) of the Act, read with Notification No.13/2022 dated 05.07.2022, which extended the period for filing the refund application.
The court noted that it will be seen that against the petitioner’s refund application dated 05.12.2023, there has been an adjudication of the same by order dated 12.01.2024, by which the petitioner’s refund application was accepted and the refund sanction granted. It is further not in dispute that no appeal under Section 107 or Revision under Section 108 of the CGST Act, 2017 has been preferred by the respondents, challenging the adjudication of the petitioner’s refund application and the consequent refund order sanctioned on 12.01.2024.
The court held that the grant of refund to the petitioner by order dated 12.1.2024 had become final and no show cause notice could be issued by the respondents to take away the benefits of a quasi judicial order in the petitioner’s favour.
Case Details
Case Title: Patanjali Foods Ltd. Versus Union Of India & Ors.
Case No.: R/Special Civil Application No. 17298 Of 2024
Date: 12/02/2025
Counsel For Petitioner: Uchit N Sheth
Counsel For Respondent: Deepak N Khanchandani
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