Executive Circular Can’t Curtail Statutory Limitation U/s 54 of GST Act: Calcutta HC Quashes Rejection of ITC Refund

The Calcutta High Court has quashed the rejection of the Input Tax Credit (ITC) refund and held that executive circular can’t curtail statutory limitation under Section 54 of CGST Act. The bench of Justice Om Narayan Rai has observed that although, ordinarily, law of limitation applies retrospectively, yet there are certain exceptions to the rule. One such exception is that a provision that curtails the existing period of limitation would be inapplicable to accrued causes of action. The cause of action (i.e. cause of action to apply for refund) accrued to the petitioner on the date the petitioner filed its return. Such right to claim refund would continue till the expiry of the period mentioned in Section 54(1) of the said Act of 2017. The same could, therefore, not have been curtailed by an executive circular by giving it retrospective effect. The petitioner, a supplier of edible oil and other goods, had applied for a refund of accumulated unutilised ITC for the month of May 2021. The refund arose due to an inverted duty structure—where the rate of tax on inputs was higher than the rate applicable on outward supplies. The refund application was filed on June 16, 2023. However, the proper officer rejected the claim by order dated June 5, 2024. The rejection was based on Central Circular No. 181/13/2022-GST dated November 10, 2022, and Corresponding State Circular dated November 14, 2022. These circulars clarified that restrictions imposed by Notification No. 1397-FT dated August 23, 2022 would apply to all refund applications filed on or after July 18, 2022. The appellate authority upheld the rejection on May 11, 2024, prompting the petitioner to approach the High Court. The central issue before the Court was Whether an executive circular issued in November 2022 could retrospectively restrict a refund claim where the statutory right had already accrued and the application was filed within the limitation period prescribed under Section 54(1) of the GST Act. The petitioner contended that under Section 54(1), a refund application may be filed within two years from the “relevant date.” As per Explanation 2(e) to Section 54, in cases of refund of unutilised ITC under inverted duty structure, the relevant date is the due date for furnishing return under Section 39. For May 2021, the due date was June 20, 2021. Therefore, the refund application filed on June 16, 2023 was well within the two-year limitation period. It was argued that once the cause of action accrued upon filing of the return, the statutory limitation could not be curtailed by an executive circular with retrospective effect. It was further pointed out that the Supreme Court had declined to interfere in the Andhra Pradesh High Court ruling in a batch led by Assistant Commissioner of Central Taxes v. Gemini Edibles and Fats India Ltd.. The Court examined Sections 54(1) and 54(3) of the GST Act along with the definition of “relevant date” under Explanation 2(e). It held the relevant date in the present case was June 20, 2021. The refund application filed on June 16, 2023 was within the statutory two-year window. The right to claim refund had accrued when the return was filed. The Court relied on the Supreme Court decision in Harshit Harish Jain v. State of Maharashtra, which recognized that although limitation provisions are generally retrospective, an exception applies where an existing period of limitation is curtailed affecting accrued rights. The High Court observed that once a cause of action has accrued and the legislature has granted a time frame for enforcing it, the same cannot be curtailed retrospectively by an executive circular. The court noted that multiple High Courts—including Gujarat, Allahabad, Rajasthan, and Andhra Pradesh—had consistently held that refund claims filed within the statutory period cannot be rejected merely because they were filed after issuance of a clarificatory circular. Finding no reason to diverge from this uniform judicial view, the Court followed the established precedent. The Court set aside the adjudicating authority’s orders and directed the proper officer to reconsider the refund application on merits. The court ordered that the application be decided without being influenced by the clarificatory circulars dated November 10 and November 14, 2022 and directed disposal preferably within six weeks from communication of the order. The writ petition was accordingly disposed of with no order as to costs. Case Details Case Title: M/s. Adani Wilmer Limited & Anr. v. Assistant Commissioner of State Tax & Ors. Citation: JURISHOUR-199-HC-2026(Cal) Case No.: WPA 27066 of 2024 Date: 25.02.2026 Counsel For Petitioner: Abhratosh Majumdar, Adv. Counsel For Respondent: Sumita Shaw, Adv. Click Here To Read Order Read More: Appeal Maintainable Against Ad-Interim Injunction Under Commercial Courts Act: Delhi High Court

Executive Circular Can’t Curtail Statutory Limitation U/s 54 of GST Act: Calcutta HC Quashes Rejection of ITC Refund

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