The Supreme Court has upheld the Gujarat High Court’s decision allowing retrospective refund of Input Tax Credit (ITC) under the amended Inverted Duty Structure (IDS) formula in Rule 89(5) of the CGST Rules.
The bench of Justice Manoj Misra and Justice Ujjal Bhuyan dismissed the Union Government’s Special Leave Petition (SLP) filed challenging Gujarat High Court’s Judgement, reinforcing that the amendment is clarificatory and curative in nature.
The dispute arose in the case of Union of India & Ors. v. Tirth Agro Technology Pvt. Ltd. & Ors., where the taxpayer had sought a refund of accumulated Input Tax Credit (ITC) under the IDS mechanism using the amended formula notified under Rule 89(5). Though the company had initially received partial refunds under the earlier version of the formula (which excluded input services), it filed rectification applications seeking additional refund benefits under the new formula. The applications were rejected by the tax authorities, citing that refunds had already been processed under the old rule.
The Gujarat High Court, however, ruled in favor of the taxpayer. It held that the amendment to Rule 89(5), along with CBIC Circular No. 181/13/2022-GST dated November 10, 2022, was clarificatory and curative in nature. Citing its earlier judgment in Ascent Meditech Ltd. v. Union of India [2024 (12) TMI 511 – GUJARAT HIGH COURT], the court concluded that the amended rule should apply retrospectively, even to refund claims filed prior to July 5, 2022.
Supreme Court’s Verdict
Aggrieved by the Gujarat High Court’s ruling, the Centre approached the Supreme Court via SLP (Civil) Diary No. 31632 of 2025. However, the apex court refused to interfere, noting that it had already dismissed a similar challenge by the government in the Ascent Meditech case (SLP (C) No. 8134 of 2025), by order dated March 28, 2025.
The Supreme Court took strong note of the fact that the government had failed to disclose the dismissal of the earlier SLP while filing the current petition, despite both cases involving similar issues and legal reasoning.
Observing that no new grounds were made out to revisit the matter, the Court dismissed the petition and disposed of all pending applications.
Case Details
Case Title: UOI Versus M/S Tirth Agro Technology Pvt. Ltd. & Ors.
Case No.: Special Leave Petition (Civil) Diary No.31632/2025
Date: 18-07-2025
