Rajasthan High Court - Jodhpur
Shree Arihant Oil And General Mills vs Union Of India (2025:Rj-Jd:39647-Db) on 8 September, 2025
Author: Dinesh Mehta
Bench: Dinesh Mehta
[2025:RJ-JD:39647-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 2932/2023
Shree Arihant Oil and General Mills, E-299, Agro Food Park,
Udyog Vihar, Sri Ganganagar (Raj.) through its Partner Harsh
Kumar Jain S/o Shri Sushil Kumar Jain, Aged About 40 Years.
----Petitioner
Versus
1. Union Of India, through its Secretary, Department Of
Revenue, Ministry of Finance, North Block, New Delhi.
2. The Joint Commissioner, State Tax Circle C, Sri
Ganganagar, Tulsi Bhawan, UIT Road, Sri Ganganagar
(Raj.).
3. Goods and Service Tax Council, through its Secretary, 5th
Floor, Tower II, Jeevan Bharti Building, Janpath Road,
Connaught Place, New Delhi - 110001.
----Respondents
For Petitioner(s) : Mr. Sanjeev Johari, Sr. Counsel
assisted by Mr. Shubhankar Johari
For Respondent(s) : Mr. Mahaveer Bishnoi, AAG
Mr. Rajat Arora
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MRS. JUSTICE SANGEETA SHARMA
Order
REPORTABLE 08/09/2025
Per Hon'ble Dinesh Mehta, J. (Oral)
1. By way of the writ petition in hands, the petitioner has
challenged the action of the respondents who have not decided its
application for refund of the tax paid under State Goods and
Service Tax (hereinafter referred to as 'the SGST'), on raw
materials such as Mustard Oil etc, purchased upto 18.07.2022.
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2. The petitioner-firm is engaged in manufacture of edible oil
purchased mustard oil etc., falling under HSN Code 1514 on
payment of applicable GST.
3. A Notification No. 09/2022-Central Tax (Rate) dated 13 th July,
2022 was issued providing that accumulated Input Tax Credit shall
not be allowed in relation to various items including HSN Entry No.
1514 which was made enforceable from prospective date i.e.
18.07.2022.
4. On the ground that its products fall into the category of
inverted duty structure, the petitioner has filed application(s) for
refund of the Input Tax Credit as per section 54 of the Central
Goods and Services Tax Act, 2017 (hereinafter referred to as 'the
Act of 2017') for the period(s) prior to 18.07.2022.
5. Mr. Sanjeev Johari, learned Senior Counsel appearing for the
petitioner submitted that since the notification dated 13 th July,
2022 was brought into effect from 18.07.2022, all the assessees
including the petitioner were entitled for claiming refund of Input
Tax Credit on the goods purchased upto 18.07.2022 and yet, the
respondents have not decided petitioner's applications for claim of
refund, which were filed on 04.01.2023.
6. He argued that indisputably, the limitation for filing the
application for refund is two years and, hence, any application
filed after 18.07.2022 subject to outer limit provided in section 54
of the Act of 2017 deserves to be allowed, subject ofcourse on
fulfillment of the requisite conditions or verification.
7. Learned Senior Counsel further submitted that the
respondents have been sitting tight over the matter and they have
neither accepted the petitioner's application for refund nor have
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they rejected the same, perhaps in light of the Circular No.
181/13/2022-GST dated 10.11.2022, which Circular itself is
illegal, as held by Andhra Pradesh High Court.
8. Mr. Rajat Arora, learned counsel appearing for the Central
Goods and Service Tax Department having filed the reply,
submitted that by virtue of clarificatory Circular dated 10.11.2022
issued by the Central Board of Indirect Taxes and Customs
(hereinafter referred to as 'the CBITC'), the petitioner is not
entitled for the refund as claimed.
9. Mr. Mahaveer Bishnoi, learned Additional Advocate General
appearing for the State also adopted the argument advanced by
Mr. Rajat Arora.
10. Heard learned counsel for the parties.
11. Section 5(3) of the Act of 2017 provides for a situation
where the Input Tax Credit available in the electronic cash ledger
of a registered person can be refunded, if the rate of tax on the
final product is lower than the rate of tax payable on the inputs
used for manufacture of such final product. This system is
popularly known as "inverted duty structure".
12. It is not in dispute that by way of Notification dated
13.07.2022, the goods purchased by the petitioner were placed in
the negative list for claiming Input Tax Credit on account of
inverted duty structure and the said notification came into force
from 18.07.2022.
13. Since, the notification has been made enforceable on
18.07.2022, the manufacturers including the petitioner cannot be
treated disentitled from claiming refund of the Input Tax Credit of
the tax, which they have paid up to 18.07.2022.
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14. It is only on account of the Circular dated 10.11.2022, the
respondents have taken a stance that the petitioner can claim
refund only if the application had been filed prior to 18.07.2022. It
will not be out of place to reproduce the relevant part of the
Circular dated 10.11.2022 issued by the CBITC, which reads as
under:-
Issue Clarification
2 Whether the restriction placed Vide Notification No. 09/2022-Central
on refund of unutilised input Tax (Rate) dated 13.07.2022, under
tax credit on account of the powers conferred by clause (ii) of
inverted duty structure in case the first proviso to sub-section (3) of
of certain goods falling under section 54 of the CGST Actx, 2017,
chapter 15 and 27 vide certain goods falling under chapter 15
Notification No. 09/2022- and 27 have been specified in respect
Central Tax (Rate) dated of which no refund of unutilised input
13.07.2022, which has been tax credit shall be allowed, where the
made effective from credit has accumulated on account of
18.07.2022, would apply to the rate of tax on inputs being higher than
refund applications pending as the rate of tax on the output supplied
on 18.07.2022 also or whether of such specified goods (other than nil
the same will apply only to the rated or fully exempt supplies). The
refund applications filed on or said notification has come into force
after 18.07.2022 or whether with effect from 18.07.2022.
the same will be applicable
only to refunds pertaining to The restriction imposed vide
prospective tax periods? Notification No. 09/2022-Central Tax
(Rate) dated 13.07.2022 on refund of
unutilised input tax credit on account
of inverted duty structure in case of
specified goods falling under chapter
15 and 27 would apply prospectively
only. Accordingly, it is clarified that the
restriction imposed by the said
notification would be applicable in
respect of all refund applications filed
on or after 18.07.2022, and would not
apply to the refund applications filed
before 18.07.2022.
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15. If above clarification issued by the CBITC is taken into
consideration, it is apparent that it restricts the right of claiming
refund for the applications filed up to 18.07.2022, though the
Notification dated 13.07.2022 does not contain such stipulation.
That apart, when the limitation for claiming refund under section
54 of the Act of 2017 is 2 years, an assessee can claim refund at
least up to such period. Clarification which has the effect that the
assessees shall be granted refund only if the application has been
filed prior to 18.07.2022 is contrary to the basic Notification dated
13.07.2022 (which does not provide such embargo) so also
section 54 of the Act of 2017.
16. If the impugned clarification is tested on the anvil of
reasonableness, it falls foul to Article 14 of the Constitution of
India, inasmuch as the right to claim refund of Input Tax Credit of
the input tax on inverted duty structure has been denied with
effect from 18.07.2022 only. No assessee can be expected to file
claim of refund of the tax for the period paid upto 18.07.2022 on
18.07.2022 itself, more particularly when he can apply for refund
of tax within the permissible time limit of two years. Hence,
curtailment of an assessee's right to claim refund upto 18.07.2022
- the date of enforceability of the notification is illegal and contrary
to section 54 of the Act of 2017.
17. Furthermore, the restriction of refund claim qua the
application filed upto 18.07.2022 creates two classes - one, the
application for refund (for period 18.07.2022) filed up to
18.07.2022 and those filed after 18.07.2022. Denial of an
assessee's right in relation to the application filed after
18.07.2022 amounts to apparent discrimination. Such
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classification is without any rationale and intelligible criteria.
According to us, the assessee's right to claim refund cannot be
restricted in the manner provided in the Circular impugned, as it
would take away substantial statutory right of the assessee.
18. Input Tax Credit is an indefeasible right of an assessee,
which accrues to it on the date when the goods were bought. A
gainful reference of judgment of Hon'ble the Supreme Court in
case of Collector of Central Excise, Pune & Ors. vs. Dai Ichi
Karkaria Ltd. & Ors., reported in 1999 (112) ELT 353(S.C.) :
(1999) 7 SCC 448 can be made. Said goods have been placed in
the negative list with effect from 18.07.2022. As such, the right
which has accrued to the petitioner up to the date, when the
notification came into force cannot be denied. The respondents'
stand and the clarification reproduced in Para No. 14 above
impinges upon petitioner's fundamental rights guaranteed under
Article 19(1)(g) and 300A of the Constitution of India.
19. Somewhat similar view has been taken by the Gujarat High
Court in the case of Patanjali Foods Ltd. vs. Union of India &
Ors. : R/Special Civil Application No. 17298/2024 decided on
12.02.2025 so also by Andhra Pradesh High Court in the cases of
Priyanka Refineries Pvt. Ltd. vs. Deputy Commissioner ST &
Ors. and Gemini Edibles and Fats India Ltd. vs. Assistant
Commissioner of Central Taxes and Ors. reported in (2025)
143 GSTR 636 : 2025 SCC OnLine AP 1435. It may be noted
that Special Leave Petition thereagainst has been rejected by
Hon'ble the Supreme Court vide judgment dated 09.05.2025
reported in (2025) 143 GSTR 644 : 2025 SCC OnLine SC
1580.
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20. The writ petition is, therefore, allowed.
21. The Point No. 2 of the Circular No. 181/13/2022-GST dated
10.11.2022 issued by the CBITC is declared illegal and arbitrary
being violative of Article 14 of the Constitution of India and also
contrary to the purport and import of the Notification dated
13.07.2022. The same is, therefore, quashed to the extent of
confining the refund of Input Tax to the application(s) filed upto
18.07.2022.
22. The respondents are directed to consider and decide
petitioner's application(s) dated 04.01.2023 (Annexure-P/2 to
Annexure-P/4) for refund in accordance with law, however, within
a period of three months from today. While deciding the
applications, the respondents shall not rely upon the part of the
Circular dated 10.11.2022, which has been quashed.
(SANGEETA SHARMA),J (DINESH MEHTA),J
13-Mak/-
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