Andhra Pradesh HC Holds Amended Rule 89(5) System for GST Inverted Refunds Applies Retrospectively

The Andhra Pradesh High Court docket has mentioned that the revised system below Rule 89 (5) of the GST Solutions for inverted accountability refunds is retrospectively appropriate.

The bench of Justice R Raghunandan Rao and Justice T.C.D.Sekhar has cited that the revision to the system in Rule 89(5) ought to be regarded as to be clarificatory in nature and, consequently, might possibly perchance well well be retrospective. Nonetheless, the orders of rejection, including the appellate picture, were handed sooner than the modification; the very fact is that the applicant had continued to agitate his claims touching on the refund sought by the applicant.

The applicant, M/s AWL Agri Alternate Runt, is engaged in importing edible oil, refining it, and supplying it within the domestic market after packaging. The firm had submitted three separate applications inquiring for the refund of gathered Input Tax Credit ranking (ITC) for November 2018, March 2019, and April 2019, citing an inverted accountability structure.

Also Be taught: How GST Tool Handles Input Tax Credit ranking (ITC) Monitoring

Below Part 54 of the CGST Act, the refund claims were incurred. However, the adjudicating authority denied the applications, conserving that Rule 89(5) of the CGST Solutions precluded these refunds below the mentioned system. Thereafter, the appellate authority pushed aside appeals through Uncover-in-Allure on February 25, 2022.

The dissatisfied applicant approached the High Court docket below Article 226 of the Constitution, inquiring for the quashing of the appellate picture and money support of 48,29,179 for April 2019, on the side of passion at 6% below portion 56 of the CGST Act.

The difficulty sooner than the Court docket was whether or now not the revisions to the system specified below rule 89(5) made as per the deliberations of the GST Council were clarificatory and retrospective in nature, or capability as claimed by the revenue authorities.

The applicant mentioned that the GST council, in its assembly performed on June twenty eighth and twenty ninth, 2022, took cognisance of anomalies within the refund system. The revision was incurred after the observations of the Supreme Court docket in Union of India vs. VKC Footsteps India Pvt. Ltd. (2022) 2 SCC 603. The revision was efficient and ought to be utilized retrospectively. As the refund claims were below field, the modified system ought to be utilized.

On November 10, 2022, the division relied upon Spherical No. 181/13/2022-GST, which specified that the modification would operate prospectively w.e.f July 5, 2022. It was claimed that, because the rejection and appellate orders were handed sooner than the modification, the advantage couldn’t be prolonged to the applicant.

The applicant put reliance on the judgment of the Gujarat High Court docket in Tirth Agro Technology Pvt. Ltd. v. Union of India(2025), where the High Court docket had space aside the spherical to the scope it declared the modification to Rule 89(5) as capability.

The Andhra Pradesh High Court docket mentioned that once a spherical is determined aside by an HC, it shall now not be regarded as within the nation.

The Division Bench mentioned that the modification to the system below Rule 89(5) ought to be acknowledged as clarificatory in nature. Thereafter, it shall purpose retrospectively. Nonetheless, the normal denial and appellate orders were handed sooner than the revision; due to the this fact, the applicant had started pursuing its claims. Hence, the applications ought to be reconsidered by applying the revised system.

Be taught Also: GST Refund Lisp on Input Companies and products U/S 54 of CGST Act

The Court docket well-liked the writ petitions and space aside the main denial orders on June 9, 2021; January 13, 2021; and March 24, 2021; space aside the appellate picture on February 25, 2022; and directed the main authority to think again the refund applications afresh by applying the revised system below Rule 89(5).