Order Date – 12 February 2025

Parties: Patanjali Foods Ltd. Vs. Union of India & Ors.

Facts –

• The Petitioner,  Patanjali Foods Ltd., sanctioned a refund under the Inverted Duty Structure Scheme for the period February 2021 to March 2021 which was applied 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.
• Later a notice under Section 73 of the GST Act was issued, claiming that the refund was erroneously granted. The demand was confirmed along with interest based on Circular no. 181/13/2022-GST dated 10.11.2022 .

Issue –

• Whether Circular No. 181/13/2022-GST dated 10.11.2022 applying the restriction retrospectively is ultra vires Section 54 of the GST Act?

Order –

• The Divisional Bench of Hon’ble High Court observed that Para 2(2) of the impugned circular dated 10.11.2022 in so far as it 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 circular itself states that the notification dated 13.7.2022 has prospective effect.
• Section 54(1) of the GST Act clearly gives a time  limit of 2 years for filing of the refund application and such time limit was extended by notification no. 13/2022 because of the Covid-19 pandemic. The application filed by the Petitioner was within the statutory period of limitation and the same was pertaining to period prior to 13.7.2022.
• Para 2 of the impugned circular is therefore grossly discriminatory and violative of  Article 14 of the Constitution of India as well as ultra-vires Section 54 of the GST Act.  Hence the petition is allowed.