Refund Limitation Clarification Struck Down: Circular No. 181/13/2022-GST Declared Ultra Vires; Rejection of Refund for 2018-19 Set Aside

ISSUE

Whether the rejection of refund applications for the period August 2018 to January 2019, based solely on the restrictions/clarifications provided in Circular No. 181/13/2022-GST, is sustainable in law after the said Circular was declared ultra vires to Section 54 of the GST Act by a coordinate Bench.

FACTS

The Period: The refund claims pertained to the period August 2018 to January 2019.
The Rejection: The Department rejected the refund applications relying on Circular No. 181/13/2022-GST issued by the CBIC and State Authority, which provided clarifications on limitation periods/refund issues.
Appellate Confirmation: The rejection was confirmed by the Appellate Authority, strictly following the Circular.
The Precedent: Recently, a coordinate Bench of the High Court in the case of Patanjali Foods Ltd. v. Union of India declared the said Circular ultra vires (beyond legal authority) as it conflicted with the statutory provisions of Section 54 of the CGST Act.

HELD

Circular Invalidated: The Court held that since the very Circular (No. 181/13/2022-GST) on which the rejection was based has been struck down as ultra vires by a coordinate Bench, it can no longer be a valid ground for denying relief.
Supremacy of Act: Circulars cannot impose restrictions or limitations that are not envisaged in the parent Statute (Section 54). Once the Circular is gone, the statutory right to refund prevails.
Consequence: The impugned orders rejecting the refund were quashed and set aside.
Direction: The authorities were directed to process the refund application in accordance with the law (ignoring the struck-down circular).
Verdict: [In Favour of Assessee]

KEY TAKEAWAYS

Circulars vs. Statute: This is a classic reminder that Circulars are binding on the Department but not on the Assessee or the Courts. If a Circular restricts a benefit granted by the GST Act (like the 2-year limitation period under Section 54), it is liable to be struck down.
The “Patanjali Foods” Precedent: This 2025 judgment is now a crucial citation for any taxpayer whose refund was rejected based on the specific limitations mentioned in Circular 181/2022. It opens the door for reviving rejected claims.
Revival of Old Claims: Even if an appellate authority has rejected your claim earlier, if the rejection was based solely on a provision now declared unconstitutional/ultra vires, you can approach the High Court (via Writ) to quash that order and restore your refund.

HIGH COURT OF GUJARAT

Akash Agro Industries Ltd.

State of Gujarat^*

A.S. Supehia and Pranav Trivedi, JJ.

R/SPECIAL CIVIL APPLICATION NO. 14912 of 2025

DECEMBER 4, 2025

Yuvraj G Thakore for the Petitioner. Ms Shrunjal Shah, AGP for the Respondent.

JUDGMENT

A.S. Supehia, J.- RULE. Learned AGP Ms.Shrunjal Shah waives service of notice of rule on behalf of the respondents.

2. At the outset, learned senior advocate Mr.Dhaval Vyas assisted by learned advocate Mr.Yuvraj Thakore appearing for the petitioner has submitted that the issue involved in the present petition is squarely covered by the Judgment of the Coordinate Bench of this Court dated 12.02.2025 passed in Patanjali Foods Ltd. v. Union of India GST 203/97 GSTL 24 (Guj)/Special Civil Application No.17298 of 2024 and the Judgment dated 27.03.2025 passed in Shree Proteins (P.) Ltd. v. Union of India (Guj)/Special Civil Application No.10677 of 2023.

3. It is submitted that identical worded circular dated 10.11.2022 issued by Central authority had been quashed and set aside and hence, in the present case the impugned circular No.181/13/2022-GST dated 12.11.2022 issued by the respondent no.-1 may be declared as ultra vires to the provisions of section 54 of the Gujarat Goods and service Tax Act, 2017.

4. Learned AGP Ms.Shrunjal Shah appearing for the respondents has very fairly admitted that in the Judgment dated 12.2.2025 passed in Patanjali Foods Ltd.(supra) by the coordinate bench of this Court, a similar circular had been declared as ultra vires and had been set aside.

5. She has submitted that prayers in the present writ petition are only confined to present petition and not to other tax period. Paragraphs No.5, 6 and 7 of the affidavit-in-reply filed on behalf of respondent No.3 reads as under.

“5. It is submitted that the present Petition is restricted to the refund applications at Sr. No. 1 to Sr. No. 3.

6. It is submitted that Refund Applications appearing at Sr. No.1 to 3 have been rejected by Assistant Commissioner of State Tax, Ghatak 25, Kalol vide separate orders dated 23.11.20222 based on the Circular No.181/13/2022-GST dated 12th November 2022 issued by Respondent No. 1 on the ground that the Petitioner Company is not eligible to get refund since the refund application is filed after 18.07.2022 i.e., the date on which Notification No.09/2022 State Tax (Rate) would come into force.

7. It is submitted that in respect of the Refund Application appearing at Sr.No. 1 to 3 bearing ARN No. AA2409220863840, AA240922091952Y and AA2410220107603, the Petitioner Company filed Appeals against the order of rejection dated 23.11.2022 before the Respondent No. 2, the Appellate Authority on 22.02.2023. The Respondent No. 2 has also rejected the Appeal vide orders dated 30.11.2024 on the ground that the Petitioner Company is not eligible to get refund since the refund applications are filed after 18.07.2022 i.e., the date on which Notification No. 09/2022 -State Tax (Rate) came into force.

6. It is not in dispute that for the following periods, the application is filed for refund. The same has been rejected on 23.11.2022 which has been confirmed by the appellate authority by the order dated 30.11.2024. The details are as under:

Sr.No.	Date of Application	Period	Amount claimed	Date Refund Application	Date of Rejection	Date of Appellate Order
1	AA2409220863840	Aug-Sep 2018	70,60,398	13.09.2018	23.11.2022	30.11.2024
2	AA240922091952Y	Nov 18	13,30,369	28.09.2022	23.11.2022	30.11.2024
3	AA2410220107603	Jan 19	46,54,245	04.10.2022	23.11.2022	30.11.2024

7. The Coordinate Bench in the Judgment dated 12.02.2025 while examining similarly worded circular dated 10.11.2022 has held thus :

“11.4 This Court in the case of Ascent Meditech (supra) has held as under :-

“48. In view of the foregoing reasons, the impugned order dated 24.08.2023 is hereby quashed and set aside. The Circular No. 181/22 dated 10.11.2022 so far as it clarifies that the amendment is not clarificatory in nature is quashed and set aside and it is held that the Notification No. 14/2022 is applicable retrospectively as the amendment brought in Rule 89(5) of the Rules is curative and clarificatory in nature and the same would be applicable retrospectively to the refund or rectification applications filed within two years as per the time period prescribed under section 54(1) of the Act. Rule is made absolute to the aforesaid extent. ”

11.5 Thus, it is seen that this Court in Ascent Meditech(supra) has struck down para 2(1) of the same Circular dated 10.11.2022 on the ground that an artificial class of assessees cannot be created on the basis of date of filing of refund application.

11.6 By that exact logic, 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. Even otherwise, the restriction contained in notification dated 13.7.2022 was introduced for the first time on such date and by expressly stating that it would apply prospectively and that too from 18.7.2022. If that be so, then refund pertaining to period prior to 13.7.2022 cannot be affected by such notification. 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. Mere fact that the refund application was filed after 13.7.2022 cannot result in denial of refund to the Petitioner even though the refund application was filed within the statutory period of limitation. The circular creates an artificial class amongst assessees based on the date of filing of refund application even though the refund application is filed within the statutory period of limitation and the refund is pertaining to the same period. 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.”

8. In the sister concerns of the present petitioner, the coordinate bench of this Court vide Judgment and Order dated 27.03.2025 passed in Special Civil Application No.10677 of 2023 while placing reliance on the Judgment dated 12.02.2025 has also held as under.

“10. In such view of the matter, it is seen that the petitioner’s case is squarely covered in the petitioner’s favour by this Court’s decision in Patanjali (supra), which considered the exact same Circular. Therefore, the rejection orders impugned herein dated 24.02.2023 and 30.01.2023 are hereby quashed and set aside. The Respondent is directed to process the applications at Serial Nos. 1 to 7 in the chart provided at paragraph No. 4.10 of the petition in accordance with law within a period of Twelve (12) weeks from the date of receipt of a copy of this judgment and order. As far as Serial No. 8 of the Table is concerned, namely the application dated 20.01.2023 for the period starting from September, 2018 to November, 2018, the same is otherwise barred by limitation, inasmuch as, the last date for filing the refund claim would have been 25.10.2022. Therefore, irrespective of the application of the impugned Circular No.181/13/2022-GST, the said refund application would have been rejected on the ground of limitation. Hence, the order dated 20.01.2023 is upheld and maintained. The petition therefore succeeds and is accordingly allowed. Rule is made absolute to the aforesaid extent. No order as to costs.”

9. Thus, the present writ petition succeeds in terms of the aforesaid decisions of this Court. The Coordinate Bench in the aforesaid decision in the case of Patanjali Foods Ltd. (supra) has declared paragraph 2(2) of Circular dated 12^th November, 2022 issued by the Central authority as ultra vires to Section 54 of the GST Act, and the same is struck down, hence, paragraph 2(2) of the impugned Circular No.181/13/2022-GST dated 12^th November, 2022 issued by the Respondent no.1- State authority is struck down and the matter is remanded to the Adjudicating Authority. The impugned order dated 30.11.2024 and order of rejection of refund dated 23.11.2022 are quashed and set aside. The concerned officer is directed to process the refund application in accordance with law within a period of 12 weeks from the date of receipt of the copy of this order. It is clarified that refund application shall not be rejected on the ground of limitation. It is further clarified that the present order is confined only to the present petitioner as it had filed the appeal within the prescribed period of limitation. Rule is made absolute to the aforesaid extent.