Refund Claim for ITC Before July 18, 2022 Explained
If you’re a GST-registered taxpayer who couldn’t claim a refund for Input Tax Credit (ITC) accrued before July 18, 2022, you’re not alone. Several refund claims were rejected by authorities citing CBIC Circular No. 181/13/2022-GST dated 10.11.2022. But recent High Court rulings have clarified the legal position in favour of taxpayers.
Why Was the Refund Denied?
CBIC’s Circular No. 181 stated that no refund of accumulated ITC on input services is allowed under inverted duty structure (Section 54(3)). Many officers applied this clarification retrospectively, leading to denial of refund claims even for periods before July 18, 2022.
What the Law Actually Says
| Issue | CBIC Circular View | Legal Interpretation |
|---|---|---|
| Can ITC refund on input services be denied? | Yes, under inverted duty structure | Only post July 18, 2022 after Rule 89(5) was amended |
| Is Circular 181 retrospective? | Interpreted as such by officials | Courts have said NO |
| Which date is crucial? | Circular issued on 10.11.2022 | Notification No. 14/2022–CT dated 05.07.2022, effective from 18.07.2022 |
High Court Rulings in Favour of Taxpayers
- Calcutta High Court – Shivaco Associates
- Ruled that CBIC Circular 181/2022 cannot override the statute.
- Clarified that refund of ITC on input services accrued before 18.07.2022 is valid.
- Madras High Court – Tvl. Transtonnelstroy Afcons JV
- Held that Rule 89(5) was amended prospectively, not retrospectively.
- Taxpayer entitled to refund of unutilised ITC accrued before amendment.
- Delhi High Court – Aryan Traders
- Emphasized that administrative circulars cannot defeat legislative intent.
- Allowed refund claim filed for period prior to July 2022.
CBIC’s Clarification: What It Means for You
- Circulars are not binding on courts.
- CBIC’s 2022 Circular is valid only for periods after July 18, 2022.
- Refund rejections based on Circular 181 for prior periods are illegal.
Expert View: Advice for Businesses
“Taxpayers who received refund rejections citing Circular 181 should file a writ petition or appeal quoting relevant HC judgments. This is a strong legal ground for refund recovery.”
— Tax Counsel, GST Consultant, Chennai
What You Should Do Now
- Review your past refund rejections under Section 54(3).
- Check if claim period was before 18.07.2022.
- Prepare grounds for appeal based on HC rulings.
- Consult your GST advisor and act within limitation period.
FAQ: Refund Claim for ITC Before July 18, 2022
Q1. Can I claim ITC refund on input services for June 2022?
Yes, if it was under the inverted duty structure and filed before July 18, 2022.
Q2. My refund was rejected citing CBIC Circular 181/2022. What next?
You can file a writ petition or appeal, as courts have held such denial as invalid for pre-July 18, 2022 periods.
Q3. Will CBIC issue any revised clarification?
There is no official update yet. You may monitor cbic.gov.in for future releases.
Final Word
Refund claim for ITC before July 18, 2022 cannot be denied based on a circular that applies prospectively. If you were affected by such rejections, seek redressal now. Courts are on your side — and Efiletax is here to help you file your appeals correctly.
Summary
Refund claims for ITC on input services before July 18, 2022 cannot be denied based on CBIC Circular 181/2022. Courts have ruled the circular is not retrospective. Businesses denied refunds for earlier periods may appeal with strong legal backing from recent High Court decisions.