M/S.Gillette Diversified Operations vs The Joint Commissioner Of Gst And ... on 5 February, 2025

1. Outcome
The Madras High Court allowed the Writ Petitions (W.P.Nos.6524, 6527 and 6537 of 2022) filed by M/s. Gillette Diversified Operations Private Limited, setting aside the impugned orders rejecting their refund claims. Consequently, the related Writ Petitions (W.P.Nos.6531 and 6541 of 2022) challenging Circular No.125/44/2019-GST and seeking retrospective application of the proviso to Rule 90(3) of the CGST Rules, 2017, were closed as it became unnecessary to address them on merits.

2. Core Issue
The core issue was whether the petitioner's refund claims for unutilized Input Tax Credit (ITC) on zero-rated supplies (exports) were filed within the two-year limitation period prescribed under Section 54 of the CGST Act, 2017, especially considering multiple filings (initial portal, manual, and re-presentation after deficiency) and the interpretative circulars issued by the CBIC.

3. Key Facts
* Petitioner: M/s. Gillette Diversified Operations Private Limited.
* Nature of Claims: Refund of unutilized ITC on zero-rated supplies (export of goods without payment of tax) for the periods July 2017, August 2017, and September 2017.
* Initial Filing: Claims were initially filed on the GST portal on 21.09.2018, 09.10.2018, and 10.10.2018.
* Manual Filing: Subsequently filed manually on 28.03.2019 due to the GST portal's incomplete functionality.
* Deficiency Memo: Deficiency memos were issued on 12.04.2019.
* Re-presentation: The rectified refund claims were re-presented on 18.10.2019 and acknowledged on 01.11.2019.
* Rejection by Authorities: The refund claims were rejected by the Assistant Commissioner and upheld by the Joint Commissioner (Appeals-II) on the ground of limitation, considering the date of re-presentation (18.10.2019) as the filing date and relying on Circular No.125/44/2019 dated 18.11.2019.
* Jurisdiction: The petitioner approached the High Court due to the non-constitution of the GST Appellate Tribunal.

4. Arguments (Taxpayer vs Revenue)

• Taxpayer (M/s. Gillette Diversified Operations):

  • The refund claims were for unutilized ITC on zero-rated supplies (exports), not for inverted duty structure.
  • The initial claims filed on the portal in September and October 2018 were well within the two-year limitation period from the "relevant date" (date of export as per Explanation 2(a) to Section 54).
  • The re-submission of claims after rectifying deficiencies should not be treated as a "fresh refund application" for limitation purposes, particularly given the initial filing was within time.
  • Challenged Paragraph 12 of Circular No.125/44/2019 dated 18.11.2019, which mandates that a rectified application is a fresh one and subject to the original limitation, arguing it is ultra vires Section 54 of the CGST Act.
  • Argued that the proviso to Rule 90(3) of the CGST Rules, 2017 (inserted w.e.f. 18.05.2021), which excludes the period from initial filing to deficiency memo for limitation purposes, should be applied retrospectively.
  • The amendment to Explanation 2(e) to Section 54 (w.e.f. 01.02.2019), which defines "relevant date" for inverted duty structure, is not applicable to their export-related refund claims.
  • Cited Universal Drinks Private Limited, Nagpur Vs. Union of India and another.

• Revenue (GST Department):

  • The "relevant date" for export of goods is defined under Explanation 2(a)(i) to Section 54 of the CGST Act (date of departure of conveyance).
  • As per Rule 90(3) of the CGST Rules, 2017, and Paragraph 12 of Circular No.125/44/2019, a refund application filed after correction of deficiencies is treated as a "fresh refund application" and must be filed within two years of the relevant date.
  • Since the re-filed claims were submitted on 18.10.2019, they were beyond two years from the dates of export (July-Sept 2017), hence time-barred.
  • Circular No.125/44/2019 is intra vires the CGST and IGST Acts and Rules 89 and 90.
  • Explanation 2(e) to Section 54, as amended, applies specifically to inverted tax structure, not to export claims for ITC refund.

5. Court’s Reasoning
* The court noted that the exports occurred in July-September 2017. The initial refund claims were filed on the portal in September-October 2018, which was clearly within the two-year limitation period from the date of exports (relevant date as per Explanation 2(a) to Section 54).
* It acknowledged that during the initial period of GST implementation, the electronic refund module was not fully operational, necessitating a hybrid system of electronic filing (FORM GST RFD-01A) and manual submission of supporting documents and subsequent processing stages, as explained in Circular No.125/44/2019.
* The court distinguished the nature of the petitioner's claim: it was for refund of unutilized ITC on zero-rated supplies (exports) under Section 16(3)(a) of the IGST Act, not for inverted duty structure.
* Therefore, the "relevant date" for these claims was governed by Explanation 2(a) to Section 54 (date of export), and not Explanation 2(e) to Section 54 (which pertains to inverted tax structure and was later amended to clarify its scope). The amendment to Explanation 2(e) effective from 01.02.2019 was thus irrelevant to the petitioner's case.
* Since the initial claims were filed within two years from the relevant date, the subsequent re-presentation after correcting deficiencies, necessitated by procedural issues and deficiency memos, did not render the original application time-barred. The department's argument that re-filing constituted a "fresh application" for limitation purposes was found incorrect.
* Given the finding that the original claims were filed in time and were therefore maintainable, the court deemed it unnecessary to delve into the challenge against Paragraph 12 of Circular No.125/44/2019 or the retrospective application of the proviso to Rule 90(3) of the CGST Rules.
* The court emphasized that legitimate export incentives should be granted upon substantial compliance.

6. Statutory References
* Constitution of India: Article 226
* Central Goods and Services Tax (CGST) Act, 2017:
* Section 2(106) (definition of "tax period")
* Section 39 (furnishing of return)
* Section 49(6) (electronic cash ledger)
* Section 50 (interest)
* Section 54 (Refund of Tax) – especially Sub-sections (1), (3), and Explanation 2(a), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h)
* Section 112 (Appellate Tribunal)
* Central Goods and Services Tax (CGST) Rules, 2017:
* Rule 89 (Application for refund)
* Rule 90(3) and its Proviso (Acknowledgement, deficiency memo)
* FORM GST RFD-01A, FORM GST RFD-03
* Integrated Goods and Services Tax (IGST) Act, 2017:
* Section 16(1), (2), (3) (unamended and amended versions) (Zero rated supply)
* Section 17
* CGST Amendment Act, 2018 (31/2018)
* Finance Act, 2021
* Foreign Exchange Management Act, 1999 (42 of 1999)

7. Precedents Cited
* Case Law:
* M/s.Gillette Diversified Operations vs The Joint Commissioner Of Gst And ... on 5 February, 2025 (The instant judgment)
* Universal Drinks Private Limited, Nagpur Vs. Union of India and another, 1984 (18) E.L.T. 207 (Bom.) (Cited by Petitioner)
* Circulars & Notifications:
* Circular No.17/17/2017-GST dated 15.11.2017 (Cited by Revenue)
* Circular No.59/33/2018 dated 04.09.2018 (Cited in impugned order)
* Circular No.79/53/2018-GST dated 31.12.2018 (Cited by Court and Petitioner)
* Circular No.125/44/2019-GST dated 18.11.2019 (Impugned by Petitioner, relied upon by Revenue)
* Notification No.02/2019-CT dated 20.01.2019 (Amending Section 54, w.e.f. 01.02.2019)
* Notification No.15/2021-Central Tax (CT) dated 18.05.2021 (Inserting proviso to Rule 90(3), w.e.f. 18.05.2021)