Retrospective Refund Restrictions Quashed: Adani Wilmar Ruling

1. The Hook (Introduction)

For businesses operating under an inverted duty structure, GST refunds are essential for survival. But what happens if the government issues a "clarification" that suddenly takes away your right to a refund for a period that's already passed? The Calcutta High Court has reached a definitive conclusion: Your legal right to a refund cannot be stolen by a retrospective circular.

"19. It is settled law that although, ordinarily, law of limitation applies retrospectively, yet there are certain exceptions to the rule. One such exception is that a provision that curtails the existing period of limitation would be inapplicable to accrued causes of action. (see: Harshit Harish Jain and Another v. State of Maharashtra and Others reported at (2025) 3 SCC 365 ). In the present case, the cause of action (i.e. cause of action to apply for refund) accrued to the petitioner on the date the petitioner filed its return. Such right to claim refund would continue till the expiry of the period mentioned in Section 54(1) of the said Act of 2017. The same could, therefore, not have been curtailed by an executive circular by giving it retrospective effect."

2. The General Proposition

A taxpayer's right to a benefit, such as a refund, is often a "vested right" once the conditions for that benefit have been met. In the world of law, there is a fundamental rule that any change that takes away a person's existing rights must generally be prospective (future-looking), not retrospective (past-looking).

Executive circulars are meant to "explain" or "clarify" the law; they cannot rewrite it. If a statute (the CGST Act) provides a clear window for claiming a refund, an administrative instruction issued by the tax department cannot slam that window shut for a period that has already concluded.

3. The Facts & The Law

The Facts: A Lifeline Denied

The case involved M/s Adani Wilmar Limited, a supplier of edible oils, who applied for a refund of accumulated ITC due to an inverted duty structure for the month of March 2022. The application was filed on April 17, 2024, well within the statutory two-year period.

However, the GST authorities rejected the claim, citing a Central Circular (No. 181/13/2022-GST) issued on November 10, 2022. This circular claimed that a new restriction on refunds (imposed in July 2022) would apply retrospectively to all applications filed after July 18, 2022, even if the refund related to an earlier period.

The Law: The Two-Year Refund Window

• Section 54(1) of the CGST Act, 2017: This section states that a taxpayer has two years from the "relevant date" to claim a refund.
• Section 54, Explanation 2(e): Defines the "relevant date" for inverted duty structure refunds as the due date for filing the GSTR-3B return for that period.
• March 2022 Return: The due date was April 2022, meaning the taxpayer had until April 2024 to file for a refund.

4. Arguments & Precedents

Petitioner's Contention: The petitioner argued that their right to the refund was "locked in" the moment they filed their return in April 2022. Since they had two years to claim it under the law, a later circular issued in November 2022 could not take that right away.

Revenue's Contention: The Revenue argued that the circular was merely clarificatory and because the actual application for refund was made in April 2024 (after the circular), the new restrictions must apply.

Precedents: The court relied on a string of consistent rulings from other High Courts that had already struck down this retrospective application:

• Patanjali Foods Ltd. (Gujarat HC)
• Vaibhav Edibles Pvt. Ltd. (Allahabad HC)
• Shree Arihant Oil & General Mills (Rajasthan HC)
• M/s Priyanka Refineries Pvt. Ltd. (Andhra Pradesh HC)

5. The Ratio & Analysis

The Ratio: Statutory Rights vs. Executive Circulars

The Calcutta High Court held that the right to claim a refund is a statutory one that accrues the moment the tax return is filed. This right is protected for the full two-year period mentioned in Section 54(1). An executive circular, which is a form of subordinate legislation, cannot overrule the clear mandate of the Act passed by the legislature.

"A provision that curtails the existing period of limitation would be inapplicable to accrued causes of action."

Analysis: Consistency Across High Courts

The Court emphasized the importance of national consistency in GST law. Since multiple other High Courts had already rejected the government's retrospective stance, and the Supreme Court had not interfered with those decisions, the Calcutta High Court saw no reason to take a different view.

The Court quashed the rejection orders and directed the department to process the refund on its merits, ignoring the restrictive circulars.

6. Case Identification (Footer Only)

• Case No: WPA 30244 of 2024
• Order Date: February 25, 2026
• Court: High Court of Calcutta
• Original Citation: 2026-VIL-224-CAL

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Disclaimer: This article is for educational purposes and provides an update on legal developments. It is not to be construed as legal advice.