Court Rules in Favor of CHEC-TPL Line 4 Joint Venture, Mandating Refunds for Accumulated Input Tax Credit
In a landmark judgment delivered on April 23, 2026, the Bombay High Court has quashed the rejection of refund claims by the Original Authority and the Appellate Authority concerning accumulated Input Tax Credit (ITC) due to an inverted tax structure. The case, CHEC-TPL Line 4 Joint Venture v. Union of India, revolved around the interpretation and application of the amendment to Rule 89(5) of the Central Goods and Services Tax (CGST) Rules, 2017, which was introduced by Notification No. 14/2022 on July 5, 2022.
The petitioner, CHEC-TPL Line 4 Joint Venture, a collaboration between China Harbour Engineering Company and Tata Projects Limited, sought refunds for ITC accumulated from various inputs taxed at higher rates than the 12% GST levied on their outward supply of works contract services. They had filed refund claims amounting to Rs. 12,16,09,178/- for the period spanning August 2018 to March 2021.
The crux of the dispute was whether the amendment to Rule 89(5), which was introduced to correct anomalies in the formula for calculating refunds, should apply retrospectively. The petitioner argued that the amendment was clarificatory and curative, and therefore applicable to refund claims filed within the prescribed two-year limitation under Section 54(1) of the CGST Act, 2017.
The Bombay High Court, presided by Justices G.S. Kulkarni and Aarti Sathe, ruled in favor of the petitioner, emphasizing that the amendment was indeed curative and should be applied retrospectively. The court referenced the Gujarat High Court's decision in Ascent Meditech Ltd. v. Union of India, which had set a precedent by interpreting the amendment as retrospective, a stance later upheld by the Supreme Court.
The judgment underscored the importance of aligning legal interpretations with legislative intent and avoiding discrimination between taxpayers based on the timing of their refund applications. By setting aside the orders of the Appellate Authority and the Original Authority, the court mandated that the petitioner be granted the refunds they were entitled to under the amended formula.
This decision is expected to have wide-reaching implications for similar refund claims across the country, reinforcing the retrospective application of amendments meant to rectify legislative anomalies in tax computations.
Bottom line:-
Goods and Services Tax (GST) - Refund of accumulated Input Tax Credit (ITC) due to inverted tax structure - The amendment brought in Rule 89(5) of the CGST Rules, 2017 by Notification No. 14/2022, dated 5th July 2022, is clarificatory and curative in nature and thus applicable retrospectively to refund claims filed within the time frame prescribed under Section 54(1) of the CGST Act, 2017.
Statutory provision(s): Article 226 of the Constitution of India, Section 54(1) of the CGST Act, 2017, Rule 89(5) of the CGST Rules, 2017, Notification No. 14/2022-Central Tax, Circular No. 181/13/2022-GST.
CHEC-TPL Line 4 Joint Venture v. Union of India, (Bombay)(DB) : Law Finder Doc id # 2888769
