Turnover of Prior Months Must Be Included for ITC Refund Claimed Later: Madras HC

The petitioner, M/s. Sea 6 Energy Private Limited is engaged in the manufacture and sale of biostimulants and potash and operates as a seasonal industry. For March 2025, the petitioner claimed a refund of accumulated Input Tax Credit (ITC) arising from the export of zero-rated goods under Section 54 of the CGST Act, read with Section 16 of the IGST Act and Rule 89(4) of the CGST Rules. The refund claim was only partially sanctioned by the Assistant Commissioner through order dated 24.06.2025 (Form GST-RFD 06).

Aggrieved, the petitioner approached the Hon’ble High Court, contending that the refund formula had been incorrectly applied and that full accumulated ITC ought to have been considered.

Main Issue: Whether, for the purpose of refund computation under Rule 89(4) of the CGST Rules, the expression “relevant period” can be applied differently for turnover and Net ITC, allowing the assessee to include ITC accumulated over the year but availed in a single month.

HC’s Order: The High Court held that the expression “relevant period” appearing in Rule 89(4) must be interpreted uniformly across all components of the refund formula, including turnover, Net ITC and adjusted total turnover.

The Court rejected the petitioner’s attempt to restrict the “relevant period” to March 2025 for turnover while simultaneously claiming full accumulated ITC of earlier periods availed in March. The court permitted the petitioner to file a fresh refund application. The respondent was directed to recompute the refund strictly in accordance with the statutory formula. As the GST portal may not accept a fresh electronic claim, the petitioner was allowed to submit a manual application.

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