• Dated 02^nd February, 2026

Uniform Application of ‘Relevant Period’ Mandatory for ITC Refund under Rule 89(4): Madras High Court

Brief Facts Involved

The petitioner, M/s. Sea 6 Energy Private Limited, is engaged in manufacturing and exporting biostimulants and potash (zero-rated supplies). For March 2025, it filed a refund claim of accumulated Input Tax Credit (ITC) under Section 54 of the CGST Act read with Rule 89(4).

The refund was partially rejected by the department vide GST RFD-06 dated 24.06.2025, leading the petitioner to approach the Madras High Court challenging the denial as being contrary to the GST provisions and constitutional principles

Assessee 's Contentions:

The assessee contended that it was entitled to refund of the entire accumulated ITC availed during March 2025, even if such ITC pertained to inward supplies received over earlier months.

Furthermore, it argued that for computing refund under Rule 89(4), turnover alone should be restricted to the "relevant period" (March 2025), while Net ITC should include the entire ITC accumulated but availed during that month. The partial rejection was alleged to be arbitrary and violative of Sections 54 CGST Act and 16 IGST Act.

Department's Contentions:

The department submitted that Rule 89(4) prescribes a clear formula, wherein the expression "relevant period" appears uniformly in all components, i.e., Net ITC, turnover, and adjusted total turnover.

It argued that the assessee cannot selectively apply the concept of "relevant period" by restricting turnover to one month while expanding Net ITC to cover earlier periods.

Accordingly, the department was in the view that the refund was rightly restricted by applying the formula strictly.

Court's Decision:

The Hon'ble Madras High Court held that the term "relevant period" must be construed uniformly across all elements of the refund formula under Rule 89(4). The Court rejected the assessee's approach of applying different interpretations of "relevant period" for turnover and Net ITC, calling it conceptually incorrect.

However, considering that the assessee acted under a misconception, the Court permitted filing of a fresh refund application, even manually, if the portal does not allow re-filing. The department was directed to recompute the refund strictly as per Rule 89(4) and release any eligible amount within eight weeks

BTA's Comment:

This judgment is significant for exporters claiming refund of accumulated ITC, as it clarifies that "relevant period" is not a flexible concept under Rule 89(4). Taxpayers cannot cherry-pick interpretations to maximize refunds by including ITC of earlier months while restricting turnover to a single month.

At the same time, the Court adopted a balanced approach by allowing a fresh/manual application, reinforcing that procedural lapses or misunderstandings should not defeat substantive benefits, provided the statutory formula is correctly followed.

Case Ref: M/s Sea 6 Energy Private Limited vs. Assistant Commissioner of Central Taxes W.P(MD)No.26287 of 2025 dated 21.11.2025

Author: Saket Shaw