Limitation period for filing refund of unutilized ITC on export of goods to be computed from shipping date: HC

December 05, 2025

Introduction:

EUnder India's Goods and Services Tax (GST) regime, exports are treated as “zero-rated supplies.” This means No GST is charged on the goods/services exported.

But the exporter is still eligible for a refund of:

• Either the IGST paid (if any), or
• The unutilized Input Tax Credit (ITC) on inputs/services used for making the export.

Under the GST Law (specifically the CGST Act and Rules), the limitation period for filing a refund of unutilized Input Tax Credit (ITC) on export of goods is governed by Section 54 of the CGST Act, 2017, read with Rule 89 of the CGST Rules, 2017.

Provision as Per Sec 54 CGST Act 2017:Refund of Tax

1. Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of Two years from the relevant date in such form and manner as may be prescribed.
2. A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55 entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of Two years from the last day of the quarter in which such supply was received.
3. Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period.

In case of export of services, the date of receipt of payment in convertible foreign exchange (or in Indian rupees wherever permitted by RBI), where the supply of service had been completed prior to the receipt of such payment. (OR)

The date of issue of invoice, where payment has been received in advance prior to the date of issue of the invoice.

In short in case of Services Relevant Date (from which 2-year limitation starts) from Date of receipt of payment or Date of invoice whichever is later.

**The Terms “Relevant Date” and “Provisions of Sub Section (10)” For the purpose of this section -Explanation as Per CGST Act

Case Laws:

• Nitrex Chemicals India Ltd v. AC GST, Valsad (Gujarat HC, Mar 10, 2025)
• Madras High Court – M/S. Tulip Nilgiris Exports Pvt. Ltd vs Additional Commissioner Of CGST and CE

1. Nitrex Chemicals India Ltd v. AC GST, Valsad (Gujarat HC, Mar 10, 2025)

Case Summary:

Parties:

• Petitioner: Nitrex Chemicals India Ltd
• Respondent: Assistant Commissioner, GST Division VIII, Valsad

Forum: High Court of Gujarat at Ahmedabad (Special Civil Application No. 12375/2021)

Judgment delivered: 24 January 2025

Facts:

• Nitrex, an exporter of Nitrocellulose, filed for refund of IGST and compensation cess paid on zero-rated exports (July 2017 to March 2018), as permitted under Sections 54 of the CGST Act and Section 16 of the IGST Act.
• The refund claim application was submitted on 15 June 2020. However, the tax authorities rejected it on the ground that the petitioner had filed refund application beyond the relevant period (mandating a 2-year limit) as per Explanation (2) to section 54 of the GST Act. The petitioner, therefore, being aggrieved has preferred this petition.

Petitioner’s Argument:

Reliance was placed on Para 3.2 Circular No.45/19/2018-GST dated 30.05.2018 wherein clarification on refund related issues is made by the Central Board of Indirect . Relying upon the said circular, it was submitted that the petitioner is required to file refund claim for tax period only after filing the details in Form GSTR-1. It was therefore, submitted that considering the date of filing the Form GSTR-1, the application for refund filed by the petitioner would be within period of two years. It was therefore, submitted that the petitioner is entitled to the refund as per the said circular.

Court’s Analysis & Ruling:

It is submitted that the petitioner's claim that the delay in filing of refund for the tax period from July, 2017 to March, 2018 due to nationwide lockdown announced in March 2020 due to Covid-19 pandemic cannot be sustainable as lockdown was announced in the month March, 2020 whereas the last date of filling of refund claim application for the period from July, 2017 to March, 2018 was ends on 20.03.2020 well before of lockdown.

Accordingly, Notification No. 35/2020-Central Tax dated 03.04.2020 was issued vide which due date for filing of refund, falls during the period from the 20th march, 2020 to 29th june,2020 was extended up to 30th June 2020 and HC Stated that Circular No.45/19/2018-GST dated 30.05.2018 cannot override statutory provisions.

Therefore, the due date for filling of refund claim for the period of March 2018 was extended up to 30.06.2020. In view of the above, the petitioner was eligible for the refund of tax period March 2018 only.

Having heard the learned advocates for the respective parties and on perusal of the material placed on record, the contention raised on behalf of the petitioner to apply the provisions of section 54(1) for extending the relevant date up to the date of filing of the return cannot be accepted.

2. M/S. Tulip Nilgiris Exports Pvt. Ltd vs Additional Commissioner Of CGST and CE

Case Summary:

Parties:

• Petitioner: Tulip Nilgiris Exports Pvt Ltd.
• Respondent: Additional Commissioner of Central Taxes & Central Excise, Appeals

Forum: Madras High Court

Judgment delivered: 22 January 2024

Facts:

• The petitioner exported processed tea under GST using LUT (zero-rated exports) and availed Input Tax Credit (ITC) on local procurement from July 2017 to November 2017. While claiming refund, the petitioner did not calculate the refund Entitlement Relating to the Total ITC.
• He claimed only ITC attributable to the exports made in the Respective month(June 2018). In June 2018, filed a refund claim, clubbing unutilized ITC from July 2017 –Nov 2017 and May 2018. Refund for June 2018 was granted; earlier periods (May 2018 + Jul–Nov 2017) were rejected.

Petitioner’s Arguments:

• The petitioner argued that Section 54(1) of the CGST Act, 2017 entitles any person to apply for a refund of any tax or unutilized input tax credit within two years from the relevant date. The provision does not restrict refund claims to a specific calendar month or financial year. Since the claim was filed within this statutory two-year limit, the rejection on grounds of period-clubbing was incorrect.
• The petitioner relied on Paragraph 11.2 CBIC Circular No. 37/11/2018-GST dated 15 March 2018, which explicitly permits exporters to file refund claims for multiple tax periods in a single application, particularly where exports are made without payment of tax under a Letter of Undertaking (LUT). The circular allows for consolidated refund applications, especially when filing for multiple months would be Difficult.

Court's Reasoning:

From the provisions, the conclusion that follows is that a refund claim may be made before the expiry of two years from the relevant date. Relevant date is required to be computed from the date of export of the goods concerned by any mode. Since the refund claim pertains to exports made between July 2017 and November 2017 and the refund application was filed on 09.01.2019 he submits that the refund claim is within the period prescribed by the statute.

In effect, the appellate authority concluded that the refund claim can only be made regarding a specific calendar month. This conclusion is contrary both to statutory prescription and Circular No.37. Therefore, The restriction imposed regarding refund claims is unsustainable and is hereby quashed.

Conclusion (HC consensus):

In the above Case Laws the High Courts have consistently held that the limitation period for unutilized ITC refund on export of goods begins on the date the goods are shipped out of India. So Refund claims must be made by Exporter within 2 years from the “relevant date”, usually the shipping date for goods.

However, procedural flexibility, such as clubbing claims or late filing of LUTs, is permitted in good faith cases. Circulars aid interpretation but cannot override clear statutory mandates.

Sources for Case Laws:

• Nitrex Chemicals India Ltd (Gujarat HC)
• M/S.Tulip Nilgiris Exports Pvt. Ltd (Madras HC)