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TMI Blog2022 (9) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on export of electricity. Further, a perusal of the amendment to Rule 89(2) of CGST Rules, would inter-alia show that the said Rule came to be amended only to clarify the anomaly that was existing with regard to production of material evidencing export of a thing which is intangible in nature. This clarification came to be made since the situation namely transmission of energy could not have been visualized when Rule 89(2) was incorporated in the Statute book. Production of shipping bills will not prove or establish by any means the quantity of energy transmitted. Hence, by no stretch of imagination, the amendment can be said to be declaratory in nature, but it can only be a one, which would be curing the defect by issuing necessary clarification as to how transmission of electrical energy can be proved - Rule 89 of CGST (Amendment) Rules, 2022 is only clarificatory in nature. When amendment/notification dated 05.07.2022 issued by Government of India is held to be curative or clarificatory in nature, the question now would be whether the said clarification is retrospective in nature? - HELD THAT:- A proviso, which is inserted to remedy unintended consequences and to make the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Kumar Routhu, Senior Standing Counsel For CBIC. COMMON ORDER:- (per the Hon'ble Sri Justice C. Praveen Kumar) Heard Sri Raghavan Ramabadran, learned counsel for the petitioner, learned Special Government Pleader for Commercial Tax, for respondent no.1 and Sri Suresh Kumar Routhu, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs [for short, "CBIC"] for respondent nos.2 and 3. 2. The issues involved in all the seven (7) writ petitions are one and the same. It is to be noted that W.P.Nos.11194, 11206 & 11263 of 2021 came to be filed against the order of Additional Commissioner, (GST Appeals) and W.P.Nos.11198, 17275, 28836 & 30292 of 2021 are filed against the order of Deputy Commissioner of Central Tax. 3. W.P.No.11194 of 2021, which is filed, against the order in Appeal No.GUN-GST-000-APP-001-20-21 GST, dated 30.04.2020, wherein the order rejecting refund was upheld, is taken as a lead petition for the purpose of deciding the issues involved. 4. In a nut-shell, the facts in issue, are that there was a Memorandum of Understanding for the purpose of supply of power between India and Bangladesh. The petitioner participated in the tender process f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch supplier of electricity to a particular recipient. The report also identifies the destination to which electricity is supplied by the petitioner. 5. The circumstances, which made the petitioner to file the writ petition, are:- (a) Since export of electrical energy is treated as Zero rated supply under Section 16 of IGST Act, 2017, the petitioner applied for refund of unutilized Input Tax Credit through a refund claim by filing application under Form GST RFD-01A in terms of Section 54 of CGST Act, 2017 read with Section 16(3) of IGST Act, 2017. (b) On 17.05.2019, the third respondent issued a Memo, demanding the petitioner to file (1) Copy of Input Tax Credit Register; (2) Copy of Input Tax Credit Invoices and (3) A statement containing the number and date of shipping bills or bills of exports and the number and date of the relevant export invoices. Except for the statement containing the number and date of shipping bills or bills of export, the petitioner submitted all other documents including the Regional Energy Account showing the units of electricity exported as demanded in the memo. In so far as non- submission of the shipping bill, the petitioner addressed a letter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r would contend that under Rule 89 of CGST Rules, 2017 application for refund of Input Tax Credit should be accompanied by statements containing the number and date of shipping bills or bills of export etc. According to him, in so far as transmission of electricity is concerned, it is impossible to generate such bills, as the supply from one place to another place and from one country to another country is only through transmission lines. In other words, his argument is that shipping bill is a custom document and the same cannot be made applicable to show supply of Electricity; which is intangible in nature. 8. To substantiate that there was export of electricity, learned counsel for the petitioner submits that he has placed other documents (REA reports), which amply establish the same. According to him, in a meeting held on 18.02.2020, with the Ministry of Power, under the Chairmanship of the Central Electrical Authority, it was decided that monthly Regional Energy Accounts [REAs] issued by the Regional Power Committee [RPC] can be used as a document to establish proof of export in case of electricity. He also placed on record the Notification dated 05.07.2022 issued by the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the transmission of power supply by the petitioner stands established only till Bohrompur, West Bengal and not beyond that. Hence, they cannot claim any benefit of refund of Input Tax credit. Learned Standing Counsel further submits that the petitioner has no dedicated electrical lines for transmission of electrical energy from their thermal plant to Bohrompur sub-station and has no dedicated International/ Cross Border Transmission lines for transmission of electricity to Bangladesh. The power is transmitted pursuant to an agreement with Central Electricity Authority under the supervision of Government of India and as such, no benefit can be given for refund of input tax credit. 12. An additional affidavit came to be filed on behalf of the second and third respondents, referring to Notification, dated 05.07.2022, amending Rule 89 of CGST Rules, 2017 and the said notification being published in the Gazette on 05.07.2022. Hence, submits that any relief to the petitioner can be extended only be after 05.07.2022 and the same cannot be retrospective in operation. 13. In the rejoinder filed by the petitioner, it is stated that the petitioner has not challenged the statutory provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal under section 112 of CGST Act, when and where it is constituted, cannot be accepted as it may cause irreparable loss to the petitioner. 18. With regard to the Writ Petitions filed against order-in- original, this court is inclined towards the contention raised by the Petitioner, wherein it is urged that when appeals of similar issues are rejected by Appellate authority, it would serve no useful purpose to file the same again before the same authority, by the same party, seeking the very same relief. 19. Coming to the point for consideration and to appreciate the rival arguments advanced, on the legal issues involved, it would be appropriate to refer Section 16 of IGST Act, 2017 which reads as under:- (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:-- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner started supply of energy. Initially, the supply was from 15.02.2018 to December, 2019, but, on extension, the petitioner entered into a long term agreement with BPDB for supply of energy beginning from 01.01.2020 to 31.07.2033. The supply of electricity by the petitioner is made as per the schedule, in terms of which, electricity is generated and injected into transmission grid at the interconnection point located in Andhra Pradesh. The reading meters at the interconnection/injection points are erected, to record the supply of electricity by the petitioner. The injected electricity gets transmitted to Bohrompur sub-station, Murshidabad District, West Bengal [delivery point] by the Interstate transmission lines of M/s.Power Grid Corporation of India Limited. From there, it reaches Bangladesh by cross border transmission line, between Bohrompur sub-station and Bheramara sub-station of Bangladesh, through Power Grid Company Bangladesh. The material on record also shows that the actual units of electricity supplied by the petitioner to Bangladesh is recorded in Regional Energy Account, issued on monthly basis, by Southern Regional Power Committee, which is a unit of Central Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 54 where the credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt supplies." 25. As stated earlier, the petitioner made multiple representations to various authorities, informing them about the difficulty in producing shipping bills for export of electricity. The said issue was also raised before Regional Power Committee meeting, in which it was stated that REA reports made available by Regional Power Committee on monthly basis can be used as proof of export. It would be useful to extract the relevant portion, which is as under:- "9. After deliberations, following was concluded: a. Total energy from a generation project may be sold through a single or more than one contracts, which may include both 'export' and 'domestic sale'. b. Taxes are paid by the generators for various components of the inputs that are used in generation of electricity from their project. Therefore, the inputs need to be apportioned between 'exports' and 'domestic sale' for the purpose of allowing input tax credits. c. Regional Energy Accounts (REAs) which are made available by each Regiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in case where refund is on account of export of electricity;"; (c) in sub-rule (4), the following Explanation shall be inserted, namely:― "Explanation. - For the purposes of this sub-rule, the value of goods exported out of India shall be taken as - (i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017; or (ii) the value declared in tax invoice or bill of supply, whichever is less."; (d) in sub-rule (5), for the words "tax payable on such inverted rated supply of goods and services", the brackets, words and letters "{tax payable on such inverted rated supply of goods and services x (Net ITC' ITC availed on inputs and input services)}." Shall be substituted;" 28. A reading of the above amendment, inter alia, makes it clear that the petitioner herein can now prove the quantity of electricity transmitted basing on the statement of scheduled energy for export of electricity issued by Regional Power Committee [RPC] Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired by the multinational corporations for such services. The BPO centres become very active from evening because of the time-difference between India and the European and American continents. The mainstay of the call centres is a sophisticated computer system and a technically strong and sophisticated international telephone network. The service consists of providing information relating to the products and services of the MNCs, queries relating to maintenance and after- sales services, providing telephonic assistance in case of glitches during operating the consumer-products or while utilising the services and so on. For instance, the customer sitting in USA has a problem operating a washing machine sold to him by an American company. When he calls the company, the local telephone number would be linked to the call centre number in India and it will actually be an employee of the Indian call centre who would answer the queries and assist the customer in USA get over the problem. Another example could be of a person in USA wanting to book an international air-ticket from an airline; his queries over the phone will be answered by the employee of the Indian call centre, sitting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was practically impossible to perform. 12. Significantly, the petitioner company asserted that it was alone being singled out for this discriminatory treatment and other similarly situated theatres were allowed to furnish the certificates from the Film Development Corporation later and not in advance. This assertion by the petitioner company was not rebutted by the third respondent in. her counter-affidavit. No explanation is forthcoming even now as to why the petitioner company alone is being picked upon for violation of the condition of furnishing the certificates in advance. The third respondent also does not dispute, that the certificates were produced by the petitioner company after release of the movies and there is no shortcoming or lacuna in this regard. If that is so, mere failure on the part of the petitioner company to produce such certificates in advance, which it could not have done in any event, is not a ground to deny it the benefit of G.O. Ms. No. 604 dated 22.04.2008. The assessment orders, which proceeded only on the premise that such benefit could not be extended to the petitioner company owing to belated production of the certificates, therefore cannot be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be given retrospective effect. 37. The issue that props up now for adjudication at this stage is to whether amended Rule 89(2) of CGST Rules, 2022 is clarificatory or declaratory? 38. Circular No.175/07/2022-GST dated 06.07.2022 issued by Ministry of Finance, Government of India, with regard to the manner of securing refund of unutilized ITC on account of export of electricity, is as under:- "Reference has been received from Ministry of Power regarding the problem being faced by power generating units in filing of refund of unutilised Input Tax Credit (ITC) on account of export of electricity. It has been represented that though electricity is classified as "goods" in GST, there is no requirement for filing of Shipping Bill/Bill of Export in respect of export of electricity. However, the extant provisions under Rule 89 of CGST Rules, 2017 provided for requirement of furnishing the details of shipping bill/bill of export in respect of such refund of unutilised ITC in respect of export of goods. Accordingly, a clause (ba) has been inserted in sub-rule (2) of rule 89 and a Statement 3B has been inserted in FORM GST RFD-01 of the CGST Rules, 2017 vide notification No.14/2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly stated that Finance Act, 2003, will operate with effect from 1st April, 2004, but the matter before the Court involved the principle of construction with regard to the provisions of Finance Act, 2003. Referring to judgment of Commissioner of Income Tax, Bangalore v. J.H. Gotla (1985) 156 ITR 323, the Hon'ble Supreme Court held that the Finance Act, 2003, to the extent indicated above, should be read as retrospective. In fact, in J.H. Gotla case [supra 6 cited], the Hon'ble Supreme Court observed:- "We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be subserved by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction." 44. The Constitutional Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the barred right or take away the accrued vested right. [T. Kaliamurthi v. Five Gori Thaikkal Wakf (2008) 9 SCC 306]. 46. From the judgments referred to above, it is very clear that any benefit that gets accrued by way of legislation cannot be denied/curtailed, more so, when it is clarificatory in nature like the present one and as such it has to be made retrospective in operation. 47. The petitioner's contention on the retrospective operation is also substantiated by the department action through the deficiency memo dated 07.07.2022 issued by the Assistant Commissioner, Nellore Division, for the refund claim filed for the period January, 2022 to March, 2022. The deficiency memo has advised the Petitioner to resubmit the refund application as prescribed vide CBIC Circular No.175/07/2022-GST dt.06.07.2022 along with all supporting documents. Copy of the refund claim in RFD-01 filed on 23.06.2022 along with deficiency memo dated 07.07.2022 is submitted before this Court along with a memo in USR No.42132 of 2022 dated 15.07.2022. 48. From the above, it is clear that the department has applied the Notification No.14/2022 - Central Tax dated 05.07.2022 even for the refund claim fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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