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TMI Blog2023 (10) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sub-rules (4A) and (4B) of Rule 89 of the Rules) in proportion of the export turnover to the total turnover, as adjusted by excluding exempt supplies and supplies in respect of which the refund is claimed under Sub-rules (4A) and (4B) of Rule 89 of the Rules - Clause (C) of Sub-rule (4) of Rule 89 of the Rules, defines the expression turnover of zero rated supply of goods . There is no dispute that the amended Sub-rule (4) of Rule 89 of the Rules applies prospectively; that is, with effect from 23.03.2020, being the date when the Central Goods and Services Tax Act (Third Amendment) Rules, 2020 came into force. However, according to the Revenue, it has a retroactive operation for computing the refund of ITC in respect of exports made prior to the date of the amendment (23.03.2020) but applied for after the amendment. And, the applications filed after 23.03.2020 are required to be processed in accordance of the amended rules - The right for refund of the accumulated ITC stands crystalised on the date when the subject goods are exported. This is also reflected in Section 54 of the CGST Act. In terms of Section 54(1) of the CGST Act, the application for refund is required to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner had filed four separate applications for four quarters comprising of the period 01.10.2018 to 30.09.2019. The said applications were rejected by four separate orders (orders dated 15.09.2020, 24.09.2020, 22.10.2020 and 05.11.2020). 5. The petitioner s claim for refund was rejected on essentially, two grounds. First, that the petitioner had not produced the relevant Foreign Inward Remittance Certificates (FIRCs) and co-related them with the exports made. And second, that the computation of the eligible export turnover was not compliant with Rule 89(4)(C) of the Rules. 6. The petitioner appealed the said orders rejecting the refund for the four tax periods (01.10.2018 to 31.12.2018; 01.01.2019 to 31.03.2019; 01.04.2019 to 30.06.2019; and 01.07.2019 to 30.09.2019) and filed four separate appeals. The same were rejected by two orders-in-appeal: the first dated 18.06.2021 relating to the exports made during the period 01.10.2018 to 31.12.2018 and the second, also dated 18.06.2021, relating to the three quarters (that is, 01.01.2019 to 30.09.2019). 7. The petitioner succeeded in respect of the issue regarding non-submission of the FIRCs. But the Appellate Authority upheld the refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) Adjusted Total Turnover means the sum total of the value of- (a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; and (b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services, excluding (i) the value of exempt supplies other than zero-rated supplies; and (ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period. (F) Relevant period means the period for which the claim has been filed. 10. As is apparent from the above, the maximum amount of refund of ITC admissible is the fraction of the amount of ITC (as adjusted by ITC refundable under Sub-rules (4A) and (4B) of Rule 89 of the Rules) in proportion of the export turnover to the total turnover, as adjusted by excluding exempt supplies and supplies in respect of which the refund is claimed under Sub-rules (4A) and (4B) of Rule 89 of the Rules. 11. Clause (C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said value was less than the actual value of exports. 15. According to the respondents, Clause (C) of Sub-rule (4) of Rule 89 of the Rules is a procedural provision for the purpose of calculation of the admissible refund of ITC. Thus, the amended clause is applicable retrospectively. 16. There is no dispute that the amended Sub-rule (4) of Rule 89 of the Rules applies prospectively; that is, with effect from 23.03.2020, being the date when the Central Goods and Services Tax Act (Third Amendment) Rules, 2020 came into force. However, according to the Revenue, it has a retroactive operation for computing the refund of ITC in respect of exports made prior to the date of the amendment (23.03.2020) but applied for after the amendment. And, the applications filed after 23.03.2020 are required to be processed in accordance of the amended rules. It was contended on behalf of the Revenue that the amendment to Rule 89 of the Rules is merely a procedural amendment and therefore, the procedure as applied after the Central Goods and Services Tax Act (Third Amendment) Rules, 2020 came into effect would be fully operational notwithstanding that the application for the refund is in respect of expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g which the turnover is effected, that is, the date when the supplies are made. It would thus follow that the ITC relatable to the turnover of a period must unless it is indicated otherwise either expressly or by necessary implication be ascertained in terms of the rules as in force during the said period. 21. In this view, we find that the appellate authority erred in applying Rule 89(4)(C) of the Rules as amended with effect from 23.03.2020 for computing the export turnover for the purposes of determining the refund as claimed by the petitioner 22. In view of the above, the petitioner s claim for refund of the accumulated ITC in respect of its exports for the period of 01.10.2018 to 30.09.2019 is liable to succeed. 23. Having observed the above, it is also necessary to note that the amendment of Rule 89(4)(C) of the Rules has been struck down by the Karnataka High Court in W.P.(C) No. 13185/2020 captioned M/s Tonbo Imaging India Pvt. Ltd. v. Union of India and Ors., decided on 16.02.2023. Thus, as on date, the amended provisions are non-existent. It is well settled that if a statute or a statutory position is struck down as ultra vires the Constitution of India, it relates back t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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