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TMI Blog2025 (1) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... tions filed within two years as per the time period prescribed under section 54 (1) of the Act. Rule is made absolute to the aforesaid extent.' The aforesaid decision of this Court is squarely applicable to the facts of the present group of petitions and nothing could be pointed out by the respondents to persuade this Court from taking a different view. Conclusion - Amendment to Rule 89(5) is applicable retrospectively, the petitioners are entitled to refunds under the amended formula, and the CBIC circular's prospective application is invalid. Petition allowed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE D.N.RAY Appearance : For the Petitioner(s) No. 1,2: Mr Abhay Y Desai (12861). For the Petitioner(s) No. 1,2: Mr D K Trivedi (5283). For the Respondent(s) No. 1,3,4: Mr Siddharth H Dave (5306). For the Respondent(s) No. 2,5,6: Notice Served. ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE D.N.RAY) 1. Heard learned Advocate Mr. D.K. Trivedi for the petitioners; learned Advocate Mr. Ankit Shah for the respondent No. 1 and learned Advocate Mr. Hirak Shah appearing for learned Senior Standing Counsel Mr. Nikunt K. Raval for the respondent Nos. 2 and 3. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELIGIBLE REFUND AMOUNT if we consider the new formulae as per Notification 14/2022-CT dtd 05/07/2020 (in regard to input and input services both) Incremental Eligible Refund Amount (Column 09 minus Column 07) 01. 11630/2023 Aug 2019 20/02/2020 (Pg. 60-61) (Rs.) 2,79,37,548 06/03/2020 (Pg. 64-67) (Rs.) 1,43,24,155 (Rs.) 2,25,73,631 (Rs.) 2,24,68,800 81,44,645 02. 11635/2023 Feb 2020 14/04/2020 (Pg. 60-61) 3,49,03,128 27/10/2020 (Pg. 66-69) 2,25,62,970 3,00,19,500 2,95,58,763 69,95,794 03. 11647/2023 Apr 2019 25/10/2019 (Pg. 60-61) 1,85,47,336 18/01/2020 (Pg. 66-69) 1,51,85,901 1,69,96,171 1,65,54,068 13,68,167 04. 11649/2023 July - 2019 19/03/2020 (Pg. 60-63) 5,80,97,383 06/03/2020 (Pg. 64-67) 4,83,00,532 5,23,07,866 5,21,71,741 38,71,209 7. DISCUSSION FINDINGS:- The formula for calculating the refund under Rule 89 (5) of the GST Rules was challenged before different High Courts on the ground that it was ultra vires to section 54 (3) of the GST Act and as the refund in respect of unutilized input tax credit attributable to input services was not being granted and, in the alternative, it was urged that the formula was defective as the entire input tax credit pertaining to inputs was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his context, it would be material to advert to the provisions of Rule 42. Rule 42 (1) provides that the ITC in respect of input goods or input services which attract the provisions of sub-Section (1) or sub-Section (2) of Section 17 being partly used for the purpose of business and partly for other purposes or partly used for affecting taxable supplies including zero rated supplies and partly for effecting exempts supplies shall be attributed for the purposes of business or for effecting taxable supplies in the manner which is indicated in the Rule. Sub-Section (1) of Section 17 provides that where the goods and services or both are used by a registered person partly for the purposes of any business and partly for any other purpose, the amount of credit shall be restricted to so much of the input tax as is attributable to the purpose of its business. Sub-Section (2) of Section 17 provides that where the goods or services or both are used by a registered person partly for effecting taxable supplies including zero rated supplies under the CGST Act or under the IGST Act and partly for effecting exempt supplies the amount of credit shall be restricted to so much of the input tax as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by prescribing an order of utilisation would take this Court down the path of recrafting the formula and walk into the shoes of the executive or the legislature, which is impermissible. Accordingly, we shall refrain from replacing the wisdom of the legislature or its delegate with our own in such a case. However, given the anomalies pointed out by the assessees, we strongly urge the GST Council to reconsider the formula and take a policy decision regarding the same. 10. Pursuant to the above directions issued by the Apex Court, the GST Council in its 47th Meeting held on 28/29.06.2022 considered the agenda item 3(ii) with regard to amendment in formula prescribed in Rule 89 (5) of the Rules for calculation of the refund of unutilized input tax credit on account of inverted duty structure as under: 7.2 The Principal Commissioner, GST Policy Wing informed that the Hon ble Supreme Court of India in case of UOI vs. M/s. VKC Footsteps vide its order dated 13.09.2021 had upheld the vires of Rule 89 (5) of the Central goods and Service Tax Rules, 2017 but had taken cognizance of the anomalies in the formula prescribed under Rule 89 (5) of the CGST Rules, 2017. The Hon ble Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted electricity by Generation Plants issued by the Regional Power Committee Secretariat as a part of the Regional Energy Account (REA) under clause (nnn) of sub-regulation 1 of Regulation 2 of the Central Electricity 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; 12. As per the aforesaid Rules, sub-rule (2) of the Rules provides as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supra) wherein, this Court has held as under:- 45. In case of Collector of Central Excise, Shilong vs. Wood Craft Products Ltd reported in (1995) 3 SCC 454 , the Hon ble Apex Court has held that a clarificatory notification would take effect retrospectively and such a notification merely clarifies the position. Clarificatory notifications have been issued to end the disputes between the parties. Therefore, Notification No. 14/2022 dated 05.07.2022 cannot be applied prospectively for the refund claim which were made within two years as prescribed under section 54(1) of the GST Act. It is not in dispute that the petitioner has filed refund claims within two years as stipulated in section 54(1) of the Act. 46. It is also not disputed by the respondent that the petitioner is entitled to the refund as per sub-section 3(ii) of section 54 of the Act being difference in the GST rates due to inverted rated structure and accordingly, the petitioner was granted refund though petitioner has filed refund applications pursuant to the deficiency memo issued repeatedly. 47. Considering the above provisions of the GST Act, the same would be applicable in the facts of the case irrespective of the no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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