2020 (8) TMI 138 - HC - Central Excise

Retrospective application of substituted provision in Notification No.14/2016 upheld. /2016

The court held that the substitution introduced by Notification No.14/2016 was retrospective, replacing the original procedure and making the new ... One year from the relevant date for refund - relevant date as date of receipt of payment in convertible foreign exchange - substitution of a notification and its retrospective effect - refund of input service tax/CENVAT credit under Rule 5 and Notification No.27/2012Substitution of a notification and its retrospective effect - relevant date as date of receipt of payment in convertible foreign exchange - one year from the relevant date for refund - Whether the substitution effected by Notification No.14/2016 (01.03.2016) operates retrospectively so that the relevant date for filing refund claims is the date of receipt of payment in convertible foreign exchange and the refund applications filed for the periods in question are time barred. - HELD THAT: - The court held that a 'substitution' replaces the earlier text and must be read as having put the new words in place of the old; it is not a mere prospective procedural change. Accordingly, the substituted clause in Notification No.14/2016, which fixes the relevant date for service providers as the date of receipt of payment in convertible foreign exchange (for services completed prior to such receipt), must be read in place of the earlier provision. On that construction the relevant date for the petitioner's refund claims is the date of receipt of convertible foreign exchange and, since the FIRCs/receipt dates fell beyond the one year period measured from that relevant date, the claims were time barred. The court rejected the petitioner's contention that the substitution should be given only prospective effect so as to preserve any vested rights, observing that the decisions relied upon by the petitioner did not deal with the specific question of substitution and that established authorities support reading a substituted provision as operative for the same period as the original provision.Substitution in Notification No.14/2016 is to be read as replacing the earlier provision; the relevant date is the date of receipt of payment in convertible foreign exchange and the refund applications for the stated periods are time barred.Final Conclusion: Both writ petitions are dismissed on the ground that the substituted provision fixing the relevant date as the date of receipt of payment in convertible foreign exchange applies, and the refund claims for the periods relied upon by the petitioner are barred by the one year limitation. Issues Involved:1. Whether the reckoning of the relevant period brought about through Notification No.14/16 dated 01.03.2016 by substitution would be prospective or retrospective in nature.Issue-wise Detailed Analysis:1. Whether the reckoning of the relevant period brought about through Notification No.14/16 dated 01.03.2016 by substitution would be prospective or retrospective in nature:The petitioner, an Export Oriented Unit, filed refund claims for Input Service Tax Credit under Rule 5 of the CENVAT Credit Rules 2004 r/w Notification No.27/2012-CE (NT) dated 18.06.2012. The respondent rejected the claims on the grounds that they were time-barred, stating that the relevant date for filing the refund claim is the date of receipt of payment in convertible foreign exchange. The petitioner argued that the amendment introduced by Notification No.14/2016 dated 01.03.2016 should apply prospectively and not to earlier quarters. The respondent countered that the amendment was a substitution and thus applied retrospectively.The court examined Section 11(B) of the Central Excise Act 1944 and the relevant notifications. It noted that the original Notification No.27/12 dated 18.06.2012 required the claimant to file the application before the expiry of the period specified in Section 11B. Notification No.14/2016 substituted Clause 3(b) of Notification No.27/12, specifying that the relevant date would be one year from the date of receipt of payment in convertible foreign exchange.The court clarified that the term 'substitution' means replacing the original words, phrases, or sentences with new ones, effectively making the new provision part of the original notification from its inception. Thus, the substitution in Notification No.14/2016 is retrospective, replacing the original procedure provided in Notification No.27/12.The court referenced several judgments to support this interpretation, including the Hon'ble Division Bench of the Karnataka High Court in Fosroc's case and the Constitution Bench of the Supreme Court in Shamarao V. Parulekar, which held that substitution implies the new provision replaces the old one from the date the original provision was enacted.The court concluded that the respondent's reasoning that the relevant date is the date of receipt of payment in convertible foreign exchange, and thus the applications were time-barred, was correct. The petitioner's reliance on the cases of TARAJYOT POLYMERS LTD and SODEXO FOOD SOLUTIONS was found inapplicable as they did not deal with the substitution of a provision.In conclusion, the court dismissed the writ petitions, upholding the respondent's decision that the refund claims were time-barred due to the retrospective application of the substituted provision in Notification No.14/2016.