2020 (12) TMI 1042 - HC - GST

Court clarifies Rule 96(10) under CGST Rules, stays proceedings (10)

The Court addressed the interpretation and applicability of Rule 96(10) of the CGST Rules in relation to Notification No. 54/2018. It considered the ... Retrospective applicability of statutory notification - Prospective application of notification - Rule 96(10) of the CGST Rules - Notification No. 54/2018 - Stay of proceedings pursuant to statutory notice - Judicial review under Article 226Stay of proceedings pursuant to statutory notice - Judicial review under Article 226 - Interim suspension of action under the notice dated 24.11.2020 - HELD THAT: - The Court, after hearing the petitioner and noting the challenge to the retrospective operation of Notification No.54/2018, directed that proceedings pursuant to the notice dated 24.11.2020 shall remain stayed until the next date of hearing. The order was made to preserve the parties' positions pending issuance of notice to respondents and further consideration of the challenge under Article 226. The interim relief is limited in time and conditional on the returnable date fixed by the Court. [Paras 7]Proceedings pursuant to the notice dated 24.11.2020 are stayed until the next date of hearing (24.02.2020).Retrospective applicability of statutory notification - Prospective application of notification - Rule 96(10) of the CGST Rules - Notification No. 54/2018 - Challenge to the retrospective operation of Notification No.54/2018 directed to be examined by respondents after issuing notice - HELD THAT: - The Court recorded that a Coordinate Bench had held Notification No.54/2018 to be effective with effect from 23.10.2017 but not from the inception of Rule 96(10). The petitioner contends that the Notification itself specifies commencement from the date of publication in the Official Gazette and therefore retrospective application back to the inception of the Rule is impermissible. The Court did not decide the substantive question on merits; instead it issued notice to the respondents to explain the position and to re-examine the correctness of applying the Notification from 23.10.2017 as observed by the Coordinate Bench. The matter is thus reserved for substantive consideration after respondents' response. [Paras 3, 4, 5, 6, 7]Notice issued to respondents for explanation; substantive question of retrospective applicability of Notification No.54/2018 to be considered on further hearing.Final Conclusion: The Court granted an interim stay of action under the notice dated 24.11.2020 until the next hearing (24.02.2020), issued notice to respondents to address the challenge to the retrospective application of Notification No.54/2018 vis-a -vis Rule 96(10) of the CGST Rules, and directed that the substantive question be considered thereafter. Issues:1. Interpretation of Rule 96(10) of the CGST Rules.2. Applicability of Notification No. 54/2018-Central Tax dated 9.10.2018.3. Jurisdiction and legality of giving retrospective effect to notifications.4. Issuance of writ of mandamus or other orders to quash impugned notice.5. Stay on further proceedings pending the final hearing.Analysis:1. The petitioners sought a declaration regarding the applicability of Rule 96(10) of the CGST Rules as amended by Notification No. 54/2018. They argued that the retrospective effect given to the notification was without jurisdiction and violated Article 14 of the Constitution of India.2. A previous judgment by a coordinate Bench of the Court had held that Notification No. 54/2018 should be effective from 23.10.2017 and not earlier. The petitioners contended that the notification itself stated it would come into force from the date of its publication in the official gazette, contrary to the Department's interpretation.3. The Court noted the concerns raised by the petitioners regarding indiscriminate issuance of notices by the Department based on the retrospective application of the notification. The respondents were directed to clarify the issue raised by the petitioners.4. Considering the arguments presented by the learned counsel, the Court issued notice to the respondents returnable on a specified date. It was ordered that proceedings pursuant to the impugned notice dated 24.11.2020 shall remain stayed until the next hearing date, providing interim relief to the petitioners.In conclusion, the judgment addressed the interpretation and applicability of Rule 96(10) of the CGST Rules in light of Notification No. 54/2018, focusing on the retrospective effect and jurisdictional aspects. The Court's decision to issue notice to the respondents and stay further proceedings reflected a cautious approach to ensure a fair and thorough examination of the legal issues involved in the case.