Power generating units can claim Input Tax Credit refunds for electricity exports under amended Rule 89(2) CGST Rules 2022

The AP HC allowed the petition regarding refund of Input Tax Credit for zero-rated supply of electrical energy across borders. The court held that amended Rule 89(2) of CGST Rules, 2022 was clarificatory in nature, addressing defects in the original rule that created problems for power generating units claiming refunds on electricity exports. The amendment clarified how transmission of intangible electrical energy could be proved, since traditional shipping bills were inadequate. Following Supreme Court precedent in Vatika Township case, the court ruled that clarificatory amendments conferring benefits should be given retrospective effect. The matter was remanded to the Deputy Commissioner for processing the refund claim.

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Issues Involved:
1. Non-submission of shipping bills.
2. Proof of export of electricity.
3. Maintainability of writ petitions without availing alternate remedies.
4. Retrospective application of the amended Rule 89 of CGST Rules, 2022.

Detailed Analysis:

1. Non-submission of Shipping Bills:
The petitioner contended that under Rule 89 of CGST Rules, 2017, it is impossible to generate shipping bills for electricity as it is intangible and transmitted through transmission lines. The authorities initially rejected the refund claim due to the non-submission of shipping bills as required under Rule 89(2)(b) of CGST Rules, 2017. The petitioner argued that shipping bills are custom documents not applicable to electricity. The court acknowledged that the transmission of electricity across borders is a recent phenomenon and suitable amendments should have been made to accommodate this.

2. Proof of Export of Electricity:
The petitioner provided Regional Energy Account (REA) reports as proof of export, which was accepted in subsequent notices. The court noted that the authorities had realized their mistake in insisting on proof of export to Bangladesh from the delivery point in Bohrompur, West Bengal, and thus, in later orders, only rejected the claim due to non-production of shipping bills. The court concluded that the REA reports could be used to establish the export of electricity.

3. Maintainability of Writ Petitions:
The respondents argued that the writ petitions were not maintainable as some were filed directly under Article 226 of the Constitution of India without availing alternate remedies. The petitioner countered that the GST Tribunal was not yet constituted, leaving no efficacious or alternative remedy. The court held that in the absence of the Tribunal, the writ petitions were maintainable and that filing appeals before the Appellate Authority again would serve no useful purpose.

4. Retrospective Application of Amended Rule 89 of CGST Rules, 2022:
The petitioner argued that the amendment to Rule 89 of CGST Rules, 2022, which allows the use of REA reports as proof of export, should be given retrospective effect. The court examined the amendment and concluded that it was clarificatory and beneficial, thus should be applied retrospectively. The court referenced several judgments supporting the principle that beneficial legislation should be applied retrospectively.

Conclusion:
The court allowed the writ petitions, set aside the orders under challenge, and remanded the cases back to the respective authorities to deal with the refund claims in terms of the court's order. The petitioner was directed to file relevant reports evidencing the transmission of electricity before the appropriate authorities if not already filed. The court emphasized that the amendment to Rule 89 of CGST Rules, 2022, should be applied retrospectively, acknowledging the department's application of the amendment for refund claims filed before the amendment date.

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