Retrospective application of amended zero-rated supply rules rejected for pre-amendment transactions; remand direction modified

The amended definition of zero-rated supply in the IGST Act, inserting the words "for authorized operations" from 1 October 2023, could not govern transactions from March 2020 to June 2023. The Court therefore held that the earlier remand direction requiring examination of whether the services were for authorized operations was not sustainable for the pre-amendment period and deleted that direction. Liberty was preserved for the respondent to raise the plea before the adjudicating authority if advised. The review was thus allowed only to the limited extent of modifying the remand order, applying the principle that an amended statutory requirement does not apply retrospectively unless clearly provided.

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Issues: Whether the direction requiring examination of whether the services in question were for authorized operations was liable to be deleted in view of the amendment to the definition of zero-rated supply and the pre-amendment period involved.

Analysis: The relevant provision defining zero-rated supply was amended with effect from 1 October 2023 by inserting the words "for authorized operations" in clause (b) of sub-section (1) of section 16 of the Integrated Goods and Services Tax Act, 2017. Since the transactions concerned related to the period from March 2020 to June 2023, the amended expression could not govern the dispute for that period. Though Rule 89 of the Central Goods and Services Tax Rules, 2017 contains a reference to the expression, the Court confined the review to the correctness of the earlier remand direction in relation to the applicable statutory position.

Conclusion: The direction to examine whether the services were for authorized operations was deleted, while liberty was preserved for the respondent to raise that plea before the adjudicating authority if so advised.

Final Conclusion: The review application succeeded only to the extent of modifying the remand direction, and the matter was otherwise left to be considered by the adjudicating authority on any plea lawfully raised.

Ratio Decidendi: An amended statutory requirement cannot be applied to transactions occurring before the amendment unless the statute clearly provides otherwise.

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