Does amendment/s to Rule 37 is prospective or retrospective? And its implications?

[Amit Agrawal]

As you are aware, vide Notification No. 19/2022–Central Tax dated the 28th September, 2022, sub-rule (1) & (2) of rule 37 of the CGST Act, 2017 were substituted while sub-rule (3) thereof was omitted.

As per Clause 1 (2) of above said notification reads as follows: Save as otherwise provided in these rules, they shall come into force with effect from the 1st day of October, 2022.

Does these amendment/s to Rule 37 is prospective or retrospective? Please share your views with supporting legal reasoning.

And to make this discussion more meaningful and lively, I request you to also explain what will be implications if you feel that these amendments are prospective in nature (i.e. what happens to contraventions under second proviso to sub-section (2) of section 16 for past period & its recovery procedure as per law etc.?).

Similarly, I request you to also explain what will be implications if you feel that these amendments are retrospective in nature (i.e. how any tax-paper is supposed to follow these substituted rule for past period, effect of changes made in sub-rule (1) about quantum of ITC reversal etc?).

Thank you!

AI Summary

Debate Over Whether Amendments to Rule 37 of CGST Act, 2017 Are Prospective or Retrospective; Clarity Awaited Amendments to Rule 37 of the CGST Act, 2017, effective from October 1, 2022, have sparked a debate on whether they are prospective or retrospective. One participant argues that retrospective effect requires enactment by Parliament through a Finance Bill or Act, suggesting the amendments are prospective. Another highlights recommendations from the 48th Council meeting for retrospective amendment to sub-rule (1) for input tax credit reversal, clarifying ambiguities. Additionally, a new Rule 37A is proposed for credit reversal and re-availment mechanisms. Participants await official notifications to address these changes comprehensively.