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2023 (9) TMI 44
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....22, With W.P. (T) No. 2790 of 2022, With W.P. (T) No. 2796 of 2022, With W.P. (T) No. 2797 of 2022, With W.P. (T) No. 403 of 2023, With W.P. (T) No. 404 of 2023, With W.P. (T) No. 405 of 2023, With W.P. (T) No. 1986 of 2023 For the Petitioner : Mr. Tarun Gulati, Sr. Adv Mr. Sumeet Gadodia, Adv. Mr. Salona Mittal, Adv. (in all the cases) For the Resp.- UOI : Mr. Anil Kumar, Addl. SGI For the Respondents : Mr. P.A.S. Pati, Adv. Mrs. Ranjana Mukherjee, Adv. JUDGMENT PER DEEPAK ROSHAN, J: Heard learned counsel for the parties. 2. Since common issue is involved in all these writ applications and pertains to the same assessee for different period, as such all are being heard together and disposed of by this common judgment. For brevity; the facts of W.P. (T) No. 1719 of 2022 are being referred herein. The petitioner has prayed for the following reliefs; (i) For the issuance of an appropriate writ/ order/ direction, quashing and setting aside the part of Paragraph 47 of Circular No. 125/44/2019-GST dated 18.11.2019 (Annexure 6) ("Impugned Circular") issued by Respondent No. 2 which stipulates that while processing refund claims in case of exports, the lower o....
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.... writ applications for concerned period with respective order in original (OIO) and order in appeal (OIA). Sl.No. Writ Petition No. Period Amount (Rs) Details of OIO Details of OIA 1. WPT No. 403/2023 Nov to Dec' 2019 85,42,660/- 23.12.2021 30.8.2022 2. WPT No. 1719 of 2022 (Lead Matter) Jan to Feb 2019 1,12,49,220/- 2.2.2021 11.10.2021 3. WPT No. 2649/2022 March 2019 29,65,413/- 17.3.2021 25.10.2021 4. WPT No. 2650/2022 Sept to Oct 2018 41,08,693/- 28.10.2020 11.6.2021 5. WPT No. 2651/2022 April 2018 27,75,802/- 6.5.2020 25.1.2021 6. WPT No. 2655/2022 May' 2018 26,63,544/- 4.6.2020 25.1.2021 7. WPT No. 2704/2022 Aug 2018 30,31,925/- 8.9.2020 9.2.2021 8. WPT No. 2710/2022 April to May 2019 15,51,996/- 20.4.2021 11.4.2022 9. WPT No. 2790/2022 June 2018 22,67,825/- 8.9.2020 9.2.2021 10. WPT No. 2796/2022 Nov to Dec 2018 62,61,069/- 11.12.2020 7.10.2021 11. WPT No. 2797/2022 July' 2018 28,88,065/- 8.9.2020 9.2.2021 12. WPT No. 404/2023 ....
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....ll) at the time of actual export. Table 9A contains details of 14516 invoices which includes details of 4932 invoices having commercial value of Rs. 775,17,57,704/-. The Petitioner claimed refund of only 4927 invoices having commercial value of Rs. 774,44,24,401/-. However, the impugned Circular was issued by Respondent No. 2 in exercise of powers under Section 168 of the CGST Act. Para 18 of the Impugned Circular provided that while processing refund claims, information in Table 9 GSTR-1 of subsequent tax periods should also be taken into account. Petitioner filed its application for refund of unutilized ITC of Compensation Cess in respect of zero-rated supplies made during January and February 2019, claiming refund of Rs. 4,95,64,373/-. Refund was claimed as per the formula prescribed in 89(4). The component "Turnover of zero-rated supply of goods" is defined as the 'value of zero-rated supply of goods ...". Therefore, the Petitioner reflected the actual value of exports (reflected I GSTR-1 of September 2019). The case of the petitioner company is that an amount of Rs. 3,32,08,130/- was provisionally refunded to the Petitioner in terms of Section 54(6) of the CGST Act read ....
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....icularly Section 15 thereof, the value of supply of goods is the transaction value i.e., the price actually payable for the said supply. This is the only price that can be taken into account while calculating the refund amount. Paragraph 47 of the Impugned Circular cannot arbitrarily impose a new condition to determine the value of zero-rated exports to whittle down the benefit of refund granted in the Act / Rules. (ii) It is further well settled that a Circular must be within the four corners of the parent Act. In the present case, neither the CGST Act nor the CGST Rules contemplated comparison of the values of the tax invoice and the shipping bill and then take the lower of the two values. The said stipulation has been introduced for the first time in the Impugned Circular without there being any underlying provision. (iii) The above principles of law have also been applied in the context of circulars issued under Section 168 of the CGST Act and it has been held by various Hon'ble High Courts that a circular which is repugnant to the parent legislation cannot be applied to oust the legitimate claim of refund of ITC. (iv) Further, the Respondent No. 2 do....
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....x) The finding that BRCs have not been enclosed to the memo of appeal is also ex-facie incorrect, in view of the fact that all the annexures were sent vide email dated 22.4.2021 (Annexure - 11). (xi) In the OIO, though the value of "Turnover of zero-rated supply of goods" has been calculated as Rs. 583,86,12,617/-; while calculating the value of "Adjusted Total Turnover", the value of "Turnover of zero-rated supply of goods" has been taken to be Rs 603,81,13,134/-, a higher amount, instead of Rs. 583,86,12,617/-. As result of taking the higher amount on the denominator side of the formula, the eligible refund of the Petitioner has been reduced. Thus, this action of the Respondent authorities in deliberately taking a higher figure in the denominator side, despite their own finding to the contrary, is clearly arbitrary and illegal. 6. Learned senior counsel further raised an additional ground to the extent that in the counter-affidavit the respondents have come with a statement that since the notification issued by CBEC has now been made a Rule in view of amendment in Rule 89(4) of CGST Rules, 2017, vide Notification No. 14/2022 - Central Tax dated 05.07.2022; he contende....
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....scribes detailed guidelines on "scrutinizing refund claims for completeness and eligibility" the demand of issuance of writ/order/direction and quashing and setting aside the part of paragraph 47 of Circular No. 125 is without any legal basis. 8. Learned senior counsel further submits that the refund granting authority was in right earnest verifying the turnover of zero-rated supply by going through invoices issued by the Assessee under Rule 46 of the CGST Rules in such zero-rated supply. Even Central Board of Excise & Customs while clarifying various issues in relation to processing of claims for refund vide Circular No. 37/11/2018-GST dated 15-032018 detailed out necessity of verification of invoices produced by claimants while processing refund claim on ITC. Clause 14.1 of this circular state, "..... For processing of refund claims of input tax credit, verifying the invoice details is quintessential. In a completely electronic environment, the information of the recipients' invoices would be dependent upon the suppliers' information, thus putting an in-built check-and-balance in the system. However, as the refund claims are being filed by the recipient in a semi-el....
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.... two values has been stressed upon for refund consideration. The petitioner in their submission reiterated that during course of export they raised commercial invoice at port on the basis of revised upgraded value. These enhanced values then been declared in Table 9A of GSTR-1 in the month of September-2019 to revise and enforce amendment in export value and with such revision they intend to claim refund on the upgraded value. But in the aforesaid Circular certain directions have been given in case where difference exists in values between tax invoice generated under rule 46 of the CGST Rules and corresponding Shipping bill. Para 47 of Circular No. 125/44/2019-GST dated 18.11.2019 is very specific in such cases where it instructs to take lower value of the two. Thus, all the writ applications are very well covered under para-47 where instruction has been given for processing of refund distinctly for those cases where differences exist between tax invoice issued under rule 46 of the CGST, Rule and corresponding shipping bill values. 10. Learned ASGI further submits that the said clarification was carried out with the approval of GST Council, which is a constitutional body establi....
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....e as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette". Except for Rules 7, 9, 10, and 19 for which dates with retrospective operation have been provided, no other rules have been given any retrospective effect. In order to decide the question as to whether the amendment in Rule 89(4) of the CGST Rules, 2017 which has introduced the explanation that came in the year 2022 has a retrospective effect; we will have to see the other parameters also. The 2022 Amendment Rules inserts a new stipulation for comparison between two values. Such an exercise was not contemplated prior to the amendment as what was taken into account was the actual transaction value. Therefore, by way of the amendment, a substantive change has been brought about in the law and therefore the amendment ought to operate prospectively. Further, mere use of the term "explanation" will not be indicative of the fact that the amendment is clarificatory/declaratory. While Paragraph 47 contemplates comparison of the value of export in the tax invoice and in the shipping bill, i.e., the export document (which can either be FOB or CIF value), the explan....
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....) by Rule 8 of Amendment Rules will have a prospective effect. 15. As indicated hereinabove, the 2022 Amendment Rules inserts a new stipulation for comparison between the two values. Such an exercise was not contemplated prior to the amendment as what was taken into account was the actual transaction value. Therefore, by way of the amendment a substantive change has been brought about in law and therefore, we are of the view that amendment will operate prospectively. In this regard. Reference may be made in the case CIT Versus Vatika Township (P) Ltd., reported in 2015 (1) SCC 1 wherein at para 28 and 44 the law has been laid down as under:- "28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded o....
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....in (2005) 12 SCC 717 has laid down the law and held at para 17 and 19 as under:- "17. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165 : (2000) 241 ITR 312] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. (See also Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139 : 1980 SCC (Tax) 67].) An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section [See Sonia Bhatia v. State of U.P., (1981) 2 SCC 585, 598 : AIR 1981 SC 1274, 1282 para 24] . If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are ....
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.... assessee by the appellant has, thus, rightly been held to be liable to be set aside. 51. Subject to the constitutionality of the Act, in view of the Explanation appended to this [sic Section 65(19)(ii) of the Finance Act, 1994], we are of the opinion that the service tax, if any, would be payable only with effect from May 2008 and not with retrospective effect. In a case of this nature, the Court must be satisfied that Parliament did not intend to introduce a substantive change in the law." 18. It goes without saying that a policy can be changed only by way of an amendment under the parent act and not by a circular and the law is well settled that no taxes shall be levied or collected by way of executive fiat. In this regard reference may be made to a celebrated Constitutional Bench judgment of the Hon'ble Apex Court rendered in the case of Kunnathat Thatehunni Moopil Nair etc. -versus State of Kerela and another reported in 1960 SCC Online SC 7 wherein the Hon'ble Supreme Court has held as under. Relevant portion of para-7 is extracted herein below: - "7. The most important question that arises for consideration in these cases, in view of the stand taken by t....