Case Law Details
Lupin Limited Vs State of Maharashtra (Bombay High Court)
The Bombay High Court reviewed its earlier order in the case concerning errors and a request for modification of directions issued while remanding the matter. The Court identified multiple clerical mistakes in the original order, including incorrect recording of counsel appearances, misidentification of the authority to whom the matter was remanded (Assistant Commissioner instead of Deputy Commissioner of State Tax), and incorrect attribution of submissions in a paragraph. The Court directed that these corrections be made immediately and a corrected order be uploaded.
On merits, the review was sought regarding a specific direction requiring the authority to examine whether the services in question were for “authorized operations” as endorsed by the specified officer of the zone. This direction was originally issued based on submissions referring to Section 16 of the Integrated Goods and Services Tax Act, 2017 read with Rule 89 of the Central Goods and Services Tax Rules, 2017, which relate to refund eligibility in cases involving authorized operations.
However, the applicant pointed out that the expression “for authorized operations” was inserted into the definition of “Zero Rated Supply” under Section 16 by the Finance Act, 2021, with effect from 1 October 2023. The transactions in the present case pertained to the period from March 2020 to June 2023, i.e., prior to the amendment. Upon examining the provision, the Court agreed that the requirement relating to “authorized operations” was not applicable to the relevant period.
Accordingly, the Court held that the direction in paragraph 12 requiring examination of whether services were for authorized operations was liable to be deleted. At the same time, it granted liberty to the concerned respondent to raise this plea before the Deputy Commissioner of State Tax, and directed that if such a plea is raised, it should be considered on its own merits.
An additional submission was made that under Rule 89 of the Rules of 2017, the application for refund is to be filed by the supplier of services, and not by a unit located in a Special Economic Zone. The Court did not decide this issue but directed that it may be considered by the Deputy Commissioner if raised.
The review application was thus partly allowed, limited to deletion of the impugned direction, while preserving liberty for parties to raise relevant contentions before the appropriate authority.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
There occurred certain errors in the order sought to be reviewed. Firstly, Mr. M.I. Dhatrak, learned Counsel, appeared for respondent nos. 2 to 7, whereas, his appearance is mentioned for respondent nos. 1 to 7. Another apparent error is that in paragraph 12, the matter is said to be remanded back to respondent no.6 – Assistant Commissioner of the State Tax, whereas, it should be remanded back to respondent no.5 – Deputy Commissioner of State Tax. There occurred yet another mistake. It is mentioned in paragraph 10 that A.G.P. made certain submissions, when, in fact, the submissions noted in paragraph 10 were made by Mr. Dhatrak.
2] Necessary corrections shall be made immediately, and corrected copy of order be uploaded forthwith.
3] Heard.
4] The review is sought on the ground that while remanding the matter back, this Court has directed the authority below to examine whether the services under question were for authorized operations, as endorsed by the specified officer of the zone. The relevant paragraph reads thus :
“12. That being so, we are of the considered view that this matter will have to be remanded back to respondent No.6 – Assistant Commissioner of the State Tax, to pass orders afresh, in the light of the law laid down in Britannia’s case and after examining whether the services under question were for authorized operations as endorsed by the specified officer of the zone.”
5] While passing above order, our attention was drawn to Section 16 of the Integrated Goods and Service Tax Act, 2017 (for short “Act of 2017”), read with Rule 89 of the Central Goods and Services Tax Rules, 2017 (for short “Rules of 2017”), by the Special Counsel for respondent nos. 2 to 7, to contend that refund of tax can be claimed, if the services are for authorized operations, as endorsed by the specified officer of the zone.
6] Mr. Prakash Shah, learned Senior Counsel for the applicant, has drawn our attention to Section 16 of the Act of 2017 to point out that the definition of ‘Zero Rated Supply’ was amended by the Finance Act, 2021, with effect from 1/10/2023, where the words ‘for authorized operations’ were inserted in Clause (b) of subsection (1) of Section 16.
7] We have gone through the said provision to find that the definition was indeed amended on the aforesaid date. The transaction under question pertains to the period prior to 1/10/2023, and to be very precise, the transaction is for the period from March – 2020 to June – 2023.
8] In that view of the matter, since the above expression was added in October – 2023, though there is reference to the said expression under Rule 89 of the Rules of 2017, we are of the view that the later part of the direction given in paragraph 12, , to examine whether the services under question were for authorized operations will have to be deleted. We, however, grant liberty to the concerned respondent to put forth this plea, if so desired before respondent no.5 and if so raised, it shall be considered on its own merits.
9] At this stage, Mr. Prakash Shah, learned Senior Counsel, submits that in terms of Rule 89 of the Rules of 2017, it is the supplier of services, who may file application for refund with evidence regarding receipt of services for authorized operations, and not the entities, like petitioner, which is a Unit located in special economic zone. Thus, according to him, this provision will not apply to the Unit located in special economic zone.
10] This aspect will be considered by respondent no.5 – Deputy Commissioner of State Tax, if so pleaded.
11] Accordingly, the later part of paragraph 12 shall stand deleted with liberty as mentioned above. The application is partly allowed in terms of above. Pending application also stands disposed of.
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