Tata Steel Limited Vs Union of India (Jharkhand High Court)
Jharkhand High Court held that the explanation inserted in Rule 89 (4) of CGST Rules, 2017 vide Notification No. 14/2022-Central Tax dated 05.07.2022 is not clarificatory in nature and thus will have a prospective effect.
Facts- The petitioner requires coal for manufacturing iron and steel. The petitioner avails Input Tax Credit (“ITC”) of the said compensation cess charged on supply of coal. Since the Petitioner undertakes export of goods under Bond/ Letter of Undertaking without payment of tax, it results in accumulation of balance of ITC of Compensation Cess.
Petitioner filed its application for refund of unutilized ITC of Compensation Cess in respect of zero-rated supplies, 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).
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 with Rule 91(2) of the CGST Rules. Thereafter, a show cause notice was issued to the Petitioner in RFD-08. It was indicated that value of “Turnover of zero rated supply of goods” indicated in the refund application could not be ascertained with certainty. Thereafter, Impugned Order in Original was passed in RFD-06 denying refund to the tune of Rs. 1,12,49,220/-.
Conclusion- 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, that amendment will operate prospectively.
Held that the amendment in Rule 89 (4) of CGST Rules, 2017 which came into effect vide Notification No. 14/2022-Central Tax dated 05.07.2022 is not clarificatory in nature and thus will have a prospective effect.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
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 of the values indicated in the tax invoice and the shipping bill should be taken into account, as being beyond the purview of and ultra vires the provisions of the Central Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Rules, 2017, as well as being manifestly arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India.
(ii) As an alternative prayer (i), for the issuance of an appropriate writ!order! direction including a writ in the nature of a declaration, holding and declaring that stipulation contained in paragraph 47 of the Impugned Circular will not be applicable in cases where the value of exports has been subsequently amended in Table 9 of GSTR1 of the subsequent tax period on the basis of the shipping bills to reflect the actual transaction value of export of goods, and thus such cases will in turn be governed by Paragraph 18 of the said circular which mandates that information contained in Table 9 of FORM GSTR-1 of the relevant tax period as well as that of the subsequent tax periods should be taken into cognizance while processing refund claims.
(iii) For the issuance of an appropriate writ! order! direction for quashing and setting aside the Order in Original dated 2.2.2021 issued in Form GST RFD-06 (Annexure – 9) and the Order in Appeal dated 11.10.2021 (Annexure – 12) in as much as they seek to curtail the amount of refund of unutilised balance of Input Tax Credit (“ITC”) of compensation cess on account of zero-rated supplies of goods to which the Petitioner is entitled, by solely placing reliance on Paragraph 47 of Circular No. 125/44/2019-GST dated 18.11.2019 (Annexure – 6).
(iv) For the issuance of an appropriate writ! order ! direction including a writ in the nature of mandamus to direct the Respondent Authorities to refund the amount of Rs. 1,12,49,220!- being the shortfall amount to which the Petitioner is entitled to be refunded as per the formula prescribed in Rule 89(4) of the CGST Rules and as per the figures provided by the Petitioner in its application for refund in Form GST RFD-01 dated 22.12.2020 (Annexure – 5) along with the stipulated interest under Section 56 of the Central Goods and Services Tax Act, 2017.
For convenience a chart is being given below which will indicate the alleged amount of refund/interest and demand involved in respective writ applications for concerned period with respective order in original (OIO) and order in appeal (OIA).
