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2022 (9) TMI 1386 - ANDHRA PRADESH HIGH COURT

Other Citation: 2022 (65) G. S. T. L. 263 (A. P.) , [2023] 108 G S.T.R. 307 (AP)

M/S. SEMBCORP ENERGY INDIA LIMITED, VERSUS THE STATE OF ANDHRA PRADESH, REP. BY ITS
PRINCIPAL SECRETARY TO GOVERNMENT, DEPARTMENT OF REVENUE (STATE TAX) ,
AMARAVATHI, GUNTUR

Writ Petition No.11194 of 2021,Writ Petition No.11198 of 2021,Writ Petition No.11206 of 2021,Writ Petition
No.11263 of 2021,Writ Petition No.17275 of 2021,Writ Petition No.28836 of 2021,Writ Petition No.30292 of
2021

Dated: - 26-8-2022

Rejection of refund claim - zero rated supply - whether the petitioner has supplied Electrical
Energy across the border? - entitlement for refund of Input Tax Credit - whether amended Rule
89(2) of CGST Rules, 2022 is clarificatory or declaratory? - HELD THAT:- Circular No.175/07/2022-
GST dated 06.07.2022 issued by Ministry of Finance, Government of India clearly establishes that
amendment to Rule 89 of CGST (Amendment) Rules, 2022 was carried out to cure the defect in Rule 89
of CGST Rules, 2017, because of the problem faced by power generating units in filing refund claims of
unutilised Input Tax Credit on export of electricity.

Further, a perusal of the amendment to Rule 89(2) of CGST Rules, would inter-alia show that the said
Rule came to be amended only to clarify the anomaly that was existing with regard to production of
material evidencing export of a thing which is intangible in nature. This clarification came to be made since
the situation namely transmission of energy could not have been visualized when Rule 89(2) was
incorporated in the Statute book. Production of shipping bills will not prove or establish by any means the
quantity of energy transmitted. Hence, by no stretch of imagination, the amendment can be said to be
declaratory in nature, but it can only be a one, which would be curing the defect by issuing necessary
clarification as to how transmission of electrical energy can be proved - Rule 89 of CGST (Amendment)
Rules, 2022 is only clarificatory in nature.

When amendment/notification dated 05.07.2022 issued by Government of India is held to be

curative or clarificatory in nature, the question now would be whether the said clarification is
retrospective in nature? - HELD THAT:- A proviso, which is inserted to remedy unintended
consequences and to make the provision workable, a proviso which supplies an obvious omission in the
section and is required to be read into the section to give the section a reasonable interpretation, requires
to be treated as retrospective in operation so that a reasonable interpretation can be given to the section
as a whole - The Constitutional Bench of Hon’ble Supreme Court in COMMISSIONER OF INCOME TAX
(CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED [2014 (9) TMI 576 -
SUPREME COURT] while deciding the question as to whether the insertion of proviso to Section 113 by
Finance Act, 2002 is retrospective, discussed the general principles concerning retrospectivity and it was
held that where a benefit is conferred by a legislation, the rule against a retrospective construction is
different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment
on some other person or on the public generally, and where to confer such benefit appears to have been
the legislators' object, then the presumption would be that such a legislation, giving it a purposive
construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat
procedural provisions as retrospective.

It is well settled law that no statute shall be construed to have a retrospective operation until its language
is such that would require such conclusion. The exception to this rule is enactments dealing with
procedure. This court held that the law of limitation, being a procedural law, is retrospective in operation in
the sense that it will also apply to the proceedings pending at the time of enactment as also to the
proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the
new provisions came into force - it is clear that any benefit that gets accrued by way of legislation cannot
be denied/curtailed, more so, when it is clarificatory in nature like the present one and as such it has to be
made retrospective in operation.

Petition allowed - remanded back to the Deputy Commissioner of Central Tax to deal with the claim of
refund in terms of this common order.

Judgment / Order

HON’BLE SRI JUSTICE C. PRAVEEN KUMAR AND HON’BLE SRI JUSTICE TARLADA
RAJASEKHAR RAO

Counsel for the Petitioner(s) :1) Sri Raghavan Ramabhadran

Counsel for the Respondents : 1) Addl. Advocate General-II for respondent no.1.

2) Sri Suresh Kumar Routhu, Senior Standing Counsel For CBIC.

COMMON ORDER:- (per the Hon’ble Sri Justice C. Praveen Kumar)

Heard Sri Raghavan Ramabadran, learned counsel for the petitioner, learned Special Government
Pleader for Commercial Tax, for respondent no.1 and Sri Suresh Kumar Routhu, learned Senior Standing
Counsel for Central Board of Indirect Taxes and Customs [for short, “CBIC”] for respondent nos.2 and 3.

2. The issues involved in all the seven (7) writ petitions are one and the same. It is to be noted that
W.P.Nos.11194, 11206 & 11263 of 2021 came to be filed against the order of Additional Commissioner,
(GST Appeals) and W.P.Nos.11198, 17275, 28836 & 30292 of 2021 are filed against the order of Deputy
Commissioner of Central Tax.

3. W.P.No.11194 of 2021, which is filed, against the order in Appeal No.GUN-GST-000-APP-001-20-21

GST, dated 30.04.2020, wherein the order rejecting refund was upheld, is taken as a lead petition for the
purpose of deciding the issues involved.

4. In a nut-shell, the facts in issue, are that there was a Memorandum of Understanding for the purpose of
supply of power between India and Bangladesh. The petitioner participated in the tender process floated
by the Bangladesh Power Development Board [for short, “BPDB”] and was awarded contract by BPDB,
pursuant to which, a Letter of Intent for purchase of 250 MW electricity power, was issued on 07.08.2018.
Thereafter, the petitioner entered into a Power Purchase Agreements (PPAs) with BPDB and started
supplying electricity/electrical energy to BPDB in accordance with the Indian Electricity Act, 2003 and the
Rules and Regulations made thereunder. The Central Electricity Regulatory Commission, which is a
statutory body under Section 76 of the Electricity Act, 2003, framed Regulations and Guidelines on Cross
Border Trade of Electricity (Guidelines for Import/Export (Cross Border) of Electricity, 2018). Necessary
guidelines to that effect were issued on December, 2018. As per the Regulations, the participating entities
in India, proposing to engage in cross border trade of electricity with neighbouring countries, shall first
obtain approval of designated authority appointed by the Central Electricity Authority. The material on
record show that the petitioner, after obtaining approval from the Central Electricity Authority, Ministry of
Power, Government of India, entered into Power Purchase Agreement, with a unit in Bangladesh. It is
needless to mention that the electricity to be supplied by the petitioner to BPDB would be as per the
dispatch schedule provided by BPDB and then injected to the Transmission Grid at the interconnection
point located in Andhra Pradesh. Reading meters would be installed at the place, where the electricity
generated is injected into Inter- State transmission line, so as to record the quantum of electricity that has
been supplied by the petitioner to BPDB. The injected electricity would then get transmitted from the
interconnection point to Bohrompur substation, West Bengal, India, which is the ‘Delivery Point’ through an
Inter-State transmission line. From the said point, the electricity would be transmitted to Bangladesh
through the cross border transmission line, between Bohrompur substation, India and Bheramara
substation, Bangladesh.

(a) The material on record further indicates that Regional Energy Account (REA) report is being
issued on monthly basis by the Southern Regional Power Committee, which is a unit of Central
Electricity Authority of Government of India, indicating the number of units of electricity transmitted
by each supplier of electricity to a particular recipient. The report also identifies the destination to
which electricity is supplied by the petitioner.

5. The circumstances, which made the petitioner to file the writ petition, are:-

(a) Since export of electrical energy is treated as Zero rated supply under Section 16 of IGST Act,
2017, the petitioner applied for refund of unutilized Input Tax Credit through a refund claim by filing
application under Form GST RFD-01A in terms of Section 54 of CGST Act, 2017 read with Section
16(3) of IGST Act, 2017.

(b) On 17.05.2019, the third respondent issued a Memo, demanding the petitioner to file (1) Copy of
Input Tax Credit Register; (2) Copy of Input Tax Credit Invoices and (3) A statement containing the
number and date of shipping bills or bills of exports and the number and date of the relevant export
invoices. Except for the statement containing the number and date of shipping bills or bills of export,
the petitioner submitted all other documents including the Regional Energy Account showing the
units of electricity exported as demanded in the memo. In so far as non- submission of the shipping
bill, the petitioner addressed a letter to third respondent, stating that shipping bill will not be
available and there is no requirement under the Customs Law, for filing of shipping bill or any similar
documents showing export of electrical energy as required for physical export of tangible goods. It is
stated that generation and filing of shipping bill is not possible for transmission of electricity and
there is no requirement for filing of any shipping bill or bill of export for electrical energy.

(c) On 28.06.2019, a Show Cause Notice was served on the petitioner, rejecting the claim for refund
to an extent of Rs.5,67,94,499/-, on the ground that as the Petitioner failed to submit shipping bill
and Export General Manifest [EGM] along with refund application, evidencing delivery of electricity
at Bohrompur Station, the same cannot be termed as ‘export of goods’ under Section 2(5) of the
IGST Act. A detailed reply came to be filed by the petitioner on 24.07.2019 and a personal hearing
was also given. On 20.09.2019, the third respondent rejected the request for the month of March,
2019. An appeal came to be filed before the second respondent reiterating the submissions.

(d) On 30.04.2020, the impugned order came to be passed upholding the order-in-original, rejecting
the claim of refund on the following grounds

(1) there is no provision of law, exempting the submission of shipping bill in respect of export
of electricity and that the sanctioning authority cannot extend an exception which is not there
in the law;

(2) Adjudicating Authority cannot be expected to condone or overlook non-filing of shipping

bill since they are not vested with such discretion power and

(3) as the delivery point of electricity is in India, it cannot be said that the impugned
transaction amounts to export of goods. Challenging the same, the present writ petitions
 came to be filed.

6. From the above, it is clear that the request came to be rejected mainly on the two grounds. (1) The
shipping bill, as required under Rule 89 (2)(b) of Central Goods and Service Tax Rules, 2017, is not
submitted to the authorities and (2) There is no evidence to show that the power transmitted by the
petitioner from Bohrompur Substation, Murshidabad, India is the same power which reached Bheramara
substation, Bangladesh.

7. Coming to the first issue, namely, non-submission of the shipping bills, learned counsel for the petitioner
would contend that under Rule 89 of CGST Rules, 2017 application for refund of Input Tax Credit should
be accompanied by statements containing the number and date of shipping bills or bills of export etc.
According to him, in so far as transmission of electricity is concerned, it is impossible to generate such
bills, as the supply from one place to another place and from one country to another country is only
through transmission lines. In other words, his argument is that shipping bill is a custom document and the
same cannot be made applicable to show supply of Electricity; which is intangible in nature.

8. To substantiate that there was export of electricity, learned counsel for the petitioner submits that he has
placed other documents (REA reports), which amply establish the same. According to him, in a meeting
held on 18.02.2020, with the Ministry of Power, under the Chairmanship of the Central Electrical Authority,
it was decided that monthly Regional Energy Accounts [REAs] issued by the Regional Power Committee
[RPC] can be used as a document to establish proof of export in case of electricity. He also placed on
record the Notification dated 05.07.2022 issued by the Government of India amending Rule 89 of CGST
Rules, 2017, which gives clarification as to how the export of electricity can be proved.

9. In so far as, the second issue is concerned, learned counsel for the petitioner would contend that
though in first three cases, the authorities issued show cause notice demanding proof, for export of
electricity to Bheramara substation, Bangladesh, but in subsequent notices issued for the months-June,
2019 to September, 2021, they realized their mistake and dropped the said issue in the notice. The very
fact of dropping the demand, with regard to filing of proof in respect of export of electricity in the
subsequent notices, would show that the authorities realized the impossibility in fulfiling the same and as
such the same applies to earlier notices as well. The learned counsel further submits that amendment to
Rule 89(2) of CGST Rules, should be given a retrospective effect as it is a beneficial legislature.

10. A counter came to be filed by the second and third respondents, disputing the averments made in the
affidavit filed in support of the writ petition. A reading of the counter shows that the documents produced
by the petitioner do not confirm export of goods, as defined in Section 2(5) of IGST Act. It is further urged
that in the absence of any material showing that the energy generated by the petitioner was the same
energy which was transmitted from India to Bangladesh, and in the absence of any documents evidencing
the same, in terms of Rule 89 of CGST Rules, 2017, the order impugned warrants no interference.

11. In other words, the argument of Sri Suresh Kumar Routhu, learned Senior Standing Counsel for CBIC,
for second and third respondents, appears to be that there is no separate procedure to waive the
requirement of producing shipping bills as proof of export. He further submits that some of the writ
petitions filed directly before this Court under Article 226 of Constitution of India without availing the
alternate remedy is bad in law. He relied upon the judgments of Hon’ble Supreme Court in support of the
same. He further submits that rejection for refund is made not only on the ground of procedural violation,
but also on the ground that the supply of electricity by the petitioner does not constitute export of goods,
as the delivery point is only up to a local area. Learned Standing Counsel further submits that the
transmission of power supply by the petitioner stands established only till Bohrompur, West Bengal and
not beyond that. Hence, they cannot claim any benefit of refund of Input Tax credit. Learned Standing
Counsel further submits that the petitioner has no dedicated electrical lines for transmission of electrical
energy from their thermal plant to Bohrompur sub-station and has no dedicated International/ Cross
Border Transmission lines for transmission of electricity to Bangladesh. The power is transmitted pursuant
to an agreement with Central Electricity Authority under the supervision of Government of India and as
such, no benefit can be given for refund of input tax credit.

12. An additional affidavit came to be filed on behalf of the second and third respondents, referring to
Notification, dated 05.07.2022, amending Rule 89 of CGST Rules, 2017 and the said notification being
published in the Gazette on 05.07.2022. Hence, submits that any relief to the petitioner can be extended
only be after 05.07.2022 and the same cannot be retrospective in operation.

13. In the rejoinder filed by the petitioner, it is stated that the petitioner has not challenged the statutory
provision, but only prays that Rule 89 of CGST Rules, 2017 requiring production of shipping bills as proof
of export, is impossible to be fulfilled in their case, owing to its intangible nature.

14. The point that arises for consideration is, whether the authorities were right in rejecting the refund
claim made by the petitioner?

15. Before dealing with issues involved, learned counsel for Respondents raised an objection with regard
to the maintainability of writ petitions. He submits that, the present writ petitions are not maintainable, as
some writ petitions are filed against order-in-appeal and some are filed against order-in-original, without
availing the remedy provided under the statutory provisions and approached this court directly under
Article 226 of the Constitution of India. He placed reliance on “Assistant Commissioner of State Tax
and Ors Vs Commercial Steel Limited MANU/SC/0872/2021”.

16. Whereas, learned counsel for the Petitioner urged that though the remedy of filing of an appeal lies
before the GST Tribunal, but the same is not done, as the Tribunal is not yet constituted and that there
was no efficacious or alternative remedy as on the date of filing of the writ petitions. It is further urged that
when some of the appeals filed before the Appellate Authority are rejected, against which, the writ
petitions are filed, no useful purpose would be served in preferring an appeal before the Appellate
Authority again seeking the very same relief. In these circumstances, it is pleaded that filing of writ
petitions directly before this Court, questioning the order-in-original cannot be said to be improper or
incorrect. Having regard to the above circumstances, learned counsel for the petitioner contends that
order under challenge requires interference.

17. It is well settled principle that this court can entertain writ petitions only in exceptional circumstances,
as laid down in Assistant Commissioner’s case [supra 1 cited]. The existence of an alternate remedy is
also not an absolute bar to the maintainability of the writ petitions. However, coming to present case, as
Tribunal is not yet constituted by the GST Council and as there is no efficacious remedy available to the
Petitioner, except approaching this court, we are of the view that the writ petitions can be entertained.
Moreover, the respondents’ contention that the petitioner has to approach Tribunal under section 112 of
CGST Act, when and where it is constituted, cannot be accepted as it may cause irreparable loss to the
petitioner.

18. With regard to the Writ Petitions filed against order-in- original, this court is inclined towards the
contention raised by the Petitioner, wherein it is urged that when appeals of similar issues are rejected by
Appellate authority, it would serve no useful purpose to file the same again before the same authority, by
the same party, seeking the very same relief.

19. Coming to the point for consideration and to appreciate the rival arguments advanced, on the legal
issues involved, it would be appropriate to refer Section 16 of IGST Act, 2017 which reads as under:-

(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.
 (2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax
Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such
supply may be an exempt supply.

(3) A registered person making zero rated supply shall be eligible to claim refund under either of the
following options, namely:––

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to
such conditions, safeguards and procedure as may be prescribed, without payment of
integrated tax and claim refund of unutilised input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and
procedure as may be prescribed, on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied,

in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the
rules made thereunder.

A reading of Section 16(3) of IGST Act will clearly indicate that a person making zero-rated supply shall be
entitled to the claim under two options, mentioned in Clauses (a) and (b). In so far as Clause (b) is
concerned, the claim would be in accordance with the provisions of Section 54 of CGST Act and the Rules
made thereunder.

20. A perusal of Section 54 of CGST Act, 2017, which deal with claim for refund, would show that the
petitioner is entitled to claim refund of Input Tax Credit. This provision nowhere refer to furnishing of
shipping bill for claim of refund, which aspect is not disputed. However, the authorities only refer to Rule
89 2(b) of CGST Rules, 2017, for production of shipping bills, so as to accept the claim made. A situation
of this nature would not have been contemplated, at the time when Rule 89 of CGST Rules was framed
and incorporated in the statute book. The transmission of electricity across the border is a phenomena that
has come into existence from the recent past i.e. after incorporation of Rule 89, and as such, suitable
amendments ought to have been made at the time when permissions are granted for transmission of
electricity to other countries.

21. Keeping this in the background, it is now to be seen (A) whether the petitioner has supplied Electrical
Energy across the border? and (B) whether he is entitled for refund of Input Tax Credit? It is to be noted
here that the petitioner has been awarded a contract for supply of power pursuant to a tender floated by
BPDB and the Letter of Intent for producing 250 MW of electricity power. The Power Purchase
Agreements were entered into with BPDB and the petitioner started supply of energy. Initially, the supply
was from 15.02.2018 to December, 2019, but, on extension, the petitioner entered into a long term
agreement with BPDB for supply of energy beginning from 01.01.2020 to 31.07.2033. The supply of
electricity by the petitioner is made as per the schedule, in terms of which, electricity is generated and
injected into transmission grid at the interconnection point located in Andhra Pradesh. The reading meters
at the interconnection/injection points are erected, to record the supply of electricity by the petitioner. The
injected electricity gets transmitted to Bohrompur sub-station, Murshidabad District, West Bengal [delivery
point] by the Interstate transmission lines of M/s.Power Grid Corporation of India Limited. From there, it
reaches Bangladesh by cross border transmission line, between Bohrompur sub-station and Bheramara
sub-station of Bangladesh, through Power Grid Company Bangladesh. The material on record also shows
that the actual units of electricity supplied by the petitioner to Bangladesh is recorded in Regional Energy
Account, issued on monthly basis, by Southern Regional Power Committee, which is a unit of Central
Electricity Authority in India. As the supply of electrical energy, is treated as zero- rated supply, under
Section 16 of IGST Act, 2017, the petitioner applied for refund of unutilised input tax credit through a
refund claim by filing applications in required forms. It is also not in dispute that the petitioner has
generated electrical energy and transmitted through transmission lines of Power Corporation of India and
the same reached Bohrompur sub-station and transmission to Bangladesh would be under the supervision
of Central Electricity Authority, which is a Government of India undertaking.

22. At this stage, it is to be noted that out of seven writ petitions, three writ petitions came to be rejected
on two grounds, namely:-

(a) the shipping bill which is required in terms of Rule 89(2) of the CGST Rules, 2017 was not
submitted, and

(b) no material show that the petitioner has not exported electricity to Bangladesh, as the delivery
point is only at Bohrompur in India.

whereas the other four writ petitions were rejected on the sole ground that bills were not produced by the
petitioner.

23. A perusal of the above rejection orders would show that the authorities have realized the mistake
committed in insisting on production of material, evidencing export of energy to Bangladesh from the
delivery point in Bohrompur, West Bengal, and for the said reason, in the subsequent orders the refund
claim was rejected only on the ground that shipping bills were not produced. In other words, the
subsequent show cause notices, for the period June, 2019 to September, 2021 does not dispute export of
energy to Bangladesh as the claim came to be rejected due to non- production of shipping bills only.
Hence, transmission to Bangladesh by the petitioner was accepted. Therefore, the argument of Sri Suresh
Kumar Routhu, learned Standing Counsel that the petitioner never transmitted energy across the border
cannot be accepted as it is now verifiable.

24. The next question, which falls for consideration would be with regard to rejection of refund claim for
non-production of shipping bills in terms of Rule 89(2)(h) of CGST Rules, 2017, which reads, as under:-

“89(2)(h):- a statement containing the number and the date of the invoices received and issued
during a tax period in a case where the claim pertains to refund of any unutilized input tax credit
under sub-section (3) of section 54 where the credit has accumulated on account of the rate of tax
on the inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt
supplies.”

25. As stated earlier, the petitioner made multiple representations to various authorities, informing them
about the difficulty in producing shipping bills for export of electricity. The said issue was also raised before
Regional Power Committee meeting, in which it was stated that REA reports made available by Regional
Power Committee on monthly basis can be used as proof of export. It would be useful to extract the
relevant portion, which is as under:-

“9. After deliberations, following was concluded:

a. Total energy from a generation project may be sold through a single or more than one contracts,
which may include both ‘export’ and ‘domestic sale’.

b. Taxes are paid by the generators for various components of the inputs that are used in generation
of electricity from their project. Therefore, the inputs need to be apportioned between ‘exports’ and
‘domestic sale’ for the purpose of allowing input tax credits.

c. Regional Energy Accounts (REAs) which are made available by each Regional Power Committee
(RPC) on monthly basis, provide energy scheduled under each contract from a particular generating
station situated in their region. Thus, this scheduled energy as available in REA can be used for
proof of export of sale.

d. However, it would be better to use the variable charge component of the bills, if available
separately, for proportionating the input tax credit between ‘export’ and ‘domestic sale’. It would still
 be better to proportionate the input tax credit on the basis of energy instead of revenue.”

26. As observed earlier, Rule 89 of CGST Rules, 2017, deals with a procedure for claiming refund. But,
requiring them to produce shipping bills, as proof of export cannot be made applicable to electricity, as it is
impossible to produce shipping bill for export of electricity, since the Custom Law does not refer to
electricity and shipping bill is a Customs document. Export of electricity can only be through transmission
line, but not through rail, road or water, for which, necessary documents can be made available.

27. Pursuant to repeated representations by Generators of Electrical Energy, and their negotiations with
the Central Authorities from the year 2020, fructified into a notification, which came to be issued in the
month of July, 2022, amending Rule 89 of CGST (Amendment) Rules, 2022, which reads as under:

“8. In the said rules, in rule 89, –

(a) in sub-rule (1), after the fourth proviso, the following Explanation shall be inserted, namely:-

‘Explanation. - For the purposes of this sub-rule, ―specified officer means a ―”specified
officer” or an ― “authorised officer” as defined under rule 2 of the Special Economic Zone
Rules, 2006.’;

(b) in sub-rule (2), –

(i) in clause (b), after the words ―on account of export of goods, the words ―, other than
electricity‖ shall be inserted;

(ii) after clause (b), the following clause shall be inserted, namely:

“(ba) a statement containing the number and date of the export invoices, details of
energy exported, tariff per unit for export of electricity as per agreement, along with
the copy of statement of scheduled energy for exported electricity by Generation
Plants issued by the Regional Power Committee Secretariat as a part of the
Regional Energy Account (REA) under clause (nnn) of sub- regulation 1 of
Regulation 2 of the Central Electricity Regulatory Commission (Indian Electricity Grid
Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in
case where refund is on account of export of electricity;”;

(c) in sub-rule (4), the following Explanation shall be inserted, namely:―

“Explanation. – For the purposes of this sub-rule, the value of goods exported out of India shall be
taken as –

(i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the
case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017; or

(ii) the value declared in tax invoice or bill of supply, whichever is less.”;

(d) in sub-rule (5), for the words “tax payable on such inverted rated supply of goods and services”,
the brackets, words and letters “{tax payable on such inverted rated supply of goods and services x
(Net ITC’ ITC availed on inputs and input services)}.” Shall be substituted;”

28. A reading of the above amendment, inter alia, makes it clear that the petitioner herein can now prove
the quantity of electricity transmitted basing on the statement of scheduled energy for export of electricity
issued by Regional Power Committee [RPC] Secretariat, as a part of Regional Energy Account [REA]
under clause (nnn) of Sub-Regulation (1) of Regulation (2) of Central Electricity Regulatory Commission.

29. Further, the amendment to Rule 89 (2)(ba) of CGST (Amendment) Rules, 2022 [July, 2022] clearly
show that the number and date of the export invoices, details of energy exported, tariff per unit of export
as per agreement, along with the copy of scheduled energy for exported electricity by Generation Plants,
issued by the Regional Power Committee Secretariat, can be made the basis to show the number of units
of electricity, transmitted and supplied across the border. This amendment makes it clear that information
relating to generation of electrical energy and its transmission across the border, can be obtained from
Regional Power Committee Secretariat or Regional Energy Account under the regulations of Central
Regulatory Committee.

30. The situation reminds of an age old maxim ‘Lex Non Cogit ad impossibilia’, meaning that the law does
not compel a man to do things which he cannot possibly perform.

31. Dealing with the aspect of impossibility of compliance, in Wipro Limited vs. Union of India 2013 (29)
STR 545 (Del.) = MANU/DE/0414/2013, the High Court of Delhi, held as under:-

“9. We are of the view that there is a good deal of force in what the appellant says. Any condition
imposed by the notification must be capable of being complied with. If it is impossible of compliance,
then there is no purpose behind it. The appellant is in the business of rendering IT-enabled services
such as technical support services, customer-care services, back-office services etc. which are
considered to be "business auxiliary services" under the Finance Act, 1994 for the purpose of levy of
service tax. The nature of the services is such that they are rendered on a continuous basis without
any commencement or terminal points; it is a seamless service. It involves attending to cross-border
telephone calls relating to a variety of queries from existing or prospective customers in respect of
the products or services of multinational corporations. The appellant's unit in Okhla is one of those
places which are popularly known as "Call Centres"-business process outsourcing (BPO) centres.
The wealth of skilled, English-speaking, computer-savvy youth in our country are a great source of
manpower required by the multinational corporations for such services. The BPO centres become
very active from evening because of the time-difference between India and the European and
American continents. The mainstay of the call centres is a sophisticated computer system and a
technically strong and sophisticated international telephone network. The service consists of
providing information relating to the products and services of the MNCs, queries relating to
maintenance and after- sales services, providing telephonic assistance in case of glitches during
operating the consumer-products or while utilising the services and so on. For instance, the
customer sitting in USA has a problem operating a washing machine sold to him by an American
company. When he calls the company, the local telephone number would be linked to the call centre
number in India and it will actually be an employee of the Indian call centre who would answer the
queries and assist the customer in USA get over the problem. Another example could be of a person
in USA wanting to book an international air-ticket from an airline; his queries over the phone will be
answered by the employee of the Indian call centre, sitting in some place in India. The American
manufacturer of the washing machine or the American airline company is the source of revenue for
the Indian call centre or BPO centre.

13. All the lower authorities, including the CESTAT, are unanimous in their view that the requirement,
though one of procedure, is nevertheless inflexible as it is conceived with a view to preventing the
evasion of service tax and dispensing with the same would deprive the service tax authorities from
carrying out the necessary preventive and audit-checks. The correctness of this view, as a broad
proposition, need not be decided in this case. The question here is one of impossibility of
compliance with the requirement. If, having regard to the nature of the business and its peculiar
features-which are not in dispute-the description, value and the amount of service tax and cess
payable on input-services actually required to be used in providing the taxable service to be
exported are not determinable prior to the date of export but are determinable only after the export
and if, further, such particulars are furnished to the service tax authorities within a reasonable time
along with the necessary documentary evidence so that their accuracy and genuineness may be
examined, and if those particulars are not found to be incorrect or false or unauthenticated or
unsupported by documentary evidence, we do not really see how it can be said that the object and
 purpose of the requirement stand frustrated. In the present case, no irregularity or inaccuracy or
falsity in the figures furnished by the appellant both on 05.02.2007 and in the rebate claims has
been alleged. Moreover, it appears to us somewhat strange that none of the authorities below has
demonstrated as to how the appellant could have complied with the requirement prior to the date of
the export of the IT-enabled services.”

32. In M/s. PVR Limited vs. State of Telangana 2019(9) TMI 641 = MANU/TL/0306/2019, the High Court
of Telangana, observed as under:-

“11. Logically, the Film Development Corporation would not be in a position to issue such a
certificate without knowing the number of prints of the movie that had been released. As already
noted supra, a low budget feature film was one where the number of prints was less than 35. This
fact could only be ascertained after release of the movie and not prior thereto. In effect, the
condition was practically impossible to perform.

12. Significantly, the petitioner company asserted that it was alone being singled out for this
discriminatory treatment and other similarly situated theatres were allowed to furnish the certificates
from the Film Development Corporation later and not in advance. This assertion by the petitioner
company was not rebutted by the third respondent in. her counter-affidavit. No explanation is
forthcoming even now as to why the petitioner company alone is being picked upon for violation of
the condition of furnishing the certificates in advance. The third respondent also does not dispute,
that the certificates were produced by the petitioner company after release of the movies and there
is no shortcoming or lacuna in this regard. If that is so, mere failure on the part of the petitioner
company to produce such certificates in advance, which it could not have done in any event, is not a
ground to deny it the benefit of G.O. Ms. No. 604 dated 22.04.2008. The assessment orders, which
proceeded only on the premise that such benefit could not be extended to the petitioner company
owing to belated production of the certificates, therefore cannot be countenanced.”

33. In Commissioner of Customs vs. Frontier Aban Drilling (India) Limited 2010 (254) ELT 63 (Mad.)
= MANU/TN/0035/2010, the Madras High Court observed as under:-

“4. We have carefully considered the arguments of the learned Counsel for the appellant and
perused the materials available on record as well as the orders of the lower Authorities. No such
condition has been imposed or stated to be imposed in the Notification. It is the admitted case of the
Department that the blow out preventer and its accessories were immersed in the deep water of the
sea and became irretrievable. Hence, the importer cannot be directed to perform the function, which
is impossible of performance. It is a different matter if it is the case of the Department that the
importer retrieved the sheared off part of the drill ship and diverted it for some other purpose. On the
contrary, it is the admitted case of the Department that the blow out preventer has been sheared off
and immersed in the deep water of the sea, which is irretrievable. That was the reason given by the
Tribunal for confirming the order of the Commissioner of Customs, who set aside the proposal of the
Department to recover a sum of Rs. 5,75,84,140/- and for imposition of penalty. We do not find any
merit in this case so as to entertain the appeal in the above stated facts and circumstances of the
case.”

34. Having to the above discussion and the judgments referred to above, we hold that the Rule 89 of
CGST Rules, 2017 and the amendment made thereto cannot curtail the benefit of Input Tax Credit. The
petitioner, in our view, was justified in not producing shipping bills to prove the quantity of energy units
transmitted and that the reports of REA filed by the petitioner, could be made the basis to deal with the
claim for refund of Input Tax Credit.

35. At this stage, Sri Suresh Kumar Routhu, learned Senior Standing Counsel for CBIC submits that the
amendment/notification issued by the Government of India on 05.07.2022 to Rule 89 (3) of CGST
(Amendment) Rules, 2022 cannot be made retrospective in operation, more so, when the notification in
the Gazette postulates that it will come into effect from 05.07.2022.

36. On the other hand, learned counsel for the petitioner submits that though the amended Rule came into
effect from 05.07.2022 but since this being a clarificatory and beneficial legislation, it has to be given
retrospective effect.

37. The issue that props up now for adjudication at this stage is to whether amended Rule 89(2) of CGST
Rules, 2022 is clarificatory or declaratory?

38. Circular No.175/07/2022-GST dated 06.07.2022 issued by Ministry of Finance, Government of India,
with regard to the manner of securing refund of unutilized ITC on account of export of electricity, is as
under:-

“Reference has been received from Ministry of Power regarding the problem being faced by power
generating units in filing of refund of unutilised Input Tax Credit (ITC) on account of export of
electricity. It has been represented that though electricity is classified as “goods” in GST, there is no
requirement for filing of Shipping Bill/Bill of Export in respect of export of electricity. However, the
extant provisions under Rule 89 of CGST Rules, 2017 provided for requirement of furnishing the
details of shipping bill/bill of export in respect of such refund of unutilised ITC in respect of export of
goods. Accordingly, a clause (ba) has been inserted in sub-rule (2) of rule 89 and a Statement 3B
has been inserted in FORM GST RFD-01 of the CGST Rules, 2017 vide notification No.14/2022- CT
dated 5th July, 2022. In order to clarify various issues and procedure for filing of refund claim
pertaining to export of electricity, the Board, in exercise of its powers conferred by Section 168(1) of
the CGST Act, hereby prescribes the following procedure for filing and processing of refund of
unutilised ITC on account of export of electricity.”

The above Circular clearly establishes that amendment to Rule 89 of CGST (Amendment) Rules, 2022
was carried out to cure the defect in Rule 89 of CGST Rules, 2017, because of the problem faced by
power generating units in filing refund claims of unutilised Input Tax Credit on export of electricity.

39. Further, a perusal of the amendment to Rule 89(2) of CGST Rules, would inter-alia show that the said
Rule came to be amended only to clarify the anomaly that was existing with regard to production of
material evidencing export of a thing which is intangible in nature. This clarification came to be made since
the situation namely transmission of energy could not have been visualized when Rule 89(2) was
incorporated in the Statute book. Production of shipping bills will not prove or establish by any means the
quantity of energy transmitted. Hence, by no stretch of imagination, the amendment can be said to be
declaratory in nature, but it can only be a one, which would be curing the defect by issuing necessary
clarification as to how transmission of electrical energy can be proved.

40. Hence, we are of the view that the Rule 89 of CGST (Amendment) Rules, 2022 is only clarificatory in
nature.

41. When amendment/notification dated 05.07.2022 issued by Government of India is held to be curative
or clarificatory in nature, the question now would be whether the said clarification is retrospective in
nature?

42. A proviso, which is inserted to remedy unintended consequences and to make the provision workable,
a proviso which supplies an obvious omission in the section and is required to be read into the section to
give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a
reasonable interpretation can be given to the section as a whole. [R.B. Jodha Mai Kuthiala v.
Commissioner of Income Tax, Punjab, Jammu & Kashmir and Himachal Pradesh] (1971) 82 ITR 570
(SC).
43. In Commissioner of Income Tax vs. Alom Extrusions Limited (2010) 1 SCC 489, the Parliament
has explicitly stated that Finance Act, 2003, will operate with effect from 1st April, 2004, but the matter
before the Court involved the principle of construction with regard to the provisions of Finance Act, 2003.
Referring to judgment of Commissioner of Income Tax, Bangalore v. J.H. Gotla (1985) 156 ITR 323,
the Hon’ble Supreme Court held that the Finance Act, 2003, to the extent indicated above, should be read
as retrospective. In fact, in J.H. Gotla case [supra 6 cited], the Hon’ble Supreme Court observed:-

“We should find out the intention from the language used by the Legislature and if strict literal
construction leads to an absurd result, i.e., a result not intended to be subserved by the object of the
legislation found in the manner indicated before, then if another construction is possible apart from
strict literal construction, then that construction should be preferred to the strict literal construction.
Though equity and taxation are often strangers, attempts should be made that these do not remain
always so and if a construction results in equity rather than in injustice, then such construction
should be preferred to the literal construction.”

44. The Constitutional Bench of Hon’ble Supreme Court in Commissioner of Income Tax vs. Vatika
Township Private Limited (2015) 1 SCC 1 while deciding the question as to whether the insertion of
proviso to Section 113 by Finance Act, 2002 is retrospective, discussed the general principles concerning
retrospectivity. The Hon’ble Supreme Court observed as under:-

“30. We would also like to point out, for the sake of completeness, that where a benefit is conferred
by a legislation, the rule against a retrospective construction is different. If a legislation confers a
benefit on some persons but without inflicting a corresponding detriment on some other person or
on the public generally, and where to confer such benefit appears to have been the legislators'
object, then the presumption would be that such a legislation, giving it a purposive construction,
would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural
provisions as retrospective. In Govt. of India v. Indian Tobacco Assn. [(2005) 7 SCC 396], the
doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the
context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a
statute was retrospective in nature, was applied in Vijay v. State of Maharashtra [(2006) 6 SCC
289]. It was held that where a law is enacted for the benefit of community as a whole, even in the
absence of a provision the statute may be held to be retrospective in nature. However, we are (sic
not) confronted with any such situation here.”

45. It is well settled law that no statute shall be construed to have a retrospective operation until its
language is such that would require such conclusion. The exception to this rule is enactments dealing with
procedure. This court held that the law of limitation, being a procedural law, is retrospective in operation in
the sense that it will also apply to the proceedings pending at the time of enactment as also to the
proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the
new provisions came into force. However, the Court held that there is an exception to the rule also, where
the right of suit is barred under the law of limitation in force before the new provision came into operation
and a vested right has accrued to another, the new provision cannot revive the barred right or take away
the accrued vested right. [T. Kaliamurthi v. Five Gori Thaikkal Wakf (2008) 9 SCC 306].

46. From the judgments referred to above, it is very clear that any benefit that gets accrued by way of
legislation cannot be denied/curtailed, more so, when it is clarificatory in nature like the present one and
as such it has to be made retrospective in operation.

47. The petitioner’s contention on the retrospective operation is also substantiated by the department
action through the deficiency memo dated 07.07.2022 issued by the Assistant Commissioner, Nellore
Division, for the refund claim filed for the period January, 2022 to March, 2022. The deficiency memo has
advised the Petitioner to resubmit the refund application as prescribed vide CBIC Circular
No.175/07/2022-GST dt.06.07.2022 along with all supporting documents. Copy of the refund claim in
RFD-01 filed on 23.06.2022 along with deficiency memo dated 07.07.2022 is submitted before this Court
along with a memo in USR No.42132 of 2022 dated 15.07.2022.

48. From the above, it is clear that the department has applied the Notification No.14/2022 – Central Tax
dated 05.07.2022 even for the refund claim filed for the period prior to 04.07.2022 acknowledging the
amendment as retrospective in operation.

49. Accordingly, these writ petitions are allowed and the orders under challenge are set aside and the
W.P.Nos.11194, 11206 & 11263 of 2021 are remanded back to Additional Commissioner [GST Appeals]
and the W.P.Nos.11198, 17275, 28836 & 30292 of 2021 are remanded back to the Deputy Commissioner
of Central Tax to deal with the claim of refund in terms of this common order. The petitioner shall file
relevant reports evidencing transmission of electricity before appropriate authorities, if not already filed.
There shall be no order as to costs.

Miscellaneous petitions pending, if any, shall stand closed.

Citations: in 2022 (9) TMI 1386 - ANDHRA PRADESH HIGH COURT

1. The Assistant Commissioner of State Tax and Others Versus M/s Commercial Steel Limited - 2021
(9) TMI 480 - Supreme Court

2. Commissioner of Income Tax (Central) -I, New Delhi Versus Vatika Township Private Limited - 2014
(9) TMI 576 - Supreme Court

3. Commissioner of Income Tax Versus M/s. Alom Extrusions Limited - 2009 (11) TMI 27 - Supreme
Court

4. T. KALIAMURTHI & ANR. Versus FIVE GORI THAIKAL WAKF & ORS. - 2008 (8) TMI 881 -
Supreme Court

5. Vijay Versus State of Maharashtra & Ors - 2006 (7) TMI 648 - Supreme Court

6. GOVERNMENT OF INDIA Versus INDIAN TOBACCO ASSOCIATION - 2005 (8) TMI 113 -
Supreme Court

7. Commissioner of Income-Tax, Bangalore Versus JH Gotla - 1985 (8) TMI 5 - Supreme Court

8. RB Jodha Mal Kuthiala Versus Commissioner of Income-Tax, Punjab, Jammu And Kashmir And
Himachal Pradesh - 1971 (9) TMI 2 - Supreme Court

9. M/s. PVR Limited Versus State of Telangana - 2019 (9) TMI 641 - TELANGANA AND ANDHRA
PRADESH HIGH COURT

10. WIPRO LIMITED Versus UNION OF INDIA - 2013 (2) TMI 385 - DELHI HIGH COURT

11. Commissioner of Customs No. 1, Versus M/s. Frontier Aban Drilling (India) Ltd. - 2010 (1) TMI 17 -
High Court of Madras