Omission Of Rule 96(10) Of CGST Rules Operates Prospectively But Applies To All Pending Proceedings: Gujarat High Court
The Gujarat High Court stated that omission of Rule 96(10) Of CGST Rules, 2017 operates prospectively but applies to all pending proceedings. The Division Bench of Justices Bhargav D. Karia and D.N. Ray was addressing the issue where a group of petitions have challenged the vires of Rule 96(10) of the Central/State Goods and Services Tax Rules, 2017 as substituted by the Central...
The Gujarat High Court stated that omission of Rule 96(10) Of CGST Rules, 2017 operates prospectively but applies to all pending proceedings.
The Division Bench of Justices Bhargav D. Karia and D.N. Ray was addressing the issue where a group of petitions have challenged the vires of Rule 96(10) of the Central/State Goods and Services Tax Rules, 2017 as substituted by the Central Goods and Services Tax (12th Amendment) Rules, 2018 with effect from 9.10.2018.
The assessee/petitioner is engaged in the business of manufacture, supply/export of conductors and Optical Fiber Ground Wires (OPGW) for several years and exports substantial quantity of finished goods manufactured to its customers spread across the world.
Prior to coming into the force of the Central Goods and Services Tax Act, 2017 with effect from 01.07.2017, the inputs and the capital goods used by the assessee were chargeable to Central Excise duty under the Central Excise Act, 1944 and the input services used by the assessee was chargeable to service tax under the Finance Act, 1994.
The assessee was eligible for availing the credit of the taxes paid by them on inputs, capital goods and input services under the Cenvat Credit Rules, 2004.
Cenvat Credit availed by the assessee was in turn utilized for payment of the excise duty on the goods cleared by the assessee in the domestic market as well as for payment of duties applicable at the time of export of goods.
As per the terms of the Advance Authorisation Scheme, the assessee was not liable to pay any customs duty on raw materials imported on utilizing such licenses and therefore, no Cenvat credit of any customs duty in the nature of CVD, Education and other Cesses, Special Additional Duty (SAD) was availed by the assessee.
The assessees have made rebate/refund claim of IGST paid on goods and services exported out of India.
It is the case of the assessee that in view of substitution of Sub-rule(10) of Rule 96 of the CGST Rules, the right of the assessee to claim refund of IGST paid on the entire goods exported by the assessee was curtailed if the supplier of any of the inputs to the assessee claiming refund has availed benefit of IGST exemption under Notification No.78/2017-Customs dated 13.10.2017 (EOU Scheme) or Notification No.79/2017-Customs dated 13.10.2017 (Advance Authorisation and EPCG scheme) as well as Notification No. 48/2017- Central Tax dated 18.10.2017 for claiming benefit of deemed export or merchant export Notification no. 40/2017 dated Central Tax (Rate) dated 23.10.2017 and Notification No. 41/2017 Integrated tax (Rate) dated 23.10.2017.
The assessee submitted that Rule 96(10) having been omitted by the said Notification with effect from the date of issuance of Notification i.e. 8th October, 2024, matters which are pending before the Court would be governed by the Notification or in alternative, they said notification would apply retrospectively.
The bench referred to the case of Rayala Corporation (P) Ltd. and M.R. Pratap v. Director of Enforcement, New Delhi reported in (1969) 2 Supreme Court Cases 412 observed that “omission” would be included in the interpretation of word “repeal” and hence omission of Rule 96(10) with effect from 8th October, 2024, would amount to repeal without any saving clause. General Clauses Act, 1897 is largely based on the English Interpretation Act, 1889 and according to such law, the effect of repealing a statute was to obliterate it completely from the records of Parliament as if it had never been passed, except for the purpose of those actions, which were commenced, prosecuted and concluded while it was an existing law.
Therefore, repeal without any saving clause would destroy any proceeding whether or not yet begun or whether pending at the time of enactment of the repealing Act and not already prosecuted to a final judgment so as to create a vested right, noted the bench.
By Notification No.20/2024 Rules, 2024 have been notified and as per Rule 10 of the said Rules, Rule 96(10) of the CGST Rules has been omitted with prospective effect. This would give rise to three situations, firstly, whether the same would be applicable retrospectively, or secondly, prospectively or thirdly, same would be applicable prospectively but also to “pending proceedings”. Rule 10 of Rules, 2024 is applicable prospectively and the same also would be applicable to pending proceedings, added the bench.
The bench opined that “Notification No.20/2024 dated 8th October, 2024 would be applicable to all the pending proceedings/cases meaning thereby that Rule 96(10) would stand omitted prospectively but applicable to pending proceedings/cases where final adjudication has not taken place.”
In view of the above, the bench allowed the petition.
Case Title: M/s Addwrap Packaging Pvt. Ltd. & Anr. v. Union of India & Ors.
Case Number: R/SPECIAL CIVIL APPLICATION NO. 22519 of 2019
Counsel for Petitioner/ Assessee: V. Sridharan
Counsel for Respondent/ Department: Devang Vyas