Power Company Wins Right to GST Refund Without Shipping Bills

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Case Name

M/s. Sembcorp Energy India Limited v. The State of Andhra Pradesh and Others

Court: High Court of Andhra Pradesh at Amaravati

Case No.: Writ Petition No.11194 of 2021

Judges: Justice C. Praveen Kumar and Justice Tarlada Rajasekhar Rao

Date of Judgment: 26th August 2022

Key Takeaways

1. Electricity is Intangible: The court recognized that electricity, while classified as “goods” under GST law, is fundamentally different from physical goods because it’s intangible and can’t be shipped like traditional exports.

2. Rules Must Be Practical: When a rule becomes impossible to follow due to the nature of what’s being exported, courts can interpret the rule in a way that makes it workable. The old Rule 89 of CGST Rules, 2017 wasn’t designed with electricity exports in mind.

3. Alternative Proof is Acceptable: Instead of shipping bills, the company can use Regional Energy Account (REA) reports from the Regional Power Committee to prove electricity was exported. This is now officially recognized.

4. Clarificatory Rules Are Retrospective: When the government later amended the rules in July 2022 to clarify how electricity exports should be handled, the court said this amendment should apply to past cases too, because it was just clarifying what should have been obvious all along.

5. Fairness Matters in Tax Law: The court emphasized that tax rules should be interpreted fairly and shouldn’t create impossible situations for taxpayers.

Issue

The central legal question in this case was: Whether the tax authorities were right in rejecting the refund claim made by Sembcorp Energy India Limited on the ground that the company failed to produce shipping bills as proof of electricity export, when electricity is an intangible commodity that cannot physically be shipped?

More specifically, the court had to decide:

• Can electricity exports be proven without shipping bills?
• Can alternative documents like Regional Energy Account reports be used instead?
• Should the amended rules (which clarified this issue) apply to past refund claims?

Facts

The Background:

India and Bangladesh had a Memorandum of Understanding for power supply between the two countries.

The Contract:

Sembcorp Energy India Limited participated in a tender process run by the Bangladesh Power Development Board (BPDB) and won a contract. On August 7, 2018, they received a Letter of Intent to supply 250 MW of electricity power. The company then signed Power Purchase Agreements (PPAs) with BPDB and started supplying electricity to Bangladesh.

The Problem:

In 2019, the company filed a refund claim for Input Tax Credit (ITC) of Rs 5,67,94,499/- because they had paid GST on the inputs used to generate electricity that was exported. However, on a date in 2019, a Show Cause Notice was served rejecting this refund claim. The reason? The company hadn’t submitted shipping bills and Export General Manifest (EGM) documents along with their refund application, which are normally required to prove that goods have been exported.

The Company’s Response:

The company filed a detailed reply on July 24, 2019 and even got a personal hearing. They explained that electricity is intangible and can’t have shipping bills. They also made multiple representations to various authorities about this problem.

The Appeals:

When the refund was rejected, the company appealed to the second respondent (the appellate authority). The appeal was also rejected on April 30, 2020. This led to the company filing seven writ petitions before the High Court.

Timeline:

• August 7, 2018: Letter of Intent issued
• 2019: Refund claim filed and rejected
• July 24, 2019: Company’s detailed reply filed
• April 30, 2020: Appeal rejected
• 2021: Writ petitions filed before High Court
• July 5, 2022: Government issued amended rules clarifying the procedure for electricity exports
• August 26, 2022: High Court judgment delivered

Arguments

Petitioner’s Arguments (Sembcorp Energy India Limited):

1. Electricity is Intangible: The company argued that electricity, being intangible in nature, cannot possibly have shipping bills or export manifests like physical goods. It’s impossible to comply with Rule 89 of CGST Rules, 2017 when dealing with electricity.

2. Alternative Proof Available: The company submitted that Regional Energy Account (REA) reports issued by the Regional Power Committee on a monthly basis can serve as proof of export. These reports show exactly how much electricity was transmitted and to where.

3. The Rule Wasn’t Designed for This: The company pointed out that Rule 89 was framed long before electricity exports became a reality. When the government later granted permission for electricity transmission to other countries, they should have amended the rule accordingly.

4. Writ Petitions Are Maintainable: The company argued that since the GST Tribunal hadn’t been constituted yet, there was no other effective remedy available, so approaching the High Court directly was justified.

5. Amended Rules Should Apply Retrospectively: When the government issued amended rules in July 2022 clarifying the procedure for electricity exports, the company argued these should apply to their past refund claims because they were merely clarificatory in nature.

Respondents’ Arguments (State of Andhra Pradesh, CBIC, and Others):

1. Procedural Requirements Must Be Met: The respondents argued that Rule 89(2)(b) of CGST Rules, 2017 clearly requires production of shipping bills as proof of export. There’s no separate procedure to waive this requirement.

2. No Separate Waiver Procedure: The learned Standing Counsel for CBIC submitted that there is no mechanism to waive the requirement of producing shipping bills, and the rule must be followed as written.

3. Not an Export of Goods: The respondents also argued that the supply of electricity by the company doesn’t constitute export of goods because the delivery point is only up to a local area (Bohrompur Station), not across an international border.

4. Writ Petitions Are Not Maintainable: The respondents contended that the company should have first approached the GST Tribunal (once constituted) under Section 112 of CGST Act before coming to the High Court. Filing directly before the High Court without exhausting alternate remedies was improper.

5. Amended Rules Cannot Be Retrospective: The respondents argued that the amendment to Rule 89 issued on July 5, 2022 came into effect from that date and cannot be applied to refund claims made before that date.

Key Legal Precedents

The court cited and applied several important legal precedents. Let me explain each one:

1. Assistant Commissioner of State Tax and Ors v. Commercial Steel Limited

What it says: This case established that writ petitions can only be entertained in exceptional circumstances, and the existence of an alternate remedy is generally a bar to maintainability.

How it was applied: The respondents relied on this case to argue that the company should have gone to the GST Tribunal instead of the High Court. However, the court distinguished this case by noting that since the GST Tribunal hadn’t been constituted yet, there was no efficacious alternate remedy available. The court held that the writ petitions could be entertained as an exception to the general rule.

2. Wipro Limited v. Union of India

What it says: This Delhi High Court case dealt with the principle of “impossibility of compliance” - the idea that the law cannot compel someone to do something that is physically impossible.

How it was applied: The court used this case to support the principle that when compliance with a rule becomes impossible due to the nature of the transaction (in this case, the intangible nature of electricity), the rule cannot be strictly enforced.

3. R.B. Jodha Mai Kuthiala v. Commissioner of Income Tax, Punjab, Jammu & Kashmir and Himachal Pradesh (1971) 82 ITR 570 (SC)

What it says: This Supreme Court case established that when a proviso is inserted to remedy unintended consequences and make a provision workable, or when it supplies an obvious omission, it should be treated as retrospective in operation.

How it was applied: The court used this principle to argue that the amended Rule 89 of CGST Rules, 2022 was clarificatory in nature and should be applied retrospectively to past cases.

4. Commissioner of Income Tax v. Alom Extrusions Limited (2010) 1 SCC 489

What it says: This Supreme Court case dealt with the principle of construction regarding Finance Act provisions and when they should be read as retrospective.

How it was applied: The court cited this case to support the argument that even when a statute explicitly states a future effective date, if it’s clarificatory in nature, it can be read as retrospective.

5. Commissioner of Income Tax, Bangalore v. J.H. Gotla (1985) 156 ITR 323

What it says: This Supreme Court case established that when strict literal construction of a statute leads to an absurd result, courts should prefer a construction that gives a reasonable interpretation. The court also noted that equity and taxation should not always be strangers.

How it was applied: The court used this principle to argue that the strict literal interpretation of Rule 89 (requiring shipping bills for all exports) would be absurd when applied to intangible electricity. A reasonable interpretation allowing alternative proof should be preferred.

6. Commissioner of Income Tax v. Vatika Township Private Limited (2015) 1 SCC 1

What it says: This Constitutional Bench Supreme Court case established important principles about retrospectivity, particularly that:

• When a benefit is conferred by legislation without inflicting corresponding detriment on others, it can be given retrospective effect
• Procedural provisions are typically treated as retrospective
• The doctrine of fairness is relevant when construing statutes conferring benefits

How it was applied: The court used this case to argue that the amended Rule 89 confers a benefit (allowing alternative proof of export) without harming anyone, so it should be given retrospective effect. The court also noted that procedural provisions are generally retrospective.

7. Government of India v. Indian Tobacco Association (2005) 7 SCC 396

What it says: This case established that the doctrine of fairness is a relevant factor when construing a statute conferring a benefit.

How it was applied: The court cited this to support the principle that fairness should guide the interpretation of tax rules.

8. Vijay v. State of Maharashtra (2006) 6 SCC 289

What it says: This case held that where a law is enacted for the benefit of the community as a whole, even without an explicit provision, the statute may be held to be retrospective in nature.

How it was applied: The court used this principle to argue that the amended Rule 89, which benefits all power-generating units exporting electricity, should be treated as retrospective.

9. T. Kaliamurthi v. Five Gori Thaikkal Wakf (2008) 9 SCC 306

What it says: This case established that while procedural laws are generally retrospective, there’s an exception: if a vested right has already accrued to another party under the old law, the new provision cannot take away that vested right.

How it was applied: The court noted this exception but found it didn’t apply here, as no vested rights had accrued to the tax authorities that would be taken away by applying the amended rule retrospectively.

The Ancient Legal Maxim:

The court also invoked the age-old legal principle: “Lex Non Cogit ad Impossibilia” - meaning “the law does not compel a man to do things which he cannot possibly perform.”

Judgement

The Court’s Decision: ALLOWED

The High Court of Andhra Pradesh ruled in favor of Sembcorp Energy India Limited. Here’s what the court decided:

Main Holdings:

1. Writ Petitions Are Maintainable: The court held that the writ petitions were properly filed before the High Court. Although there’s generally a rule that alternate remedies must be exhausted first, the court found an exception here because the GST Tribunal hadn’t been constituted yet, leaving no other effective remedy available.

2. Electricity Was Actually Exported: The court accepted that Sembcorp Energy India Limited did indeed export electricity to Bangladesh. The respondents’ own deficiency memo from September 2021 didn’t dispute this fact—they only rejected the refund claim because of the missing shipping bills.

3. Shipping Bills Cannot Be Required for Electricity: The court held that Rule 89 of CGST Rules, 2017 and the amendment made thereto cannot curtail the benefit of Input Tax Credit. The petitioner was justified in not producing shipping bills to prove the quantity of energy units transmitted.

4. Alternative Proof Is Acceptable: The court ruled that the Regional Energy Account (REA) reports filed by the petitioner could be made the basis to deal with the claim for refund of Input Tax Credit. These reports, issued by the Regional Power Committee, adequately prove the transmission of electricity across the border.

5. The Amended Rule Is Clarificatory: The court held that the amendment to Rule 89(2) of CGST Rules, 2022 (issued on July 5, 2022) is clarificatory in nature, not substantive. It was issued to cure a defect in the original rule that didn’t account for electricity exports.

6. The Amendment Applies Retrospectively: Because the amendment is clarificatory, it should be given retrospective effect and can be applied to refund claims made before July 5, 2022. The court cited the principle that when a benefit is conferred by legislation without inflicting corresponding detriment, it warrants retrospective effect.

7. The Department’s Own Actions Confirm This: The court noted that the tax department itself applied the amended notification (Notification No. 14/2022-Central Tax dated July 5, 2022) to refund claims filed before that date, as evidenced by the deficiency memo dated July 7, 2022. This shows the department itself recognized the retrospective nature of the amendment.

The Court’s Reasoning:

• The Problem: Rule 89 of CGST Rules, 2017 required shipping bills as proof of export. This rule was framed long before electricity exports became a reality. When the government later permitted electricity transmission to other countries, they should have amended the rule, but didn’t initially.

• The Impossibility: Electricity is intangible. You can’t ship it like goods. Therefore, requiring shipping bills for electricity exports is literally impossible to comply with. The ancient legal maxim “Lex Non Cogit ad Impossibilia” (the law doesn’t compel the impossible) applies here.

• The Solution: The government later issued Circular No. 175/07/2022-GST (dated July 6, 2022) and amended Rule 89 to clarify that Regional Energy Account reports can be used as proof of electricity export instead of shipping bills.

• Retrospective Application: Since this amendment was merely clarifying what should have been obvious all along (that electricity exports need different proof), it should apply to past cases too.

The Orders Made:

1. The original orders rejecting the refund claims are SET ASIDE.

2. The cases are REMANDED BACK to the appropriate authorities:

• Writ Petitions Nos. 11194, 11206 & 11263 of 2021 are remanded back to the Additional Commissioner (GST Appeals)
• Writ Petitions Nos. 11198, 17275, 28836 & 30292 of 2021 are remanded back to the Deputy Commissioner of Central Tax

3. These authorities must now reconsider the refund claims in accordance with the court’s judgment, using the Regional Energy Account reports as proof of export.

4. The petitioner must file relevant reports evidencing transmission of electricity before the appropriate authorities, if not already filed.

5. No costs awarded to either party.

FAQs

Q1: What exactly was the dispute about?

A: Sembcorp Energy India Limited exported electricity to Bangladesh and wanted a GST refund on the taxes they paid for inputs used to generate that electricity. The tax authorities rejected the refund because the company couldn’t produce “shipping bills”—documents normally used to prove physical goods have been exported. The company argued that electricity is intangible and can’t have shipping bills, so they should be allowed to use alternative proof instead.

Q2: Why couldn’t the company just produce shipping bills?

A: Because electricity is intangible—it’s not a physical good that can be shipped in containers or on trucks. You can’t create a shipping bill for something that doesn’t physically move across borders in the traditional sense. The electricity was transmitted through power lines, and the proof of this transmission comes from Regional Energy Account reports, not shipping documents.

Q3: What are Regional Energy Account (REA) reports?

A: These are official reports issued by the Regional Power Committee that document how much electricity was generated, transmitted, and to where. They serve as the official record of electricity transactions and can prove that electricity was indeed exported to another country.

Q4: Did the company actually export electricity to Bangladesh?

A: Yes, absolutely. Even the tax authorities didn’t dispute this fact. Their own documents from September 2021 acknowledged that the company transmitted energy to Bangladesh. The only issue was the lack of shipping bills as proof.

Q5: What does “Input Tax Credit” mean?

A: When a business buys goods or services for their operations, they pay GST (Goods and Services Tax) on those purchases. This is called “Input Tax.” If the business then exports goods or services, they can claim a refund of the Input Tax they paid, because exports are typically zero-rated (no tax charged on the export itself). That’s what “Input Tax Credit” refund means.

Q6: Why did the government later amend the rules?

A: The government realized there was a problem. The original Rule 89 didn’t account for electricity exports because this was a new phenomenon. When power-generating companies started exporting electricity and faced the same problem (can’t produce shipping bills for intangible electricity), the government issued Circular No. 175/07/2022-GST and amended Rule 89 to clarify that alternative proof like REA reports could be used.

Q7: Can the amended rules apply to past cases?

A: Yes, according to this judgment. The court held that because the amendment is clarificatory (just clarifying what should have been obvious), it should be applied retrospectively to past refund claims. The court also noted that the tax department itself applied the amended rules to past claims, as shown by the deficiency memo dated July 7, 2022.

Q8: What does “clarificatory” mean in this context?

A: A clarificatory rule is one that clarifies or explains what was already intended but wasn’t clearly stated. It’s not creating a new rule; it’s just making clear what should have been understood all along. In this case, the amended Rule 89 clarifies that electricity exports need different proof than physical goods.

Q9: What is the principle “Lex Non Cogit ad Impossibilia”?

A: This is an ancient legal maxim meaning “the law does not compel a man to do things which he cannot possibly perform.” In other words, you can’t be required by law to do something that’s physically impossible. The court used this principle to argue that you can’t require shipping bills for something (electricity) that can’t be shipped.

Q10: What happens now? Does the company get the refund?

A: The case has been sent back to the tax authorities (Additional Commissioner for GST Appeals and Deputy Commissioner of Central Tax) to reconsider the refund claim. They must now accept the Regional Energy Account reports as proof of export and process the refund accordingly. The company should get the refund of Rs 5,67,94,499/- (or the appropriate amount) if they file the necessary REA reports.

Q11: Why did the company file writ petitions directly before the High Court instead of going to the GST Tribunal?

A: Because the GST Tribunal hadn’t been constituted yet at the time the company filed the petitions. The court recognized this as an exceptional circumstance that justified filing directly before the High Court without exhausting other remedies first.

Q12: What’s the significance of this judgment for other power companies?

A: This judgment is very important for all power-generating companies exporting electricity. It establishes that they don’t need shipping bills to claim GST refunds on exports. They can use Regional Energy Account reports instead. This removes a major barrier that was preventing power companies from claiming legitimate refunds.

Q13: Does this judgment affect other types of exports?

A: No, this judgment is specific to electricity exports. Physical goods still need to follow the normal export procedures with shipping bills. However, the principle that rules must be interpreted reasonably and can’t require the impossible could potentially apply to other intangible exports in the future.

Q14: What was the amount of the refund claim?

A: The refund claim was for Rs 5,67,94,499/- (approximately Rs 5.68 crores). This was the Input Tax Credit that the company paid on inputs used to generate electricity that was exported to Bangladesh.

Q15: How long did this case take?

A: The case took approximately 3 years from the time the refund was rejected (2019) to the High Court judgment (August 26, 2022). This included the time for the company’s appeals and the subsequent writ petitions before the High Court.

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 Limited1”.

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 India2, 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 Telangana3, 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) Limited4, 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]5.

43. In Commissioner of Income Tax vs. Alom Extrusions

Limited6, 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 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 Limited8 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 Wakf9].

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.

JUSTICE C.PRAVEEN KUMAR

JUSTICE TARLADA RAJASEKHAR RAO

Date: 26.08.2022