Article
Export refund simplification: Prospective by legislature; retroactive by the courts!!!ByKrina Shah and Asish Philip
The article in this issue of Indirect Tax Amicus discusses the amendments in Rule 89 and Rule 96 of the CGST Rules, 2017, in relation to export refunds and their impact on pending proceedings and investigations in the light of recent High Court orders. The article notes that the omission of Rule 96(10), Rule 89(4A) and Rule 89(4B) is a welcome development for exporters but the prospective omission of the Rules, without any saving clause, has created a significant legal ambiguity concerning live proceedings. The authors discuss various recent decisions of the High Courts, holding that the rule was ultra vires before the omission and that the omission is retroactive. They also note that batch matters are pending before the different High Courts challenging the validity of the rule and implications of the unconditional omission of Rules without a saving clause. According to them, an enabling ecosystem with legal certainty must be made available to exporters to enhance the global competitiveness of Indian products, especially in the current era of Tariffs.
Goods and Services Tax (GST)
Notifications and Circulars
- Registration – CBIC issues instruction for processing of applications
- GST Appellate Tribunal (Procedure) Rules, 2025 notified
Ratio decidendi
- Rectification of returns when there is no loss to Revenue – Right to correct clerical/arithmetical errors flows from the right to do business – Supreme Court
- No GST on supply of service by a club/association to its members – Kerala High Court
- Registration only for supply of goods does not disentitle refund of IGST on zero-rated supply of services – Andhra Pradesh High Court
- Export of services – Customer support service when not covered as ‘intermediary’ – Karnataka High Court
- Omission of Rule 96(10) – Pending proceedings not to continue – Calcutta High Court
- Refund permissible of unutilized ITC of cess paid on coal utilized for manufacture of goods exported on payment of IGST – Gujarat High Court
- Refund of ITC due to inverted duty structure – Substitution of Para 3.2 of Circular No.135/05/2020-GST by Circular No.173/05/2022-GST is applicable retrospectively – Karnataka High Court
- Refund of accumulated ITC on export of goods when not deniable – Jharkhand High Court
- Refund cannot be rejected at stage of acknowledgement of application by issuing a deficiency memo – Gujarat High Court
- Refund – Mere opinion under Section 54(11) cannot result in holding back refund – Delhi High Court
- Cancellation of registration due to non-filing of returns for 6 months cannot be set aside if not all returns filed after SCN – Kerala High Court
- Input Tax Credit can be claimed based on deemed receipt of goods – Patna High Court
- Sale of the partly constructed mall by Liquidator on ‘as is where is’ basis, without any further construction services to be provided is not liable to GST – Karnataka High Court
- No GST on ‘Solatium’, which is compensation received for acquisition of lands by the State – Karnataka High Court
- Agreement for the right to develop a property is not covered as service by way of transfer of development rights – Bombay High Court
- Demand – Separate show-cause notices are required for different assessment years – Kerala High Court
- Mere denial of cross-examination is not sufficient to invoke writ jurisdiction – Delhi High Court
- Demand – Issuance of just summary of SCN without the main notice when not fatal – Himachal Pradesh High Court
- Service of notice/order, etc., by making them available in the Common Portal is a valid mode of service – Court relies upon DB decision interpreting similar provision under TNGST Act, 1959 – Madras High Court
- Procedures need not be insisted upon if leading to miscarriage of justice – Gujarat High Court
Customs
Notifications and Circulars
- Transshipment of goods imported for all customs stations – Application fees removed
- Export Entry (Post export conversion in relation to instrument-based scheme) Regulations, 2025 notified
- Interactive Flat Panel Displays and Monitors (other than IFPDs) – CBIC clarifies on difference and rate of duty
Ratio decidendi
- Classification of goods – Test of ‘most akin’ and not ‘preponderance of probability’ to be followed when laboratory testing not done on all specified parameters – Supreme Court
- Interest and penalty are not leviable on IGST on imports, before amendment to Customs Tariff Section 3(12) on 16 August 2024 – Judgment in Mahindra & Mahindra in respect of Sections 3(6) and 3A(4) relied upon – Bombay High Court
- Provisional attachment of bank account is not permissible at the investigation stage – Madhya Pradesh High Court
- Deemed closure of proceedings when duty, interest and penalty paid within 30 days of SCN, though corrigendum to SCN, revising demand, issued later – CESTAT New Delhi
- Valuation – Weight not to influence transaction value when purchase order on per piece basis – CESTAT Ahmedabad
- Valuation – Floating crane charges whether includible as transportation/unloading charges – CESTAT Ahmedabad
- DFIA scheme – Export goods not become ‘prohibited’ for non-declaration of technical characteristics of inputs on shipping bills – CESTAT New Delhi
Central Excise, Service Tax & VAT
Ratio decidendi
- Refund of unutilised Input Tax Credit of VAT regime, when same not carried forward in Form GST TRAN-1 to GST regime – Gujarat High Court
- Valuation (Service tax) – 15% service component in a composite contract when correct – CESTAT Ahmedabad
- Area based exemption is available even if part of land is not covered under exemption notification – CESTAT New Delhi
- Valuation (Service tax) – Compensation received for lost-in-hole equipment is not includible in value of services – CESTAT New Delhi
