Notification No. 54/2018-Central Tax (Rate) is not ultra vires to the provisions of CGST Act,2017 (Refund of IGST paid on export of goods or services under Advance Authorisation-Rule 96(10))

Case Title: Cosmo Films Ltd. v. Union of India

Court: High Court of Gujarat

Petition No.: R/Special Civil Application No. 15833 of 2018 with Misc. Civil Application No. 1 of 2020 and Civil Applications No. 2–6 of 2021

Category of Dispute: Refund under Rule 96(10), retrospective amendment, Notification validity

Date of Judgement: 19th September, 2024

Relevant Provisions:

Rule 96(10) of CGST Rules, 2017

Section 54 of CGST Act, 2017

Section 16 of IGST Act, 2017

Notifications: 39/2018-CT, 54/2018-CT, 79/2017-Cus, 16/2020-CT

Circular: 70/44/2018-GST dated 26.10.2018

Facts of the Case

[Para 3–5, 13, 14]
Cosmo Films Ltd., holding Advance Authorization (AA) licenses under FTP 2015–20, filed a writ challenging the retrospective application of Notification No. 54/2018-CT which amended Rule 96(10) of CGST Rules. The petitioner argued that the amendment could not affect their right to claim refund of IGST paid on exports, especially when the rule was explicitly made effective from 9th October 2018.

[Para 7, 8, 10]
The original judgment dated 20.10.2020 erroneously concluded that Notification No. 54/2018 applied retrospectively from 23.10.2017. The petitioner sought review citing apparent errors including misinterpretation of effective dates and factual inaccuracies.

Questions in Consideration

[Para 9]

• Whether Notification No. 54/2018 amending Rule 96(10) of CGST Rules is valid?
• Whether such amendment could have retrospective effect from 23rd October 2017 despite being notified on 9th October 2018?

Observations of the Court

[Paras 32–36]

• The Court acknowledged that multiple paragraphs in the original CAV judgment incorrectly recorded the effective date of Notification No. 54/2018 as 23.10.2017 instead of 9.10.2018.
• [Para 35] On perusal of the Notification, it was clarified that it came into force prospectively from 9th October 2018.
• [Paras 36(i)–(viii)] The judgment was extensively corrected to delete the retrospective references and align interpretation with the actual notified date.
• [Para 36(vii)] The court deleted Para 8.15 of the original judgment, which had erroneously referred to Notification No. 16/2020-CT dated 23.03.2020 issued after arguments were concluded.

Judgement of the Court

[Para 37–39]

• The High Court allowed the review application.
• Rectified the errors in the CAV judgment dated 20.10.2020.
• Held that Notification No. 54/2018 is to be applied prospectively w.e.f. 9th October, 2018.
• Notification No. 39/2018 shall govern claims made between 23rd October 2017 and 9th October 2018, thereby restoring benefit for that period.
• Miscellaneous and Civil Applications were disposed of.

Between Fine Lines

• The Court clarified that CGST Rule 96(10) as amended by Notification 54/2018 applies prospectively from 9.10.2018.
• Exporters like Cosmo Films are entitled to IGST refund claims made before this date under Notification 39/2018.
• Misapplication of retrospective effect was held to be an error apparent on record.
• Notification 16/2020-CT could not be relied upon since it was issued after arguments had closed.
• Relief was granted by rectifying legal and factual mistakes in the earlier judgment.

Summary of Referred Cases

Takeaway:

“Retrospectivity Reversed – When Dates Decide the Right to Refund”