The Andhra Pradesh High court ruled that the proof of export cannot be made applicable to electricity.
There was a Memorandum of Understanding for the purpose of supply of power between India and Bangladesh.
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 in December, 2018.
In June 2019, a Show Cause Notice was served on the petitioner, rejecting the claim for refund, 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.
Suresh Kumar Routhu,Senior Standing Counsel for CBIC, for the respondents, submitted that there is no separate procedure to waive the requirement of producing shipping bills as proof of export.
He contended 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 further submitted 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.
Advocate Raghavan Ramabadran, appearing 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 was 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.
The division bench of Justice C.Praveen Kumar and Justice Tarlada Rajasekhar Rao stated that as the Tribunal is not yet constituted by the GST Council and as there is no efficacious remedy available to the Petitioner, except approaching the court, the writ petitions can be entertained.
The bench observed that 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).
It stated that 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.
The court said that 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 nonproduction of shipping bills only. Hence, transmission to Bangladesh by the petitioner was accepted.
It was added that the amendment to Rule 89 (2)(ba) of CGST (Amendment) Rules, 2022 [July, 2022] 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.
The court held that the Rule 89 of CGST Rules, 2017 and the amendment made thereto cannot curtail the benefit of Input Tax Credit.
The petitioner, in court’s 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.
“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” the court added.
The bench allowed the writ petitions.
Case title: M/s.Sembcorp Energy India Limited v/s The State of Andhra Pradesh
Citation: Writ Petition No.11194 of 2021