Explanation was inserted in Rule 89(4) of the CGST Rules, 2017, vide notification no. 14/2022 - Central Tax, which provided that while
processing refund claims in case of exports, the lower of the values i.e. FOB value declared in the Shipping Bill or value declared in tax
invoice shall be considered. The Court confined interpretation on the question of retrospective effect of the amendment that came in
the year 2022, so far as its applicability in the aforesaid writ applications for the sole reason that the vires of the said rule is not
under challenge and did not touch the aspect of validity of Paragraph 47 of Circular No. 125/44/2019-GST dated 18-11-2019.
a) Insertion of Explanation was from Prospective Effect-Explanation inserted by way of amendment in Rule 89(4) of the CGST Rules,
2017, vide Notification No. 14/2022 - Central Tax dated 5-7-2022 was not in existence at the time of passing of the Order in Appeal dated
11-10-2021. Except for Rules 7, 9, 10, and 19 for which dates with retrospective operation have been provided, no other rules were given
any retrospective effect. Thus, from bare perusal of notification itself amendment made to Rule 89 (4) will have a prospective effect.
b) Whether Amendment was on similar lines to Para 47 of Circular No. 125/44/2019-GST 18-11-2019 or inserted a new stipulationHigh Court held that Paragraph 47 contemplated comparison of the value of export in the tax invoice and in the shipping bill, i.e., the
export document (which can either be FOB or CIF value) whereas explanation required comparison of the value in tax invoice with only
FOB value. Thus, explanation cannot be said to be on similar lines as Paragraph 47. A policy can be changed only by way of an
amendment under the parent Act and not by a circular and the policy change will be effective from the date of the amendment.
c) Whether the term Explanation when used would always signify retrospective Amendment- The 2022 Amendment Rules inserted
a new stipulation for comparison between two values. Such an exercise was not contemplated prior to the amendment as what was taken
into account was the actual transaction value. Therefore, by way of the amendment, a substantive change was brought about in the law
and therefore the amendment ought to operate prospectively. Further, mere use of the term "explanation" will not be indicative of the fact
that the amendment is clarificatory/declaratory.
d) A policy can be changed only by way of an amendment under the parent act and not by a circular and the law is well settled
that no taxes shall be levied or collected by way of executive fiat.
The High Court held that amendment in Rule 89 (4) of CGST Rules, 2017 which came into effect vide Notification No. 14/2022-Central
Tax dated 5-7-2022 is not clarificatory in nature and thus will have a prospective effect. In all these writ applications since the period
involved is prior to the amendment; as such, we hold that the respective impugned orders deserve to be quashed and set aside.
Cases Referred- CIT Versus Vatika Township (P) Ltd., reported in 2015 (1) SCC 1, Sedco Forex International Drill. Inc. v. CIT, reported in
(2005) 12 SCC 717, Union of India v. Martin Lottery Agencies Ltd., reported in (2009) 12 SCC 209, Kunnathat Thatehunni Moopil Nair etc. -
versus State of Kerela and another reported in 1960 SCC Online SC 7
