Gujarat HC in the case of Cosmo Films Limited Versus Union of India- Updated with SC order on 28 April 2023

Supreme Court update-

On 28 April 2023, supreme court reversed the decision of the Gujarat high court. The court said that the decision was arbitrary.The order of the Gujarat high court was set aside. In para 75 of the judgment following was pronounced-

“75. For the foregoing reasons, this court holds that the Revenue has to succeed. The impugned judgment and orders of the Gujarat High Court are hereby set aside. However, since the respondents were enjoying interim orders, till the impugned judgments were delivered, the Revenue is directed to permit them to claim a refund or input credit (whichever is applicable and/or wherever customs duty was paid). For doing so, the respondents shall approach the jurisdictional commissioner, and apply with documentary evidence within six weeks from the date of this judgment. The claim for refund/credit shall be examined on their merits, on a case-by-case basis. For the sake of convenience, the revenue shall direct the appropriate procedure to be followed, conveniently, through a circular, in this regard.”

Case Covered:

Cosmo Films Limited

Versus

Union of India

Facts of the Case:

By this petition, under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:

“a) this Hon’ble Court may be pleased to issue an appropriate writ, order or direction quashing and setting aside the amendments in sub­rule (10) of Rule 96 of the CGST Rules and GGST Rules substituted vide Notification Number   54/2018­ Central Tax, dated 9 October 2018 and Notification No. 54/2018­ State Tax, No. (GHN   ­99) / GSTR­2018(33)TH,  dated 9 October 2018, to the extent it denies the option of rebate claim to the Petitioner for importing goods under AA License, as being ultra vires of the CGST Act, GST Act and Rules made thereunder and the Constitution; 

b) this Hon’ble Court may be pleased to issue a writ, order or direction staying any demand against Rebate benefits  availed by the Petitioner due to retrospective operation of the impugned Notifications on Rule 96(10) of the CGST and   the GGST Rules;

c) this such further and other reliefs are granted as this Hon’ble Court may deem fit and proper.”

Observations:

Having considered the submissions made by the learned advocates for both sides and having gone through the materials on record, the short question which arises for the consideration is whether the amendment made by the Notification No. 54/2018 dated 9th October 2018 amending subrule (10) of Rule 96 of the CGST Rules is valid or not.

The Decision of the Court:

In view of the above amendment, the grievance of the petitioner raised in this petition is therefore taken care of.   However, it is also made clear that Notification No. 54/2018 is required to be made applicable w.e.f. 23rd October 2017   and not prior thereto from the inception of Rule 96(10) of the CGST Act. Therefore, in effect Notification No. 39/2018 dated 4th September 2018 shall remain in force as amended by Notification No. 54/2018 by substituting sub­rule (10) of Rule 96 of CGST Rules, in consonance with sub­section (3) of Section 54 of the CGST Act and Section 16 of the IGST   Act. The Notification No. 54/2018 is therefore held to be effective w.e.f. 23rd October 2017. The rule is made absolute to the aforesaid extent, with no order as to costs.

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