UNION OF INDIA AND ORS. v. COSMO FILMS LIMITED

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A not mean that such a provision empowers the Government to do so retrospective.”

71Copy pinpoint71. To give retrospective effect, to the notification of 10.01.2019 through interpretation, would be to achieve what is impermissible in law. Therefore, the impugned judgment cannot be sustained on this score as B well.

72Copy pinpoint72. This court recollects its recent decision, on the question of entitlement to refund, under the old tax regime, which was subsumed and resulted in some businesses being affected. Negativing the challenge to constitutionality of the provisions of GST, it was held, in Union of C India (UOI) & Ors. v VKC Footsteps India Pvt. Ltd39. that: “A claim to refund is governed by statute. There is no constitutional entitlement to seek a refund. Parliament has in Clause (i) of the first proviso allowed a refund of the unutilized ITC in the case of zero-rated supplies made without payment of tax. Under Clause (ii) of the first proviso, Parliament has envisaged a refund of unutilized ITC, where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. When there is neither a constitutional guarantee nor a statutory entitlement to refund, the submission that goods and services must necessarily be treated at par on a matter of a refund of unutilized ITC cannot be accepted. Such an interpretation, if carried to its logical conclusion would involve unforeseen consequences, circumscribing the legislative discretion of Parliament to fashion the rate of tax, concessions and exemptions. If the judiciary were to do so, it would run the risk of encroaching upon legislative choices, and on policy decisions which are the prerogative of the executive.”

73Copy pinpoint73. In this court’s opinion, what applies to refunds, (the right to which can be curtailed legitimately) applies equally to exemptions. It has been held in Bannari Amman Sugars Ltd. vs. Commercial Tax Officer & Ors40 that if there is any tax concession, it “can be withdrawn at any time and no time limit should be insisted upon before it was withdrawn”. 39 2021 (15) SCR 169. 40 H 2004 (6) Suppl. SCR 264.

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[S. RAVINDRA BHAT, J.]

74Copy pinpoint74. Commentators and economists have spoken about how introduction of GST was one of the most significant tax reforms undertaken by India. It was preceded by a series of meetings and negotiations, whereby concerns of the states, and various other agencies were accommodated. It has ushered a unified market driven by a single tax, converting different markets in states, with different tariffs and governing principles. It has smoothened movement of goods between different states. Before the advent of GST, the Union taxed production of goods and supply of services; and the states taxed sale of goods. With GST, both the Union and the states are entitled to share the taxes of the full value chain of goods and services. Such a transformation cannot be painless; disruptions – especially in the beginning will be felt. Yet, that in the process of unification, if a certain section of the business is inconvenienced, and would have to pay taxes (which exist as levies, newly introduced) and conditions are imposed upon their ability to freely import inputs (for the purpose of export), this alone cannot lead the court to conclude that such a change is unreasonable or arbitrary. D

75Copy pinpoint75. 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 refund or input credit (whichever appliable and/or wherever customs duty was paid). For doing so, the E 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 F circular, in this regard.

76Copy pinpoint76. The Revenue’s appeals are allowed, subject to the above terms.

Divya Pandey Appeals allowed. (Assisted by : Shevali Monga, LCRA) G