Order dated: 26 August 2022

Facts 

• That Petitioner, M/s Sembcorp Energy India Limited, entered into a Power Purchase Agreements (PPAs) with BPDB and started supplying electricity/electrical energy to Bangladesh Power Development Board (‘BPDB’) in accordance with the Indian Electricity Act, 2003 and the Rules and Regulations made thereunder. 
• The injected electricity would get transmitted from the interconnection point to Bohrompur substation, West Bengal, India, which is the ‘Delivery Point’ through an Inter-State transmission line. From the said point, the electricity would be transmitted to Bangladesh through the cross border transmission line, between Bohrompur substation, India and Bheramara substation. 
• Petitioner submitted that since export of electrical energy is treated as Zero rated supply under Section 16 of IGST Act, 2017, the petitioner applied for refund of unutilized Input Tax Credit through a refund claim by filing application under Form GST RFD-01A in terms of Section 54 of CGST Act, 2017 read with Section 16(3) of IGST Act, 2017.
• On 28.06.2019, a Show Cause Notice was served on the petitioner, and the refund was rejected mainly  on the two grounds. (1) The shipping bill, as required under Rule 89 (2)(b) of Central Goods and Service Tax Rules, 2017, is not submitted to the authorities and (2) There is no evidence to show that the power transmitted by the petitioner from Bohrompur Substation, Murshidabad, India is the same power which reached Bheramara substation, Bangladesh.
• Aggrieved, the Petitioner has filed this writ petition. 

Issue 

• Whether electricity supplied by the Petitioner would qualify as Exports ? 

Order

• The Court observed that Rule 89 of CGST Rules, 2017 deals with a procedure for claiming refund. But, requiring them to produce shipping bills, as proof of export cannot be made applicable to electricity, as it is impossible to produce shipping bill for export of electricity, since the Custom Law does not refer to electricity and shipping bill is a Customs document. Export of electricity can only be through transmission line, but not through rail, road or water, for which, necessary documents can be made available.
• Further, the amendment to Rule 89 (2)(ba) of CGST (Amendment) Rules, 2022 [July, 2022] clearly show that the number and date of the export invoices, details of energy exported, tariff per unit of export as per agreement, along with the copy of scheduled energy for exported electricity by Generation Plants, issued by the Regional Power Committee Secretariat, can be made the basis to show the number of units of electricity, transmitted and supplied across the border. 
• The Court accordingly held that Rule 89 of CGST Rules, 2017 and the amendment made thereto cannot curtail the benefit of Input Tax Credit. The petitioner, is justified in not producing shipping bills. The aforesaid amendment 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.
• Further, amendment to Rule 89(2) of CGST Rules, the amendment cannot be said to be declaratory in nature, but it can only be a one, which would be curing the defect by issuing necessary clarification as to how transmission of electrical energy can be proved. Hence, Court was of the view that the Rule 89 of CGST (Amendment) Rules, 2022 is only clarificatory in nature.
• Accordingly, the writ petitions are allowed and the orders under challenge are set aside.