Lm Wind Power Blades (INDIA) PVT LTD. vs. Union Of INDIA

Held

The Court allowed the petition. On the first issue, while the petitioner challenged the constitutional validity of Rule 89(4B), the primary basis for allowing the petition appears to stem from the subsequent deletion of the rule. Regarding the second issue, the Court held that the deletion of Rule 89(4B) and Rule 96(10) of the Rules, vide Notification No. 20/2024 dated 08.10.2024, is retrospective. This finding is supported by the petitioner's reliance on the Apex Court's decision in Kolhapur Canesugar Works Ltd. v. Union of India and Ors. and a recent decision in M/s. Goodluck India Limited & Anr. v. Union of India & Ors. The Court also noted that an order in Writ Appeal No. 1261/2026, placed on record by the respondents, indicated that this question had been answered against the respondents. Consequently, the Court quashed the impugned Show Cause Notice dated 21.02.2024 and the Corrigendum dated 26.02.2024. No specific amount in dispute was mentioned.

Facts

The petitioner, LM Wind Power Blades (India) Pvt Ltd., filed a writ petition challenging a Show Cause Notice (SCN) dated 21.02.2024 and its corrigendum dated 26.02.2024, both issued by the Joint Commissioner of Central Tax, Anti-Evasion. The SCN and corrigendum proposed to recall refunds granted to the petitioner for the period between October 2018 and December 2021. The basis for recalling the refund was that the petitioner had availed input tax credit (ITC) contrary to the restrictions under Rule 89(4B) of the Central Goods and Services Tax Rules, 2017. The petitioner also challenged the constitutional validity of Rule 89(4B). The tax period in dispute is October 2018 to December 2021. The procedural history involves the issuance of the SCN and corrigendum, leading to the present writ petition.

Key Issues

1. Whether Rule 89(4B) of the Central Goods and Services Tax Rules, 2017, being silent on methodology/computation, is ultra vires Section 54 of the CGST Act and violative of the Constitution of India? The petitioner argued that Rule 89(4B) is unconstitutional due to its silence on computation methodology. The respondents' arguments are not explicitly recorded in the judgment. 2. Whether the deletion of Rule 89(4B) and Rule 96(10) of the Rules, vide Notification No. 20/2024 dated 08.10.2024, is prospective or retrospective? The petitioner contended that the deletion is retrospective and cited the Apex Court's decision in Kolhapur Canesugar Works Ltd. v. Union of India and Ors. and a recent decision in M/s. Goodluck India Limited & Anr. v. Union of India & Ors. The respondents' stance on this issue is not explicitly detailed, but a copy of an order in Writ Appeal No. 1261/2026 indicated the question was answered against them.