Seil Energy India Limited vs The Union Of India on 31 July, 2024

Outcome
The Writ Petitions are allowed**. The orders in original and the appellate orders rejecting the petitioner's refund applications are set aside. The 2nd respondent (Deputy Commissioner of Central Tax) is directed to reconsider the refund applications, allowing the petitioner to produce the Regional Energy Account (REA) of the previous month as proof of export for refund applications made in the succeeding month, provided all other requirements are in accordance with the law.

2. Core Issue
The core issue was the interpretation of the "relevant period" for furnishing the Regional Energy Account (REA) as proof of export for Input Tax Credit (ITC) refund claims under the GST regime, specifically for the continuous supply of electricity where invoices for a given month's supply are raised in the subsequent month. The dispute centered on whether the REA should align with the month of actual electricity supply or the month in which the invoice for that supply is issued, which determines the "time of supply" for GST purposes.

3. Key Facts
* The petitioner, M/s. SEIL Energy India Limited, generates and exports electrical power to M/s. Bangladesh Power Development Board.
* This supply is claimed as an export sale, making it a zero-rated supply exempted from tax under the IGST Act, 2017, and thus eligible for ITC refund.
* The petitioner filed monthly refund applications for the period January 2022 to October 2022.
* Initially, applications were rejected for failure to produce a "bill of shipping."
* Rule 89 of the CGST Rules, 2017, was subsequently amended to allow the Regional Energy Account (REA) as proof of export for electricity, and a previous judgment (W.P.No.11194 of 2021) held this amendment to be retrospective.
* Despite the amendment and submission of REAs, the refund applications were again rejected by the 2nd respondent and confirmed by the appellate authority in some cases.
* The ground for rejection was that the petitioner furnished the REA for the preceding month (e.g., REA for December 2021 for a January 2022 refund application), while the authorities insisted the REA must be for the "relevant period" (i.e., the month for which the refund was sought).
* The Power Purchase Agreement (PPA) stipulated that invoices for electricity supplied in a particular month were to be raised by the 7th day of the succeeding month.

4. Arguments
* Taxpayer (M/s. SEIL Energy India Limited):
* Electricity supply falls under the definition of "continuous supply of goods" as per Section 2(32) of the CGST Act.
* For continuous supply of goods, the "time of supply" for tax liability is fixed by Section 12(2) read with Section 31(4) of the CGST Act, as the date of invoice issuance (or the last date required for invoice issuance) or the date of payment, whichever is earlier.
* Since invoices for a month's supply are raised by the 7th of the succeeding month, the "time of supply" (by legal fiction) falls in the succeeding month.
* Therefore, submitting the REA for the previous month (reflecting the actual consumption) for a refund application made in the succeeding month (reflecting the deemed time of supply due to invoicing) is in compliance with the Act and Rules.
* Revenue (Union of India & GST Authorities):
* Rule 89 of the CGST Rules clearly mandates that the REA for the "relevant period" (meaning the specific month for which the refund is claimed) must be furnished.
* The petitioner failed to provide the REA corresponding to the exact month for which the refund was sought (e.g., January 2022 REA for January 2022 refund).
* The orders of rejection were justified as the petitioner did not adhere to the unambiguous requirement of the Rule.

5. Court’s Reasoning
* The Court meticulously examined Sections 2(32), 12(2), and 31(4) of the CGST Act.
* It observed that Section 2(32) defines "continuous supply of goods" for which the supplier invoices on a regular or periodic basis.
* Section 12(2) establishes that the "time of supply" of goods is the earlier of the date of invoice issuance (as required by Section 31(1)) or the date of payment.
* Section 31(4) specifies that for continuous supply of goods, the invoice must be issued "before or at the time each such statement is issued or, as the case may be, each such payment is received."
* The Court concluded that for tax purposes, it is the point of time when the invoice is raised or payment is made (whichever is earlier) that determines the "time of supply," not the continuous flow of goods itself.
* Given the undisputed fact that the petitioner raised invoices for a particular month's electricity supply by the 7th day of the succeeding month (as per the PPA), the "time of supply" for that electricity, by legal fiction, occurred in the succeeding month.
* Consequently, the Court held that furnishing the REA for the preceding month (which represents the physical supply occurring in that period) when applying for a refund in the succeeding month (when the time of supply is legally deemed to occur due to invoicing) is in complete accord with the statutory framework.

6. Statutory References
* Integrated Goods and Services Tax Act, 2017 (IGST Act)
* Central Goods and Services Tax Act, 2017 (CGST Act)
* Section 2(32) – Definition of "continuous supply of goods"
* Section 12 – Time of Supply of Goods
* Section 12(2) – Specific provisions for determining time of supply of goods
* Section 31(1) – Tax invoice
* Section 31(4) – Invoice in case of continuous supply of goods
* Central Goods and Services Tax Rules, 2017 (CGST Rules)
* Rule 89 – Application for refund of tax, interest, penalty, etc. (specifically the amendment substituting bill of shipping with REA)

7. Precedents Cited
* W.P.No.11194 of 2021 and batch (Judgment dated 26.08.2022 by a Hon’ble Division Bench of this Court): This judgment held that the amendment to Rule 89 of the CGST Rules, replacing the requirement of producing a bill of shipping with the Regional Energy Account (REA) for electricity export, should be treated as retrospective.