25 - Rules Regulations Laying and Removal of difficulties

Section 22 — Power to make rules

Section 23 — Power to make regulations

Section 24 — Laying of rules, regulations and notifications

Section 25 — Removal of difficulties

BLOCK 2 — PRE-GST COUNTERPART / PARALLEL PROVISIONS / OPERATIVE RULES

BLOCK 3 — COMMENTARY

1. Statutory Architecture (Composite for ss. 22-25)

2. Historical Context

Sections 22-25 IGST provide the ancillary rule-making / regulation / Parliamentary-oversight / removal-of-difficulties architecture. They are structural sections — essential for the IGST Act to function but not directly substantive.

Section 22 — Government rule-making power. Sub-s. (1) substantive; (2) generality; (3) retrospective up to commencement date; (4) Rs. 10,000 penalty cap. Operative under Notification 9/2017-Integrated Tax notifying IGST Rules 2017. Subsequently amended multiple times — most importantly Notification 4/2018-IT inserting Rules 4-9 for cross-border POS proxies.

Section 23 — Board (CBIC) regulations power. Used for procedural / operational matters consistent with the Act + rules. Rarely substantive impact.

Section 24 — Parliamentary laying. 30-day laying with modification / annulment power. Standard Constitutional check on subordinate legislation. Validity-of-acts-done preserved — modifications operate prospectively.

Section 25 — Removal of Difficulties. Original 3-year sunset; FA 2020 extended to 5 years. Counted from commencement (01.07.2017) → original sunset 30.06.2020; extended to 30.06.2022. Post-sunset, the Government cannot issue new removal-of-difficulties orders under s. 25. Any operational difficulties post-sunset require statutory amendment.

3. Judicial Evolution

Commissioner of Income Tax v Vatika Township Pvt Ltd — (2015) 1 SCC 1 [Supreme Court — 5-Judge Constitution Bench]

Brief Facts: The Income-tax Act's surcharge provisions had been amended mid-year. Question was whether the amendment applied retrospectively to assessment years already commenced. Constitution Bench was constituted to settle conflicting two-Judge Bench rulings on the presumption of prospectivity for fiscal statutes.

Issue: Whether a fiscal statute that imposes or enhances a burden operates prospectively unless expressly or by necessary implication retrospective; and what is the standard of clarity required for retrospective imposition.

HELD: Strong presumption of prospectivity for any provision that imposes or enhances a burden. Retrospective imposition requires either an express statutory direction or a necessary implication so unmistakable that no reasonable construction can avoid it. Beneficial provisions may be construed retrospectively; burden-imposing provisions cannot.

"If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on another, it could be construed to be retrospective. The same is not true of a provision imposing a tax or otherwise creating a fresh burden — there, the presumption of prospectivity is at its strongest."

Relevance: Constitutional anchor for prospective operation of GST amendments. Decisive in every dispute over the effective date of a notification, amendment, or rule change under IGST.

Union of India v Mohit Minerals Pvt Ltd — (2022) 10 SCC 700 [Supreme Court — 3-Judge Bench (Constitution Bench questions)]

Brief Facts: Importers of coal on CIF basis were held liable under Notification Nos. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate) to pay IGST on ocean freight component under reverse charge under s. 5(3)/(4) of the IGST Act. Importers challenged the levy as ultra vires the charging section and contended that IGST had already been paid on CIF value (which included freight) at the time of import under s. 3(7) of the Customs Tariff Act.

Issue: Whether IGST could be levied separately on the ocean freight component of CIF imports when the entire CIF value (inclusive of freight) had suffered IGST under s. 3(7) of the Customs Tariff Act; and whether GST Council recommendations are binding on the Union and States.

HELD: Levy struck down. The Court held that the impugned notification offended the principle of 'composite supply' under s. 8 of the CGST Act because ocean freight in CIF imports is part of the composite supply of imported goods and cannot be artificially severed. Further, the GST Council's recommendations are recommendatory, not binding, on the Union and States — both Parliament and State legislatures have simultaneous legislative power under Article 246A.

"The recommendations of the GST Council are not binding on the Union and the States. The recommendations only have a persuasive value. To regard them as binding would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST."

Relevance: Foundational authority on the IGST charging section, the limits of reverse-charge notifications under s. 5(3)/(4), and the constitutional architecture of the GST Council. Repeatedly cited in RCM, place-of-supply, and composite-supply disputes.

Union of India v Bharti Airtel Ltd — (2022) 4 SCC 328 [Supreme Court — 2-Judge Bench]

Brief Facts: Bharti Airtel claimed it had under-reported ITC in GSTR-3B for July-Sept 2017 (the early GST months when GSTR-2A was not operational) and sought rectification of GSTR-3B for those months to correct the under-claim. Delhi HC permitted rectification; Revenue appealed to SC.

Issue: Whether GSTR-3B for past periods can be rectified to correct an under-claim of ITC where the registered person's books would support the correction but GSTN does not allow retrospective edit.

HELD: Rectification not permitted. The Court held that the GST return-filing regime is self-assessed; the registered person is duty-bound to verify entitlements at the time of filing and cannot, after the fact, claim that GSTR-2A was not available. ITC is a statutory entitlement that must be claimed within the period prescribed under s. 16(4) and not through retrospective rectification.

"GST is a self-assessment regime. The registered person bears the burden of correctly computing and reporting tax liability at the time of filing the return. The unavailability of GSTR-2A does not absolve the assessee of this duty."

Relevance: Substance-over-form authority on self-assessment, the finality of GSTR-3B, and limits on retrospective rectification — critical for place-of-supply disputes where mis-classification may be alleged years later.

All India Federation of Tax Practitioners v Union of India — (2007) 7 SCC 527 [Supreme Court — 3-Judge Bench]

Brief Facts: The constitutional validity of the service-tax levy on chartered accountants, cost accountants, and architects was challenged on the ground that these professions had been historically regulated by State legislation and were therefore outside Union legislative competence.

Issue: Constitutional foundation of the service-tax levy — whether 'service' can be taxed by the Union under the residuary entry (Entry 97 List I) and what is the doctrinal nature of a service-tax levy.

HELD: Service-tax upheld. The Court held that service-tax is a value-added tax on the value of services rendered, traceable to Entry 97 of List I until Entry 92C was inserted by the Constitution (88th Amendment). The economic concept of value addition through services is the doctrinal basis on which service-tax — and now GST on services — rests.

"Service-tax is a value-added tax on the commercial activity of providing services. The taxable event is the rendition of service and the levy attaches to the value addition at the point of service delivery."

Relevance: Constitutional anchor for taxation of services under GST — pre-101st-Amendment doctrinal framework that informs the place-of-supply concept under s. 12 and s. 13 of the IGST Act.

Union of India v Filco Trade Centre Pvt Ltd — (2022) SCC OnLine SC 1156 [Supreme Court — 2-Judge Bench]

Brief Facts: Multiple High Courts had directed nationwide reopening of the GSTN portal for filing/revising TRAN-1 / TRAN-2 by taxpayers who had missed the original window. SC consolidated the appeals and considered whether Article 142 could be invoked to grant procedural relief beyond the statutory transitional-credit window under s. 140 of the CGST Act.

Issue: Whether a vested transitional CENVAT/ITC credit can be defeated by procedural deadlines, and whether the SC can direct a nationwide one-time portal reopening under Article 142.

HELD: Portal reopened nationwide for a 2-month window (1 Oct to 30 Nov 2022, later extended). The Court held that transitional credit is a vested right that cannot be defeated by mere procedural lapses, and Article 142 may be invoked to do complete justice where the procedural architecture has failed thousands of taxpayers.

"Article 142 confers a plenary power on this Court to do complete justice. Where a procedural failure of the administrative architecture has caused widespread denial of substantive rights, this Court can direct a one-time corrective dispensation."

Relevance: Authority for the vested-right doctrine in transitional credit; for the use of Article 142 to correct portal/architecture failures; and as the procedural template for any future SC-supervised GSTN remedial scheme.

4. Circulars and Notifications

Notification No. 9/2017-Integrated Tax dated 28.06.2017 — Notification of IGST Rules 2017 under s. 22

Notified IGST Rules 2017 with original Rules 1-3. Subsequently amended multiple times including Notification 04/2018-IT (Rules 4-9 insertion effective 01.01.2019).

Notification No. 4/2018-Integrated Tax dated 31.12.2018 — Inserted Rules 4-9 in IGST Rules 2017 — POS proxies for cross-border services

Critical operational amendment — inserted Rules 4-9 for POS proxies (advertisement, telecom, banking, insurance, intermediary, others) for cross-border services. Effective 01.01.2019. Most significant s. 22 rule-making exercise post-original notification.

FA 2020 s. 134 + Notif 04/2020-IT dated 30.06.2020 effective — Extension of s. 25 sunset from 3 to 5 years

Substituted 'three years' with 'five years' in s. 25(1) proviso. Original 3-year sunset would have expired 30.06.2020; extended to 30.06.2022. Provided additional 2-year window for removal-of-difficulties orders during COVID and rapid GST evolution period.

Removal of Difficulties Orders (various) dated 2017-2022 — Operative orders under s. 25 IGST

Various Removal of Difficulties Orders issued addressing operational issues — registration transitions, return-filing deadlines, refund procedures, ITC time-limits. Now spent post 30.06.2022 sunset.

Parliamentary laying compliance dated Periodic — 30-day Parliamentary laying of rules / regulations / notifications under s. 24

Standard procedural compliance. Modifications by Parliament rare. Validity of acts done preserved per s. 24 text — modifications prospective.

5. Worked Examples

6. Practitioner Planning

• For rule-making compliance, monitor Notifications under s. 22 for IGST Rules amendments.
• For retrospective rules under sub-s. (3), apply Vatika Township prospectivity for burden-imposing aspects.
• For rule contravention penalty under sub-s. (4), Rs. 10,000 cap provides ceiling.
• For Board regulations under s. 23, rarely substantive — mostly procedural.
• For Parliamentary laying under s. 24, validity-of-acts-done provides protection during scrutiny.
• For s. 25 post-sunset (post 30.06.2022), recall no new RoD Orders; statutory amendment route.
• For pre-sunset RoD Orders, document operative orders for any continuing reliance.
• Subscribe to CBIC notifications for rule / regulation / RoD changes.
• For complex operational difficulties post 30.06.2022, advocacy for statutory amendment if material.
• Coordinate with CGST ss. 164-167 parallel framework via s. 20.
• For Council recommendation pre-condition, exhibit GST Council meeting minutes for novel rules.
• For audit / SCN disputes citing rules, verify Notification + Parliamentary laying compliance.

7. Litigation Defence

• Council-recommendation pre-condition defence — for s. 22 rules without Council recommendation, vulnerable to challenge.
• Vatika Township prospectivity — for retrospective burden-imposing rules.
• Sub-s. (4) Rs. 10,000 cap defence — for rule-contravention penalties.
• s. 24 validity-of-acts-done defence — for actions taken under rules later modified.
• Post-sunset s. 25 defence — for any RoD Orders issued post 30.06.2022, ultra vires.
• Mohit Minerals defence — for rules / regulations that enlarge charging section.
• Bharti Airtel finality defence — for retrospective rule application.
• AIFTP constitutional anchor — for foundational rule-making framework.
• Hierarchy-of-instruments defence — Rules cannot exceed Act; Regulations cannot exceed Act + Rules.
• Filco Trade Article 142 backstop — for systemic rule-architecture failures.
• Maneka Gandhi audi alteram partem — for adverse rule application without hearing.
• Parliamentary modification defence — modified rule applies only prospectively per s. 24.
• Pre-sunset RoD Order defence — for orders issued pre 30.06.2022, validity preserved.
• Notification 04/2018-IT Rules 4-9 defence — for cross-border POS proxy disputes, exhibit operative rules.

8. Procedural Map

Step 1. For rule-making, identify operative Notification under s. 22

IGST Rules 2017 + amendments.

Step 2. Verify Council recommendation

Pre-condition for s. 22(1).

Step 3. For retrospective rules, apply Vatika Township scrutiny

Burden-imposing aspects.

Step 4. For Board regulations under s. 23, check operative notifications

Mostly procedural.

Step 5. For Parliamentary laying under s. 24, monitor 30-day window

Modification rare.

Step 6. For removal of difficulties pre-sunset (≤ 30.06.2022), check operative orders

Validity preserved.

Step 7. Post-sunset, no new RoD Orders

Statutory amendment route.

Step 8. For rule contravention penalty, apply Rs. 10,000 cap under sub-s. (4)

Distinct from s. 122 CGST.

Step 9. Maintain master log of operative rules + amendments

Practitioner reference.

Step 10. For audit defence, exhibit Notification + Parliamentary laying compliance

Validity record.

Step 11. Subscribe to CBIC notifications

Ongoing compliance.

Step 12. For complex operational difficulties, advocacy for statutory amendment if material

Post-sunset.

Step 13. Coordinate with CGST ss. 164-167 via s. 20

Parallel framework.

Step 14. For SCN citing rules, verify operative validity

Foundation of compliance argument.

Step 15. For Notification 4/2018-IT Rules 4-9, apply cross-border POS proxies

Operative rules.

CROSS-REFERENCES

• s. 1 IGST — Commencement (anchor for s. 22(3) retrospective scope).
• s. 20 IGST — Application of CGST including miscellaneous via item (xxv).
• CGST Act s. 164 — Parallel rule-making power.
• CGST Act s. 165 — Parallel regulations power.
• CGST Act s. 166 — Parallel laying.
• CGST Act s. 167 — Parallel removal of difficulties.
• IGST Rules 2017 (Notification 9/2017-Integrated Tax) — Operative rules.
• Notification 4/2018-Integrated Tax — Rules 4-9 insertion.
• FA 2020 s. 134 — s. 25 sunset extension to 5 years.
• Notification 04/2020-Integrated Tax — FA 2020 amendment effective.
• CGST Act s. 122 — General penalty (distinct from s. 22(4) IGST cap).
• CGST Act s. 125 — General penalty for contraventions.
• CGST Act s. 168 — Power to issue instructions / directions (Circulars).
• GST Council recommendations — Statutory pre-condition.
• Constitution Article 246A — Constitutional foundation.
• Constitution Article 245 — Parliamentary legislative power.
• Vatika Township (2015) — Prospective operation presumption.
• Mohit Minerals (2022) — Council recommendations persuasive.
• Bharti Airtel (2022) — Self-assessment finality.
• Filco Trade (2022) — Article 142 backstop.
• AIFTP (2007) — Constitutional foundation.
• Various Removal of Difficulties Orders (2017-2022) — Operative orders pre-sunset.