CBIC’s clarification on Valuation; A Test of Promissory Estoppel?

Hon’ble SC recently reiterated that the doctrine of promissory estoppel does not apply to the exercise of legislative powers by the State; Here’s the extract;

“It is an evident position of law that a prior executive decision does not bar the state legislature from enacting a law or framing a policy contrary to or in conflict with the previous executive decision in furtherance of the larger public interest. Nor can it be argued that the law laid down by the legislature would be affected by the principles of promissory estoppel or legitimate expectation because the executive had previously expressed a different view”

Notably, Hon’ble CBIC recently provided clarification regarding valuation in cases involving related parties and where full input tax credit is available to the recipient.

Firstly, the clarification states that the value declared in the invoice can serve as the open market value (OMV). This aligns with Rule 28 of the CGST rules.

Regarding the second part of the clarification, it specifies that when no invoice is issued, the value may be considered Nil.

It is worth noting that while the second part benefits taxpayers, it does not directly derive from Rule 28.

Therefore, a question arises: If the second part goes detrimental to revenue in the future, can it be reversed? Alternatively, can taxpayers assert it as a vested right?? Would it make a difference if the same is also made a part of Rule 28???

I think, this for sure may need an examination.

Let’s see!!!