Exporters Win Temporary Relief: Challenge to Tax Refund Rule 96(10) Halts Coercive Recovery Measures

The HC examined a challenge to Rule 96(10) of CGST Rules, 2017, concerning tax refunds for exported goods. The court granted interim relief by directing respondents to refrain from coercive recovery against the petitioner and deferred further proceedings. The case involves constitutional and statutory interpretation of tax regulations, with potential implications for integrated tax claims and export-related tax procedures.

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Issues involved: Challenge to Rule 96(10) of the CGST Rules, 2017; Entitlement to pay Integrated Tax on exported goods and claim refund under Section 16(3) of the IGST Act, 2017; Quashing of proceedings initiated against the Petitioner.

Challenge to Rule 96(10) of the CGST Rules, 2017:
The petition sought to strike down Sub Rule (10) of Rule 96 of the CGST Rules, 2017 as ultra vires Section 16 of the IGST Act, ultra vires Section 54 and 164 of the CGST Act, 2017, and ultra vires Articles 14 and 19(1)(g) of the Constitution of India. Alternatively, the petition requested the issuance of a Writ of Mandamus or any other appropriate writ, order, or direction declaring that the bar/restriction of Rule 96(10) of the CGST Rules, 2017 is not applicable in the Petitioner's case. The court noted a similar petition with identical controversy and prayers entertained by a Co-ordinate Bench previously.

Entitlement to pay Integrated Tax on exported goods and claim refund:
The petition also sought a declaration that the Petitioner is entitled to pay Integrated Tax on goods exported and claim refund of such tax paid under Section 16(3) of the IGST Act, 2017. Additionally, the petition requested the court to direct the Respondents to allow the Petitioner to pay integrated tax on exported goods and claim a refund of such tax paid on the exported goods under Section 16(3) of the IGST Act, 2017. The court, by way of ad-interim relief, directed that the respondent shall not make any coercive recovery from the petitioner for the refund of integrated tax already paid until further orders.

Quashing of proceedings initiated against the Petitioner:
Furthermore, the petition sought the quashing and setting aside of proceedings initiated against the Petitioner via Show Cause Notice dated 20.11.2022. The court took note of a previous order granting interim relief in a similar matter and fixed the next hearing for 26.4.2023.

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