Court orders IGST refund for exporter despite error, directs respondents to process refund within 8 weeks

The court ruled in favor of the petitioner, a regular exporter seeking an IGST refund for exported goods. Despite an error in the drawback code declaration and system constraints preventing refund processing, the court emphasized the petitioner's entitlement to the refund. Referring to CBEC Circulars allowing error rectification, the court directed the respondents to refund the undisputed IGST amount for specified shipping bills within eight weeks. The writ petition was allowed, and no costs were imposed.

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Issues Involved:
1. Entitlement to IGST refund for exported goods.
2. Error in drawback code declaration.
3. Applicability of CBEC Circulars for error rectification.
4. Respondents' inability to process IGST refund due to system constraints.

Detailed Analysis:

1. Entitlement to IGST Refund for Exported Goods:
The petitioner, a regular exporter of Polished Granite Slabs, sought a mandamus directing the second respondent to settle and release the pending refund of IGST paid on specific shipping bills. The petitioner argued that under Rule 96A of CGST Rules, 2017, shipping bills filed by an exporter are deemed applications for refund of integrated tax paid on exported goods. Despite this, the refund was not processed, allegedly due to the petitioner availing a higher drawback rate.

2. Error in Drawback Code Declaration:
The petitioner admitted to an inadvertent error in declaring the drawback code as 680203A instead of the correct 680203B in the shipping bills. This mistake led to the non-processing of the IGST refund by the respondents, as the system automatically rejects such discrepancies. The respondents acknowledged this error in their counter affidavit but stated that the computer system could not process the refund once the Export General Manifest (EGM) was closed.

3. Applicability of CBEC Circulars for Error Rectification:
The petitioner cited several CBEC Circulars, particularly Circular No. 8/2018-Cus dated 23.03.2018, which provides an alternative mechanism for rectifying errors in shipping bills through officer interface. The petitioner argued that this circular applies to their case, as it addresses similar inadvertent errors made by exporters. The respondents did not dispute the applicability of these circulars but contended that the system constraints prevented the refund processing.

4. Respondents' Inability to Process IGST Refund Due to System Constraints:
The respondents admitted that the IGST refund was payable but could not be processed due to the computer system's limitations. The system does not allow amendments once the EGM is closed, and the shipping bill status is archived. The petitioner argued that this technicality should not deprive them of their rightful refund, especially when the error was acknowledged and alternative mechanisms were available.

Discussion and Judgment:
The court acknowledged the petitioner's entitlement to the IGST refund and noted the respondents' admission of the error and the system's constraints. The court referred to CBEC Circular No. 8/2018-Cus, which provides an alternative mechanism for rectifying such errors. The court emphasized that the petitioner should not be deprived of the refund due to a technical error and system limitations.

The court directed the respondents to refund the undisputed IGST amount for the specified shipping bills within eight weeks from the date of receipt of the order. The writ petition was allowed, and the connected miscellaneous petition was closed with no costs.

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