2020 (1) TMI 90 - HC - GST

Court Orders Refund of Rs. 4,80,355 in IGST for Exported Goods; Circular Cannot Override Statutory Provisions.

The HC granted the petitioner's Writ of Mandamus, directing the respondents to refund Rs. 4,80,355 in IGST for exported goods. The court determined that ... Refund of IGST on zero-rated supplies - Entitlement to refund where tax is paid on export - Refund claim under the Integrated Goods and Services Tax regime - Circulars cannot override or alter statutory provisions - Effect of availing duty drawback on IGST refund - System-managed refund mechanism and automatic adjustmentsRefund of IGST on zero-rated supplies - Entitlement to refund where tax is paid on export - Refund claim under the Integrated Goods and Services Tax regime - Effect of availing duty drawback on IGST refund - Circulars cannot override or alter statutory provisions - Petitioner entitled to refund of IGST paid on exports of zero-rated supplies despite earlier availing higher duty drawback and subsequent voluntary repayment; Circular No.37/2018-Customs, dated 09.10.2018 cannot defeat the statutory right to refund. - HELD THAT: - The Court examined the statutory framework under the IGST Act and CGST Act which permits refund of integrated tax paid on exports made after payment of tax. The petitioner exported goods after paying IGST and claimed refund in accordance with the applicable Rules (Sub-Clauses (a) and (b) of Sub-Rule (1) of Rule 96 of the CGST Rules, 2017). A departmental circular asserting that exporters who declare drawback serial numbers suffixed with A or C have 'consciously relinquished' IGST/ITC claims was found to be inapplicable to defeat the statutory entitlement. Reliance was placed on the principle that executive circulars cannot prevail over statutory provisions; where the statute grants a refund, a contrary interpretation in a circular cannot nullify that right. The Court noted that a Division Bench of the Gujarat High Court has treated the circular as not affecting IGST refund claims and that subsequent administrative steps (including a later circular addressing system-managed refunds) do not supplant the statutory refund route. Applying these principles to the facts - that IGST was paid on exports and refund procedures under the statute and rules were complied with - the Court concluded that the petitioner is entitled to the refund notwithstanding the earlier duty drawback issue and its voluntary repayment. [Paras 9, 11, 13]Respondents directed to refund the IGST paid on the exported zero-rated supplies to the petitioner.Final Conclusion: Writ petition allowed; respondents directed to refund the IGST paid on the exported zero-rated supplies to the petitioner within six weeks; no costs. Issues:Claim for refund of IGST paid by the petitioner for exported goods under zero-rated supplies. Interpretation of circular affecting refund entitlement.Analysis:The petitioner sought a Writ of Mandamus for the refund of Rs. 4,80,355 IGST paid for exported cotton. The petitioner exported after paying the tax, making them eligible for the refund of input tax credit. The respondents argued that the petitioner, by mistakenly claiming higher duty drawback and repaying it, had relinquished the right to claim IGST refund. They cited a circular stating that consciously requesting a duty drawback refund forfeits the IGST claim. The court noted that the statute allows for IGST refund on exports made after tax payment. The court referenced a Supreme Court case emphasizing that circulars cannot override statutory provisions. The court held that the circular in question did not apply to the IGST refund claim and directed the respondents to refund the IGST amount within six weeks. The court highlighted a Gujarat High Court decision supporting the petitioner's claim for IGST refund despite the circular's provisions. The Writ Petition was allowed, with no costs incurred.