2020 (7) TMI 455 - HC - Customs

Respondent given one week to seek Apex Court review on IGST refund. Failure leads to merit-based proceedings.

The court granted the respondent one week to approach the Apex Court regarding the IGST refund claim non-compliance. If the respondent failed to do so ... Contempt of court - refund of IGST - higher drawback versus IGST refund - system-driven withholding of refund - implementation of court directions - leave to approach the Supreme CourtImplementation of court directions - contempt of court - Whether the respondents should be permitted a short period to challenge the Division Bench's order before the contempt petition is proceeded with on merits - HELD THAT: - The Court noted that the Division Bench had earlier held the applicant entitled to claim IGST in respect of exported goods and that the applicant alleges non-compliance of those directions, giving rise to the present contempt proceedings. The respondents asserted that the withholding of IGST refunds is system-driven and that the legal question remains pending at the apex level; they sought time to move the Supreme Court. The Court observed that more than a year had elapsed since the Division Bench's order and that no petition had yet been filed before the Supreme Court. Balancing the department's stated intention to challenge the order with the applicant's right to execution of the directions, the Court allowed a limited, one week period for the respondents to file an appeal to the Supreme Court; the Court made clear that, if no such step is taken within that period, the contempt application and implementation would be proceeded with on merits on the listed date.Respondents granted one week to approach the Supreme Court; failing which the matter will be taken up on merits.Refund of IGST - higher drawback versus IGST refund - system-driven withholding of refund - Whether the contention that the department's system prevents sanctioning IGST refunds where higher drawback has been availed excuses continued non-compliance with the Division Bench's directions - HELD THAT: - The Court recorded the department's position that the automated system withholds IGST refunds where exporters have availed higher drawback and that the legal controversy is not yet finally resolved by the Supreme Court. The Court nevertheless observed that in view of the Division Bench's earlier adjudication in favour of the applicant and the lapse of over a year without the department instituting proceedings before the apex forum, indefinite delay could not be permitted. The Court therefore did not accept the passage of time as a sufficient reason to refuse immediate steps towards implementation; instead it afforded a narrowly tailored opportunity to the department to file an appeal, after which the Court will proceed to adjudicate the contempt/implementation issue on merits if no appeal is filed.System-related constraints and the department's intent to approach the Supreme Court do not justify further delay; a limited period to file an appeal was granted, after which the implementation will be considered on merits.Final Conclusion: The respondents were given one week to move the Supreme Court against the Division Bench's order; if no appeal is filed within that period, the contempt application alleging non-compliance with the Division Bench's directions relating to IGST refunds will be proceeded with and heard on merits on the listed date. Issues:Contempt of court for non-compliance of directions regarding IGST refund claim.Analysis:The applicant filed a contempt application alleging that the respondent had unlawfully withheld the IGST refund claim despite specific directions issued by the court in a previous case. The applicant sought action against the respondent for non-compliance with court orders regarding the refund claim.In response to the notice, the Assistant Commissioner of Customs filed an affidavit emphasizing that the refund sanctioning process is system-driven and based on the exporter's declaration at the time of export. The respondent highlighted that exporters who have already availed higher drawback amounts have had their IGST refunds withheld by the system. The department expressed its intention to challenge the Division Bench's judgment on the issue in the Apex Court.During the hearing, the applicant's advocate argued that the law permits requesting IGST refunds when opting for higher due drawback refunds. He pointed out that a circular from the Ministry of Finance also supports this position. The advocate criticized the department for not taking timely action despite the Division Bench's ruling in favor of the applicant. He raised concerns about the lack of a petition filed in the Apex Court till date.Another advocate representing the department acknowledged some delays but argued that the court should not deny the department's right to challenge the Division Bench's order. He explained that the system does not currently allow switching to claim IGST refunds after availing higher due drawback refunds. He requested an adjournment to allow the department more time to approach the Apex Court.In light of the arguments presented, the court granted the respondent one week to approach the Apex Court. The court noted that a year had passed since the judgment in question was issued and emphasized that if the respondent failed to move the Apex Court within the given time frame, the matter would proceed on its merits. The next hearing was scheduled for a later date.