Court declares certain GST provisions unconstitutional, orders refund with interest.

The Court declared certain provisions of Notifications and Circulars under the IGST Act and CGST Act as ultra vires and unconstitutional. After verification, it was confirmed that most petitioners had availed duty drawback but not CENVAT credit. The Court directed the refund of IGST to the petitioners with 7% simple interest until 26.04.2021. Interest was also ordered for delayed remittance of IGST refund. The writ petition was disposed of with directions for refund and compliance by all concerned Commissionerates, following a Gujarat High Court precedent.

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Issues:
1. Challenge to the validity of certain provisions of Notifications and Circulars under the IGST Act and CGST Act.
2. Verification of duty drawback/CENVAT credit availed by petitioners.
3. Refund of IGST paid on exported goods during the Transitional Period.
4. Payment of interest for delayed remittance of IGST refund.

Analysis:

Issue 1: Challenge to the validity of Notifications and Circulars
The petitioners sought a declaration that certain provisions of Notifications and Circulars were ultra vires Section 16 of the IGST Act, 2017, and unconstitutional. The Court agreed with the petitioners' submissions, subject to verification of duty drawback/CENVAT credit availed by the petitioners concerning Central Excise and Service Tax components. The matter was adjourned to allow respondent no.2 to verify this fact.

Issue 2: Verification of duty drawback/CENVAT credit
After multiple adjournments, respondent no.2 filed a compliance-affidavit stating that none of the petitioners had availed CENVAT credit for Central Excise. Only one petitioner had availed CENVAT credit for Service Tax. Based on this affidavit, it was confirmed that most petitioners had availed duty drawback but not CENVAT credit. The petitioners agreed to forego input tax credit to expedite the refund process.

Issue 3: Refund of IGST
The Court directed the refund of IGST to the petitioners, with interest at a rate of 7% simple interest from the date of filing shipping bills till the date of actual refund. The interest was to be granted until 26.04.2021, and the refund process was to be completed by that date. The Court cited a Gujarat High Court judgment supporting the payment of interest for delayed refunds.

Issue 4: Payment of interest for delayed remittance
The Court ordered the payment of interest at 7% simple from the date of filing shipping bills till the date of refund, not exceeding 26.04.2021. The writ petition was disposed of with directions for the refund of IGST to the petitioners, ensuring due compliance by all concerned Commissionerates.

By following the Gujarat High Court precedent, the Delhi High Court provided a detailed analysis and resolution to the issues raised in the writ petition, ensuring the timely refund of IGST with appropriate interest and compliance with legal provisions.

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