2022 (1) TMI 547 - HC - GST

Customs authorities must immediately sanction IGST refund for export of comber noil under zero rated supplies

M/s AIM Worldwide Pvt. Ltd. Versus Union of India

Gujarat HC allowed IGST refund for export of comber noil under zero rated supplies. The court held that customs authorities arbitrarily withheld refund ... Refund of IGST - Export of Comber Noil - Zero Rated Supplies - claim of interest @ 18% on the amount of refund of IGST from the date of shipping bill up till the date on which the amount of refund is paid to the petitioner herein - Petitioner claims that the refund has been arbitrarily and illegally withheld by the respondent authorities - HELD THAT:- In the present case, admittedly, the shipping bills have been amended pursuant to the decision of the Superintendent of Customs (Export). It is not in dispute that the Demand Draft of differential drawback aggregating to an amount of ₹ 3,39,245/- has been realized by the respondent Authorities. As held in various decisions, such Circulars are merely in the form of instructions or guidance to the concerned Department and it explains the provisions of drawback, however, it has nothing to do with the IGST refund. More particularly, Rule 96 of GCST Rules, 2017 is explicitly clear on the said aspect. This Court had an occasion to deal with the similar facts in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [2020 (12) TMI 1116 - GUJARAT HIGH COURT], whereby reliance was made upon the Circular 37/2018-Customs dated 09.10.2018, whereby the competent Authority had withheld the refund of IGST on the ground that exporters had availed the option to take drawback at higher rate in place of the IGST refund out of their own volition. - Refund allowed. Rate of interest - HELD THAT:- There is a direct binding decision of this Court, which is rendered in favour of the assessee holding the assessee entitled to the refund of IGST. Despite the aforesaid decision of this Court in the case of Amit Cotton Industries [2020 (12) TMI 1116 - GUJARAT HIGH COURT], for the reasons best known to the adjudicating authority, the adjudicating authority has failed to abide by the aforesaid decision and has chosen not to take decision with regard to the refund of IGST. To repeat, on going through entire record, the stand of the respondent Authority to withhold IGST based on non-consideration of Judicial pronouncement is equally irrational and arbitrary. The respondent Authorities are directed to immediately sanction the refund towards IGST paid in respect of goods exported “Zero Rated Supplies” made under the shipping bill - respondent authorities directed to grant interest @ 9% from the date when the bills for refund of IGST were raised by the petitioner, till its actual payment. Application disposed off. Issues Involved:1. Refund of Integrated Goods and Services Tax (IGST) paid on exported goods.2. Claim of higher drawback rate by mistake.3. Entitlement to interest on delayed refund.Detailed Analysis:1. Refund of Integrated Goods and Services Tax (IGST) Paid on Exported Goods:The petitioners invoked the extraordinary writ jurisdiction under Article 226 of the Constitution of India, seeking a writ of mandamus directing the respondent authorities to immediately sanction the refund of IGST amounting to Rs. 14,94,739/- paid on exported goods (Comber Noil) under various invoices. The petitioners had filed the necessary forms (GSTR-1 and GSTR-3B) within the prescribed time. However, due to an inadvertent mistake, they claimed a higher drawback rate instead of the lower rate while generating shipping bills. This mistake was acknowledged, and the petitioners requested an amendment to the shipping bills under Section 149 of the Customs Act, 1962, and expressed their willingness to refund the differential amount of Rs. 3,39,245/-, which was realized by the Customs authorities. Despite various representations, the refund of IGST was not sanctioned.2. Claim of Higher Drawback Rate by Mistake:The petitioners mistakenly claimed a higher drawback rate by selecting options '5202A' and '600699A' instead of '5202B' and '600699B'. Upon realizing the mistake, they requested the Customs authorities to amend the shipping bills and refund the differential amount. The Customs authorities acknowledged the amendment of the shipping bills and the receipt of the differential amount. However, the respondents objected to the refund of IGST, citing the petitioners' initial choice of a higher drawback rate and reliance on Board Circular No.37/2018-Customs dated 09.10.2018.3. Entitlement to Interest on Delayed Refund:The petitioners also sought interest at 18% on the delayed refund of IGST from the date of the shipping bill until the actual payment. The court referred to Section 56 of the CGST Act, 2017, which provides for interest on delayed refunds if the refund is not made within sixty days from the date of receipt of the application. The court noted that the petitioners had made timely applications and various representations for the refund. The court also referred to previous judgments, including Amit Cotton Industries Vs. Principal Commissioner of Customs, which held that the claim for refund can only be withheld under specific circumstances as provided in Rule 96(4) of the CGST Rules, 2017.Judgment:The court directed the respondent authorities to immediately sanction the refund of IGST paid on the exported goods, as the petitioners had complied with the necessary procedures and rectified their mistake. The court also directed the respondents to pay interest at 9% from the date the refund bills were raised until the actual payment. The refund and interest were to be paid within eight weeks from the date of the order, failing which further interest at 9% would accrue until payment.Conclusion:The court upheld the petitioners' claim for the refund of IGST paid on exported goods and directed the respondent authorities to process the refund along with interest for the delay. The judgment emphasized the importance of adhering to statutory provisions and judicial pronouncements, rejecting the respondents' reliance on the Board Circular that contradicted the statutory rules.