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

Gujarat HC allowed IGST refund for export of comber noil under zero rated supplies. The court held that customs authorities arbitrarily withheld refund despite shipping bill amendments and differential drawback realization. Following precedent in Awadkrupa Plastomech case, the court rejected authorities' reliance on customs circulars to deny IGST refund. Authorities were directed to immediately sanction IGST refund and pay interest at 9% from the date refund bills were raised until actual payment. The court criticized authorities for failing to follow binding judicial precedent.

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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.

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