2022 (5) TMI 591 - HC - Customs

Manufacturer wins IGST refund case, court orders refund with interest.

Phoenix Contact India Private Limited Versus Commissioner Of Customs (Exports), New Delhi

The court ruled in favor of the petitioner, a manufacturer and exporter seeking a refund of IGST against two shipping bills. The court held that the ... Seeking refund with interest on the IGST paid on the export of goods - wrongful mentioning the code in the shipping bills under which drawback is claimed - despite the correction having been permitted in the shipping bill (on payment of fee and penalty), the refund of IGST was not granted to the petitioner - Section 16 of the IGST Act, 2017 (IGST Act) read with Rule 96 of the Central Goods and Service Tax (CGST) Rules, 2017. HELD THAT:- The issue at hand is covered by the judgments of the Division Bench of the Gujarat High Court in Amit Cotton Industries v. Principal Commissioner of Customs, [2019 (7) TMI 472 - GUJARAT HIGH COURT] and in M/s Shyam Textile Through Proprietor Rakesh Ram Swaroop vs. Principal Commissioner of Customs dated 05.04.2021 [2021 (4) TMI 870 - GUJARAT HIGH COURT] where reliance placed in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA [2020 (12) TMI 1116 - GUJARAT HIGH COURT] where it was held that respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.'Zero Rated Supplies' made vide the shipping bills. The respondent/revenue is directed to refund IGST against the aforementioned shipping bills - further having regard to the fact that the necessary fee and penalty was paid as far back as on 24.10.2018, interest will be paid at the rate of 7% (simple) per annum, albeit from 25.10.2018, when correction was effected by the respondent/revenue. Petition disposed off. Issues:1. Refund of IGST paid on export of goods.2. Claim for interest on delayed refund.3. Dispute over duty drawback code.4. Interpretation of CBIC circular.5. Entitlement to IGST refund.6. Applicability of higher duty drawback rate.7. Delay in granting IGST refund.8. Legal precedent from Gujarat High Court judgments.Detailed Analysis:1. The petitioner, a manufacturer and exporter of electrical connectors, sought a refund of IGST against two shipping bills. The refund amounts were claimed under Section 16 of the IGST Act read with Rule 96 of the CGST Rules. The petitioner had paid IGST at 28% of the export value and claimed refunds of Rs. 8,00,621/- and Rs. 8,25,349/- against the two shipping bills, respectively.2. The petitioner mistakenly claimed duty drawback under the incorrect code initially but later applied for correction, which was allowed upon payment of fees and penalties. Despite the correction, the IGST refund was not granted, leading to the filing of the writ petition.3. The respondent relied on a CBIC circular stating that exporters who opted for a higher rate of duty drawback could not claim IGST refund later. However, the court held that this circular did not apply in this case as the duty drawback rates were identical for both scenarios.4. The court emphasized the petitioner's entitlement to the IGST refund under the relevant provisions of the IGST Act and CGST Act. The argument that the petitioner could not claim IGST refund due to the duty drawback claim at a higher rate was deemed factually incorrect.5. Citing legal precedents from the Gujarat High Court, the court directed the respondent to refund the IGST against the shipping bills. Additionally, interest at the rate of 7% per annum was to be paid from the date of correction, considering the delay in granting the refund despite the correction being made in 2018.6. The judgment highlighted the importance of following legal provisions and precedents to ensure timely and rightful refunds to exporters, emphasizing the petitioner's clear entitlement to the IGST refund in this case.