2022 (5) TMI 634 - HC - GST

IGST Refund Granted for Exports Despite Drawback Claim Suffix Error; Technical Formality Cannot Bar Valid Refund Entitlement

The HC ruled in favor of the petitioner, directing respondents to sanction IGST refund on exported goods. The court rejected the respondents' argument ... Refund of integrated goods and services tax (IGST) - drawback serial suffixed with 'A' and 'B' - claim of drawback limited to customs component - uniform drawback rate after amendment effective 01.10.2017 - technical disallowance for erroneous suffix - statutory interest on delayed refundRefund of integrated goods and services tax (IGST) - drawback serial suffixed with 'A' and 'B' - claim of drawback limited to customs component - uniform drawback rate after amendment effective 01.10.2017 - Entitlement to IGST refund where exporter mistakenly used drawback serial suffix 'A' but claimed only the customs component and the rates in column 'A' and 'B' are the same after the amendment effective 01.10.2017. - HELD THAT: - The court found on the materials that the petitioner exported goods on payment of IGST and claimed refund of the IGST corresponding only to the customs component at the rates specified. With effect from 01.10.2017 the earlier distinction between column 'A' and 'B' rates was removed and a single uniform rate was prescribed; for the products concerned the rates in column 'A' and 'B' were the same. The petitioner inadvertently suffixed the drawback serial with 'A' but did not claim any higher drawback than the custom component. Relying on the precedent where identical facts were upheld, the court held that a technical error in affixing suffix 'A' could not be allowed to defeat the substantive entitlement to refund where there was no substantive claim for a higher drawback. Consequently the refund of IGST paid on export by shipping was to be sanctioned; statutory interest would follow if there were no other impediments.Writ petition allowed; respondents directed to sanction refund of IGST in respect of the exported goods (supply made by shipping), with statutory interest where applicable.Final Conclusion: The petition succeeds. The technical use of drawback suffix 'A' did not disentitle the petitioner from IGST refund where only the customs component was claimed and the applicable drawback rates were uniform; respondents to sanction the refund and pay statutory interest if otherwise permissible. Issues:1. Direction sought for sanctioning refund under IGST Act and CGST Act.2. Interpretation of suffix 'A' in draw back claim.3. Application of circular dated 09.10.2018 on IGST/ITC claims.4. Denial of refund based on suffix 'A' claim for higher draw back.5. Dispute over draw back rates specified under column 'A' and 'B'.6. Claiming draw back of custom component only for exported goods.7. Similarity of the case with the Gujarat High Court judgment.8. Granting of refund and statutory interest.Analysis:1. The Petitioner sought a direction for the sanction of a refund amount under the IGST Act, CGST Act, and relevant rules. The Petitioner claimed that the draw back they had requested was in line with the custom component, despite a suffix 'A' mistakenly included instead of 'B'.2. The Petitioner's counsel argued that the inclusion of suffix 'A' did not indicate a claim for higher draw back, citing a judgment by the Gujarat High Court and its confirmation by the Apex Court. The courts observed that the claim was only for the custom component, and no error was found in the High Court's decision.3. The Respondents contended that the circular from 09.10.2018 implied that by using suffixes 'A' or 'C', exporters waived their IGST/ITC claims. Therefore, they argued that the Petitioner was not entitled to a refund based on this circular.4. The dispute arose from the interpretation of the suffix 'A' in the draw back claim, with the Respondents asserting that it indicated a higher draw back claim, contrary to the Petitioner's position that the rates specified under column 'A' and 'B' were the same.5. The Petitioner exported goods and paid integrated goods and service tax, with differing rates based on credit availed or not availed. However, post an amendment, a single rate was applicable. The Petitioner claimed that the rates specified under column 'A' and 'B' were identical, a fact not disputed by the Respondents.6. It was established that the Petitioner was claiming draw back solely for the custom component of the exported goods at rates specified under both columns 'A' and 'B', which were the same. The Respondents did not contest this fact, and the denial of the claim was based on a technicality regarding the suffix 'A'.7. The Court found in favor of the Petitioner, directing the Respondents to sanction the refund for the IGST paid on the exported goods. The judgment highlighted the similarity of the case with the Gujarat High Court's decision, leading to the grant of the refund and statutory interest.8. Consequently, the writ petition was disposed of with no costs awarded in the matter.