2022 (10) TMI 313 - HC - GST

Exporters Win IGST Refund Battle: Full Reimbursement Granted with Interest Based on Clear Legal Precedents

M/s. Kishan Lal Kuria Mal International and M/s. Overseas Commitment & Ors. Versus Union Of India & Ors.

HC ruled in favor of petitioners challenging Notification dated 31st October, 2016, regarding IGST refund on exported goods. The court directed ... Refund of IGST paid on the goods exported by the Petitioners during the transitional period after deducting the differential amount of duty drawback - Constitutional Validity of Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the Notification dated 31st October, 2016, [as amended by Notifications dated 29th June, 2017 and 26th July, 2017], Circular No. 37/2018 dated 09th October, 2018 - vires of Section 16 of the IGST Act, 2017 read with Section 54 of CGST Act, 2017 as well as Rule 96 of CGST Rules, 2017 and violative of Articles 14, 19 and 21 of the Constitution of India. HELD THAT:- A perusal of the paper book reveals that the matter in issue is covered by the judgment of Gujarat High Court in M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [2019 (7) TMI 472 - GUJARAT HIGH COURT] where it was held that the respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e. ‘zero-rated supplies’, with 7% simple interest from the date of the shipping bills till the date of actual refund. Since the facts in the present cases are pari materia to the case in M/s Amit Cotton Industries, the present writ petitions are allowed directing the Respondent authorities to grant refund of IGST paid on the goods exported by the Petitioners during the transitional period, after deducting the differential amount of duty drawback, if the said differential amount has not already been returned by the petitioner, within twelve weeks along with appropriate interest at the rate of 7% p.a. on such refund from the date of the shipping bill till the date of actual refund. Application disposed off. Issues:1. Challenge to the validity of Paragraph 11(d) read with 12A(a)(ii) of the Notification dated 31st October, 2016, and related Circulars.2. Denial of refund of IGST paid on exported goods due to higher drawback rates claimed.3. Allegation of confusion and lack of technical knowledge during the transitional phase.4. Non-joinder of necessary parties in the writ petitions.5. Interpretation of relevant legal provisions and prior judgments on similar issues.Issue 1:The petitioners sought a declaration that certain provisions of the Notification dated 31st October, 2016, and subsequent Circulars were ultra vires and violative of constitutional provisions. They argued that these provisions denied them the refund of IGST paid on exported goods. The contention was that the impugned instruments were not in line with the IGST Act, CGST Act, and CGST Rules, and infringed upon constitutional rights.Issue 2:The petitioners claimed that despite higher drawback rates under Column A compared to Column B, the IGST paid on exported goods was even higher. They argued that claiming drawback under Column A did not benefit them in terms of IGST refund. The confusion and lack of technical knowledge during the transitional phase were cited as reasons for choosing Column A for drawback claims.Issue 3:Reference was made to a previous judgment where the refund of IGST paid on goods exported during the Transitional Period was allowed, even though duty drawback was claimed at a higher rate. The court noted that the issue raised in the present petition was similar to the one addressed in the previous judgment, indicating a consistent judicial approach to such matters.Issue 4:The respondents raised a procedural objection regarding the non-joinder of necessary parties in the writ petitions. They argued that various Jurisdictional Commissionerates involved in refund claims were not impleaded as parties, which could impact the outcome of the petitions. However, the court did not find this objection valid in light of the specific circumstances of the case.Issue 5:The court referred to a judgment of the Gujarat High Court and a subsequent Supreme Court decision dismissing a Special Leave Petition related to the same issue. The court relied on these precedents to allow the present writ petitions, directing the authorities to grant the refund of IGST paid on exported goods. The judgment emphasized the entitlement of the petitioners to claim the refund with interest, based on the legal clarity provided by previous judicial pronouncements.In conclusion, the judgment addressed various legal issues concerning the refund of IGST paid on exported goods, highlighting the importance of legal provisions, constitutional rights, prior judicial decisions, and procedural considerations in resolving the dispute.