Refund of IGST on zero rated exports ordered to be sanctioned with interest after court affirmed statutory refund entitlement.

Refund of IGST for zero rated exports: the Court applied precedent holdings to conclude that exporters are entitled to IGST refund notwithstanding a drawback notification classification error, noting repayment of excess drawback with interest. The court held that an administrative circular cannot override the statutory refund scheme, relying on higher court precedent addressing conflict between statute and circular and prior state bench decisions. Consequently the respondents were directed to sanction IGST refunds corresponding to the shipping bills with simple interest at 6% from bill date to actual refund, and the petition was allowed.

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Issues Involved:
1. Sanction of IGST Refund for Exported Goods.
2. Payment of Interest on Delayed Refund.

Summary:

Issue 1: Sanction of IGST Refund for Exported Goods

The petitioner filed a petition under Article 226 of the Constitution of India seeking a writ of mandamus to direct the respondents to sanction the refund of IGST paid on exported goods through Mundra Customs Port and Hazira Port. The petitioner claimed refunds for various shipping bills, asserting that the goods exported were "Zero Rated Supplies" as per Section 16(3)(b) of the IGST Act and Rule 96 of the CGST Rules, 2017. The petitioner argued that due to an oversight, the Custom House Agent selected the wrong suffix in the drawback notification, which was later corrected by repaying the excess drawback with interest. The petitioner cited previous judgments, including Amit Cotton Industries v. Principal Commissioner of Customs, to support their claim for the refund.

The respondents contended that the refund process is automatic and that the petitioner's claim was invalid due to the selection of higher drawback rates. However, the court referred to its earlier decisions, particularly in Amit Cotton Industries, which established that the petitioner is entitled to the refund of IGST paid on zero-rated supplies. The court emphasized that Rule 96 of the CGST Rules provides that the shipping bill is deemed an application for refund and can only be withheld under specific conditions, none of which applied to the petitioner's case.

Issue 2: Payment of Interest on Delayed Refund

The petitioner also sought interest at 6% on the delayed refund amount from the date of the shipping bills until the actual refund date. The court, referencing its previous rulings, directed the respondents to sanction the refund with simple interest at the rate of 6% from the date of the shipping bills till the date of actual refund.

Conclusion

The court allowed the petition, directing the respondents to immediately sanction the refund of IGST paid on the specified shipping bills with interest at 6% from the date of the shipping bills till the date of actual refund. The rule was made absolute with no order as to costs.

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