Customs authorities must process IGST refund claims for exports during GST transition period with 7% interest

The Delhi HC directed customs authorities to process the petitioner's IGST refund claim for goods exported during the GST transition period (01.07.2017 to 30.09.2017). Following the Gujarat HC precedent in M/S Amit Cotton Industries case, the court held that exporters are entitled to refund of IGST paid on zero-rated supplies with 7% simple interest from shipping bill date until actual refund. The petition was disposed of with directions to process the refund claim in accordance with law and applicable interest.

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Issues involved:
The denial of refund of Integrated Goods and Service Tax (IGST) paid by the petitioner on goods exported during the transition period after the rollout of the GST Regime is challenged based on certain impugned notifications and circulars.

Summary:

Issue 1 - Challenge to Notifications and Circular:
The petitioner sought a declaration that specific paragraphs of the impugned notifications and circular are ultra vires Section 16 of the IGST Act, 2017, and unconstitutional, thereby requesting the quashing of the same. The notifications and circular in question prescribed different rates of duty drawback for specified goods, with higher rates covering various indirect taxes. Exporters claiming duty drawback at higher rates were denied IGST refunds. The petitioner, a merchant exporter, was denied IGST refund as it claimed duty drawback at higher rates specified in Column 'A'.

Issue 2 - Identical Drawback Rates:
In cases where the drawback rates in columns 'A' and 'B' were identical, it was established that only the customs duty component was neutralized, not other indirect taxes. This was crucial in determining whether exporters were eligible for IGST refunds.

Issue 3 - Precedents and Court Decisions:
The judgment referenced previous court decisions, including the TMA International Pvt. Ltd. case and the Awadkrupa Plastomech Pvt. Ltd. case, where exporters with identical drawback rates were granted IGST refunds. The Gujarat High Court's decision in M/s Amit Cotton Industries v. Principal Commissioner of Customs was also cited, emphasizing the entitlement to IGST refunds for zero-rated supplies.

Conclusion:
Given the precedents and decisions cited, the court directed the authorities to process the petitioner's refund claim for IGST paid on exported goods during the transitional period, deducting any differential duty drawback amounts if necessary. The concerned officer was tasked with verifying duty drawback availed by the petitioner and making adjustments as required. The petition was disposed of accordingly, with the petitioner's claim to be processed along with applicable interest in line with the court's directives and relevant legal provisions.

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