2024 (1) TMI 32 - HC - GST

Gujarat HC quashes order for non-compliance with directions, orders IGST refund on zero-rated supplies with 7% interest

Gujarat HC quashed the impugned order for non-compliance with court directions regarding IGST refund on zero-rated supplies. The court held that ... Refund of IGST - zero rated supplies - grant of refund after adjusting the differential duty drawback amount which was claimed erroneously because of mistake committed by the clearing and forwarding agent - HELD THAT:- It appears that the impugned order is passed contrary to the directions issued by this Court. Once this Court has issued the directions, the same are binding upon the respondent-authorities and the respondent-authorities had no reason to take a different view than the directions issued by this Court while exercising the powers under Article 226 of the Constitution of India. The respondent-authorities are bound by the directions issued by this Court and therefore, the impugned order is hereby, quashed and set aside. The respondent-authorities are directed to comply with the directions issued by this Court while sanctioning the refund of IGST after deducting the differential duty drawback with 7% simple interest as ordered by this Court. Such exercise shall be completed within a period of four weeks from the date of receipt of the copy of this Order. Petition allowed. Issues involved:The issues involved in this case include the petitioner seeking relief through a writ petition under Articles 226 and 227 of the Constitution of India to challenge an order passed by the Commissioner of Appeals, Customs under Section 128A of the Customs Act, 1961. The petitioner sought various reliefs including quashing the impugned order, directing the respondents to release the refund of IGST, and granting interest on the refund.Details of the Judgment:Issue 1: Relief sought through the writ petitionThe petitioner sought relief through the writ petition, requesting the court to issue a writ of certiorari or a writ in nature of certiorari to quash the impugned order, and to direct the respondents to release the refund of IGST and grant interest on the refund at the rate of 7% per annum.Issue 2: Background and facts of the caseThe petitioner, a private limited company engaged in trading of cotton yarn and cotton waste, was registered under the Central Goods and Service Tax Act, 2017. The petitioner had erroneously selected the option of export without payment of tax, even though the required letter of undertaking was obtained later. The petitioner paid IGST on exports and sought refund, but faced challenges due to errors in filing shipping bills by the clearing and forwarding agent.Issue 3: Dispute over refund and duty drawbackThe petitioner faced challenges in obtaining the refund of IGST paid on exports made before obtaining the letter of undertaking. Despite multiple correspondences and court directions, the refund was not granted as per the petitioner's entitlement. The Deputy Commissioner of Customs granted the refund but charged interest at 15% on the differential duty drawback and reduced the interest rate from 7% to 6%, leading to the petitioner's appeal against the order.Issue 4: Court's decision and reasoningThe Court found that the authorities had erred in implementing the court's directions, leading to discrepancies in charging interest on the duty drawback and reducing the interest rate. The Court held that the impugned order was contrary to the court's directions and directed the respondent-authorities to comply with the court's previous order of sanctioning the refund of IGST after deducting the differential duty drawback with 7% simple interest, to be completed within four weeks.Conclusion:The Court allowed the petition, quashed the impugned order, and directed the respondent-authorities to comply with the previous court directions regarding the refund of IGST. The ruling emphasized the binding nature of court directions on the respondent-authorities and mandated compliance within a specified timeframe.