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 - deduction of differential duty drawback - interest on refund - binding nature of High Court directions - quashing of orders passed in disobedience of court directionsRefund of IGST - deduction of differential duty drawback - interest on refund - binding nature of High Court directions - Impugned appellate order contrary to this Court's directions in Special Civil Application No. 14974 of 2019 insofar as it charged interest on the differential duty drawback and reduced the directed rate of interest on IGST refund. - HELD THAT: - The Court found that the respondent-authorities implemented the refund order in a manner inconsistent with the directions previously issued by this Court and affirmed by the Supreme Court. The authorities (i) levied interest on the differential duty drawback contrary to the entitlement to deduct that differential from the IGST refund and (ii) reduced the rate of interest on the IGST refund from 7% (as directed by this Court) to 6%, and applied 15% interest on the differential duty drawback. Those departures were held to be without justification. Once this Court's directions are issued, they are binding on the respondent-authorities and cannot be ignored or varied in the exercise of their functions under Article 226. Consequently the appellate order was quashed and the authorities were directed to sanction the refund of IGST after deducting the differential duty drawback and to grant interest at 7% simple interest from the date of shipping bill until actual refund, in accordance with this Court's earlier direction; the exercise to be completed within four weeks from receipt of this order. [Paras 6, 7]Impugned order quashed; respondents directed to comply with this Court's earlier directions and sanction refund of IGST after adjustment of differential duty drawback with 7% simple interest within four weeks.Final Conclusion: Petition allowed; the appellate order dated 11.03.2022 is quashed to the extent it departs from this Court's directions and the respondents are directed to sanction the IGST refund after deduction of differential duty drawback and payment of 7% simple interest, to be completed within four weeks. 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.