Mismatch between ICEGATE and GST export data blocks IGST refunds; confirmed shipping bills treated as refund applications; refund ordered.

Non-alignment of export data between the Customs ICEGATE portal and the GST common portal led to denial of IGST refund on zero-rated exports. The HC held that under Rules 96/96A read with s.16 IGST Act, presentation of shipping bills for confirmed export sales operates as the refund application and entitles the exporter to IGST refund; the authorities could not retain IGST once exports were confirmed. Consequently, the 18 July 2019 circular could not be applied retrospectively to compel a s.54 refund application and then reject it as time-barred, and such rejection was illegal. The HC directed refund within three weeks with 9% simple interest, continuing at 9% until payment if delayed.

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Issues Involved:
1. Refusal to grant refund of IGST paid by the petitioner.
2. Legality of Circular dated 18 July, 2019.
3. Rejection of refund application under Section 54 of the CGST Act.
4. Non-alignment of export data between ICEGATE Portal and GST Common Portal.
5. Entitlement to interest on the refund amount.

Summary:

1. Refusal to grant refund of IGST paid by the petitioner:
The petitioner challenged the refusal of the respondents-GST authorities to grant a refund of IGST paid on confirmed exports amounting to Rs. 5,26,80,126/- for the period from July 2017 to December 2018. The petitioner argued that the IGST amount was wrongly withheld due to non-alignment of export data between the ICEGATE Portal and the GST Common Portal. The petitioner contended that under Rule 96 and Rule 96A of the CGST Rules, the shipping bill itself should be treated as an application for refund.

2. Legality of Circular dated 18 July, 2019:
The petitioner assailed the legality of the Circular dated 18 July, 2019, titled "Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion." The petitioner argued that the circular was ultra vires the Constitution and the provisions of the CGST Act and IGST Act. The court noted that the circular could not override the provisions of the substantive rules framed under the CGST Act and was not applicable to the petitioner's case for the period in question.

3. Rejection of refund application under Section 54 of the CGST Act:
The petitioner's refund application under Section 54 of the CGST Act was rejected by respondent no. 4 on the grounds of being time-barred. The court observed that the petitioner's shipping bills, which were presented in accordance with law, should be treated as valid refund applications under Rule 96 and Rule 96A. The court held that the rejection of the refund application on the grounds of limitation was unwarranted and illegal.

4. Non-alignment of export data between ICEGATE Portal and GST Common Portal:
The court noted that the non-alignment of data between the ICEGATE Portal and the GST Common Portal was not the fault of the petitioner. The court emphasized that the petitioner should not suffer due to the non-compatibility of electronic portals and systems. The court directed that the refund be processed expeditiously, and the petitioner's entitlement to the refund should not be defeated by technical glitches.

5. Entitlement to interest on the refund amount:
The court held that the petitioner was entitled to interest on the refund amount as the amount had been illegally retained by the respondents without authority in law. The court directed that the refund amount be paid to the petitioner within three weeks along with simple interest at the rate of 9% per annum, failing which the petitioner would be entitled to further interest at the same rate till actual payment.

Conclusion:
The court allowed the petition, declaring the impugned Circular dated 18 July, 2019, as not applicable to the petitioner's refund applications/claim. The court set aside the rejection of the refund applications and directed the respondents to refund the amounts along with interest within three weeks.

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