2024 (6) TMI 659 - HC - GST

Exporter wins IGST refund case as authorities failed to process claim under Rule 96 CGST Rules 2017

The Bombay HC ruled in favor of an exporter seeking IGST refund for goods exported from India. The court held that customs authorities failed to process ... Deemed application for refund under Rule 96 of the CGST Rules - mandated processing of IGST refund within sixty days under Section 54(7) of the CGST Act - shared responsibility for error free EGM integration between ICD, gateway port officers and shipping lines/agents - obligation on authorities to either sanction or reject refund with reasons - entitlement to interest on delayed IGST refundDeemed application for refund under Rule 96 of the CGST Rules - mandated processing of IGST refund within sixty days under Section 54(7) of the CGST Act - shared responsibility for error free EGM integration between ICD, gateway port officers and shipping lines/agents - obligation on authorities to either sanction or reject refund with reasons - Shipping Bill filed by the exporter was to be treated as a deemed refund application and respondents were obligated to process the IGST refund notwithstanding the recorded EGM error which arose from failures in EGM integration. - HELD THAT: - The Court held that Rule 96 of the CGST Rules makes the shipping bill a deemed application for refund of IGST and Section 54(7) requires the proper officer to pass an order within sixty days of receipt of a complete application. The record and departmental circulars show that errors in local and gateway EGMs (and their integration) are matters for officers and shipping lines/agents to rectify and that there is a shared responsibility to ensure error free filing. The respondents could not indefinitely withhold processing of the deemed application on account of the SB006 EGM error without either sanctioning or recording reasons for rejection. In the circumstances the respondents were directed to process and sanction the refund forthwith. [Paras 5, 8, 9]Deemed refund application status of the Shipping Bill upheld; respondents directed to process and sanction the IGST refund in respect of Shipping Bill No. 7114580 dated 24th August 2018.Entitlement to interest on delayed IGST refund - Petitioner entitled to interest on the delayed IGST refund from the date of the Shipping Bill until actual realization. - HELD THAT: - The Court found that because the deemed refund application was not processed within the statutory timeframe and no reasons for withholding or rejection were recorded, the petitioner was entitled to interest on the amount of IGST. Exercising its remedial powers, the Court directed payment of interest at the specified rate for the period from the date of the Shipping Bill until actual payment. [Paras 9, 11]Respondent directed to pay interest on the IGST refund from 24th August 2018 until realization, at the rate ordered by the Court.Final Conclusion: Writ petition allowed; Respondent No. 3 directed to process and sanction the IGST refund in respect of Shipping Bill No. 7114580 dated 24th August 2018 within four weeks and to pay interest on the delayed refund for the period from the date of the Shipping Bill until actual payment. Issues involved:The judgment involves issues related to the processing of a refund claim of Integrated Goods and Service Tax (IGST) for goods exported from India, failure of the customs authorities to process the refund claim, statutory obligations under the Central Goods and Services Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017.Factual Matrix and Petitioner's Contentions:The petitioner, engaged in manufacturing and exporting high capacity diesel engines, filed a petition seeking a writ of mandamus to direct the Respondent No. 3 to process and sanction the IGST refund amount. The petitioner alleged that despite fulfilling all statutory obligations, the refund claim of Rs. 2,44,61,247/- for goods exported was not processed by the customs authorities. The petitioner argued that as per Rule 96 of the Central Goods and Services Tax Rules, 2017, the shipping bill should be considered as an application for refund, and the refund should have been processed without delay. The petitioner contended that the reasons for withholding the refund were not valid and that interest should be paid for the delay in processing the refund.Respondent's Reply and Arguments:The Respondents, through an affidavit-in-reply, admitted most facts but stated that the petitioner's IGST refund was pending due to errors in the filing process, specifically related to the Gateway EGM not being filed. The Respondents argued that the petitioner was aware of the errors and had not rectified them, leading to the delay in processing the refund claim.Court's Observations and Decision:The Court noted the Circulars issued by the Respondents regarding the filing process and responsibilities of officers and shipping agents. The Court referred to relevant case laws supporting the petitioner's contention that the shipping bill should be treated as an application for refund under Rule 96 of the CGST Rules, 2017. The Court held that the delay in processing the refund was unjustified and directed Respondent No. 3 to process and sanction the IGST refund amount within four weeks. Additionally, the Court ordered the payment of interest at the rate of 6% per annum to the petitioner from the date of the refund application until the realization of the amount.Conclusion:In conclusion, the High Court of Bombay directed the customs authorities to process and sanction the IGST refund amount for goods exported by the petitioner within a specified period. The Court also ordered the payment of interest to the petitioner for the delay in processing the refund claim.