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 the refund claim despite the Shipping Bill dated 24th August 2018 being deemed a refund application under Rule 96 of CGST Rules, 2017. The court found that withholding refunds without proper rejection orders with recorded reasons is impermissible. The respondents were directed to process and sanction Rs. 2,44,61,247/- IGST refund within four weeks, emphasizing that refunds must be either allowed or rejected with proper justification under Section 54 of CGST Act, 2017.

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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.

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