CESTAT upholds interest liability on delayed IGST payments for imported goods under Section 3 Customs Tariff Act

CESTAT New Delhi dismissed the appeal challenging refund of interest on delayed IGST payment for imported goods. The tribunal held that IGST on imports constitutes a taxable event under inter-state supply provisions, not customs duty. Interest provisions applicable to delayed IGST payments on domestic inter-state supplies equally apply to imports, as Section 3 of Customs Tariff Act makes IGST payable under IGST Act. No legal basis exists to exempt import-related delayed IGST payments from interest liability. The original order was upheld.

---

---

Issues Involved:
1. Entitlement to refund of interest paid on delayed IGST for imported goods.
2. Validity of claiming refund based on judgments in other cases.
3. Requirement to challenge the assessment to claim refund.
4. Nature of IGST on imported goods.
5. Applicability of interest on delayed IGST payment.

Detailed Analysis:

1. Entitlement to Refund of Interest Paid on Delayed IGST:
The appellants sought refunds for the interest paid on delayed IGST payments for imported goods. They argued that IGST, being a tax on supply, does not attract interest under the Customs Tariff Act. They cited the Bombay High Court's decision in Mahindra and Mahindra, which held that no interest is chargeable on delayed payment of additional duties of customs.

2. Validity of Claiming Refund Based on Judgments in Other Cases:
The Tribunal held that refunds cannot be claimed based on judgments in other cases. Refunds are execution proceedings that do not determine mutual rights and liabilities between the assessee and the Revenue. They are limited to refunding the money due as per the assessment. The Tribunal cited the Supreme Court's decision in Mafatlal Industries, which clarified that a judgment in one case does not automatically alter the liabilities of other assessees.

3. Requirement to Challenge the Assessment to Claim Refund:
The Tribunal emphasized that no refund can be sought without challenging the assessment, including self-assessment. The appellants did not contest their own assessments, nor were they modified. As per the Supreme Court's decision in ITC Ltd., refunds cannot be claimed without assailing the assessment. The appellants paid IGST under Section 28(1)(b) of the Customs Act, which does not require the issuance of a show-cause notice (SCN) by the proper officer. This self-assessment attained finality and was not contested.

4. Nature of IGST on Imported Goods:
The Tribunal examined the nature of IGST on imported goods. IGST is a tax on the supply of goods and services, not on importation. The taxable event for IGST is the inter-state supply of goods and services, including imports. The charging section for IGST is Section 5 of the IGST Act, read with Section 3 of the Customs Tariff Act. IGST is credited under Major Budget Head 0008 and apportioned between the Centre and States as per Article 269A of the Constitution. It is not a duty of customs but a tax on supply.

5. Applicability of Interest on Delayed IGST Payment:
The Tribunal held that interest is payable on delayed IGST payments. Section 20 of the IGST Act makes several provisions of the CGST Act, including Section 50, applicable to IGST. Section 50 of the CGST Act provides for interest on delayed payment of tax. The Tribunal found no legal basis to exempt delayed IGST payments on imports from interest. The reliance on the Mahindra and Mahindra judgment was misplaced as it pertained to the pre-GST regime and additional duties of customs, not IGST.

Conclusion:
The Tribunal concluded that:
a) No refund can be sanctioned based on judgments in other cases.
b) Refunds cannot modify the assessment without challenging it.
c) Customs duties are levied on importation or exportation, not on supply.
d) IGST is a tax on supply, not a duty of customs.
e) IGST on imports is not an additional duty of customs.
f) Interest is payable on delayed IGST payments, including on imports.
g) The appellants correctly paid the interest, and the lower authorities rightly rejected the refund claims.

The appeals were dismissed, and the impugned orders were upheld.

---