TaxTMI 
TaxTMI 
2019 (11) TMI 160
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....ed by Notification No. 3/2018 -Central tax (later substituted by Notification No.39/2018- Central Tax dated 04.09.2018 retrospectively from 23.10.2017) on claiming refund of IGST paid on export of goods by inserting Rule 96(10) is applicable only on such export of goods for which corresponding inward supplies were procured at a concessional rate of 0.10% GST under Notification No. 40/2017- Central Tax (Rate), thereby holding that such restriction on IGST refund does not apply on export of goods which were procured on full payment of GST? b) Alternatively, whether the above restriction prohibits refund of IGST paid in its entirety even on such exports where the goods have been procured on payment of full rate of GST by the person who procures only a small quantity of goods at concessional rate of 0.10% GST under Merchant Export Scheme as provided under Notification No. 40/2017- Central Tax (Rate)? 3. The applicant furnishes some facts relevant to the stated activity:- a. The applicant states that he is engaged in the purchase and resale of various goods falling under Harmonised System of Nomenclature ('HSN') 8703, 8708, 8706 and 8466 to buyers located outside the country. b. ....
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.... the IGST and respective State GST i.e., the supplier should have levied full GST at the applicable rates instead of concessional rate of 0.10% on the supply to the exporter. Rule 96(10) is reproduced herein below for ease of reference: "(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance, Notification No.48/2017 - Central Tax dated the 18th October 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1305 (E) dated the 18th October, 2017 or notification No.40/2017 - Central Tax (Rate) dated the 23rd October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1320 (E) dated the 23rd October, 2017 or notification no. 41/2017- Integrated Tax (Rate) dated the 23rd October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 1321 (E) dated the 23rd October, 2017 or notification No. 78/2017 -Customs dated the 13th October, 2017 published in the Gaze....
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....i) Whether the restriction as provided in Rule 96(10) introduced by Notification No.3/2018 - Central Tax (later substituted by Notification No.39/2018- Central Tax dated 04.09.2018 retrospectively with effect from 23.10.2017) on claiming refund of IGST paid on export of goods is applicable only to such exports of goods for which corresponding inward supplies were procured at a concessional rate of 0.10% GST under Notification No.40/2017 - Central Tax (Rate), thereby holding that such restriction on IGST refund does not apply on export of goods which were procured on full payment of GST? (ii) Whether the above restriction prohibits claim of refund of IGST paid in its entirety even on exports where the goods have been procured on payment of full rate of GST by the person who procures only a small quantity of goods at concessional rate of 0.10% GST under Merchant Export Scheme as provided under Notification No.40/2017 - Central Tax (Rate)? (iii) In case of (ii) above is held as the restriction as applicable under Notification 3/2018 - Central Tax amending Rule 96(10) of the Central GST Rules 2017 (later substituted by Notification 39/2018- Central Tax dated 04.09.2018 retrospectiv....
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....lies at concessional rate under Notification No.40/2017 - Central Tax (Rate) has also received some supplies of goods on which none of the exemptions or concessions have been availed under any Notifications specified in Rule 96(10), it shall be permissible for him to pay IGST on export of such goods procured without exemption or concession and claim refund of the same. 4.2 In the instant case, the applicant states that he receives goods from suppliers, who have not availed benefits under any of the notifications specified in sub-rule (10) of Rule 96 of the Central GST Rules, 2017 and has been exporting goods under LUT without payment of tax. Now the applicant proposes to export those goods on payment of IGST which have been procured without any concessions or exemptions as aforesaid. The payment of IGST is proposed to be made by utilising the available input tax credit or in cash, as the case may be. Thereafter, the applicant proposes to claim refund of such IGST paid, in accordance with the provisions of Section 16 of the IGST Act, 2017 and the CGST Rules, 2017. Further, the applicant additionally wishes to procure some of its goods at concessional rate of GST @ 0.10% complying w....
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....id, which also appears to be the intent of the legislature. In the instant case, the applicant wishes to claim refund only to the extent the concerned goods have been received without using the concessional rate of tax for merchant exports, but on full payment of applicable taxes. 4.5 The applicant states that denying refund of IGST paid on all exports made by him merely because they have received a part of supplies on which reduced rate of tax has been charged in terms of Notification No.40/2017 -Central Tax (Rate) would be a grossly narrow and erroneous interpretation of the law, which is against the principles of justice. Such an interpretation would be against the very basic and settled principle that exports must be zero-rated and taxes should not be exported since the goods or services are consumed outside the country. GST being a consumption based tax, the goods exported by the applicant would be consumed outside the country and hence should not be taxes and denial of refund on all exports would be against the very basic essence of GST and as such unconstitutional. 4.6 Further, the applicant argues that even assuming but not admitting that the law maker intends to restrict....
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....te), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 has been availed; or (b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme." It is very clear from the above that the restriction is on the persons claiming refund of IGST paid that he must not have received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017 has been availed, and not related to the individual transactions. If the person has utilized the benefit of the said notification on his inward supplie....