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2019 (9) TMI 515 - HC - GSTRefund of IGST - Refund on a transaction which is otherwise zero-rated transaction - scope of Section 16 of IGST Act - HELD THAT - The subject transaction in fact is with effect from 01.07.2017, come under Section 16 of IGST Act and are zero-rated. It is also not disputed that the voluntary or erroneous payment of IGST is required to be refunded to petitioner - The objection pointed out by Sri Sreejith is that the petitioner has already drawn or availed the higher rate of duty drawback and therefore while ordering refund of IGST the petitioner is required to refund the higher rate of duty drawback already availed by the petitioner with interest. The refund of IGST allowed after adjusting the higher rate of duty drawback availed by the petitioner without refunding IGST amount - petition allowed.
Issues Involved:
1. Refund of IGST paid during the transition period. 2. Entitlement for refund of IGST on zero-rated transactions. 3. Adjustment of higher rate of duty drawback already availed by the petitioner. Issue 1: Refund of IGST paid during the transition period: The petitioner, an exporter, contended that they were entitled to a refund of IGST paid during the transition period as per Ext.P6. The petitioner argued that the denial of the refund on a zero-rated transaction was illegal and contrary to the Constitution of India. The petitioner relied on a judgment highlighting that the claim for refund can only be withheld in specific circumstances as provided in Rule 96 of the CGST Rules. The court noted that the circular issued by the Government of India could not be the basis for rejecting the claim. The court held that Rule 96 of the Rules, 2017, was clear, and the petitioner was entitled to claim the refund of the IGST paid on zero-rated supplies. Consequently, the court directed the respondents to sanction the refund of IGST with interest. Issue 2: Entitlement for refund of IGST on zero-rated transactions: The court acknowledged that the subject transaction fell under Section 16 of the IGST Act and was zero-rated. It was undisputed that the petitioner was entitled to a refund of the voluntary or erroneous payment of IGST. The respondents raised an objection regarding the higher rate of duty drawback already availed by the petitioner. The court suggested adjusting the higher rate of duty drawback against the IGST refund without refunding the IGST amount. The court directed the respondents to pay the balance of IGST payable to the petitioner within a specified period to avoid additional interest payment on the IGST refund. Issue 3: Adjustment of higher rate of duty drawback: In response to the objection raised by the respondents regarding the higher rate of duty drawback already availed by the petitioner, the court proposed a solution of adjusting the amount already availed by the petitioner against the IGST refund. The court directed the respondents to pay the balance amount of IGST minus the higher rate of duty drawback within a stipulated timeframe. Failure to comply would result in the respondents being obligated to pay interest along with the balance amount from the date of the refund request till the actual payment date. In conclusion, both writ petitions were disposed of with directions for refunding the IGST paid on zero-rated supplies, with adjustments for the higher rate of duty drawback already availed by the petitioner.
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