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2020 (3) TMI 614 - HC - GSTRefund of IGST - exports were declared as the zero rated supplies - Section 16 of the IGST Act - Simultaneous duty drawback claim - It is the case of the writ-applicants that since the clearing and forwarding agent had erroneously selected the option of export without payment of tax while filing the shipping bill, the amount of the IGST paid was shown as Nil in the shipping bill. In such circumstances, the customs authorities denied to grant refund of the IGST paid on exports by the writ-applicants - HELD THAT - Identical issue decided in the case of M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS 2019 (7) TMI 472 - GUJARAT HIGH COURT where it was held that the refund of the IGST paid on the exports cannot be denied on the ground that the higher rate of duty drawback is claimed. In view of the aforesaid, no further adjudication is necessary in the present case. The respondents are directed to immediately sanction the refund of the IGST paid with regard to the exported goods, i.e. zero rated supplies , with 7% simple interest from the date of shipping bill till the date of actual refund. The refund shall be granted after deducting the differential amount of the duty drawback for the period between July and September, 2017 - application allowed.
Issues Involved:
1. Entitlement to refund of IGST paid on exports. 2. Impact of claiming higher duty drawback on refund eligibility. 3. Applicability and binding nature of circulars issued by the Government. Detailed Analysis: 1. Entitlement to Refund of IGST Paid on Exports: The writ-applicants, engaged in the business of trading cotton yarn and cotton waste, sought a refund of IGST paid on exports for the period from July to September 2017. Under Section 16 of the IGST Act, exports are deemed "zero rated supplies," meaning they are exempt from tax liability. Section 16(3) offers two options for claiming refunds: exporting without paying tax against a bond or letter of undertaking and claiming a refund of unutilized input tax credit, or exporting on payment of integrated tax and claiming a refund of the tax paid. The writ-applicants initially exported goods on payment of IGST but erroneously selected the option of export without payment of tax while filing shipping bills, leading to a denial of IGST refund by customs authorities. 2. Impact of Claiming Higher Duty Drawback on Refund Eligibility: The writ-applicants claimed a higher rate of duty drawback under the Customs Act, 1962, which the customs authorities used as a basis to deny the IGST refund. However, the court referenced the judgment in M/s. Amit Cotton Industries v/s Principal Commissioner of Customs, which held that refund of IGST paid on exports cannot be denied solely on the grounds of claiming a higher duty drawback. Rule 96 of the CGST Rules deems the shipping bill as an application for refund of IGST paid on exported goods and allows withholding of refund only under specific conditions, none of which applied to the writ-applicants. 3. Applicability and Binding Nature of Circulars Issued by the Government: The respondents argued that the refund claim should be denied based on a Government of India circular dated 9th October 2018. However, the court noted that circulars, while binding on revenue authorities, cannot contradict statutory provisions or judicial decisions. The circular in question was issued after the export date and primarily addressed duty drawback provisions, not IGST refunds. The court cited Supreme Court precedents, emphasizing that circulars cannot override statutory rules or judicial pronouncements. Conclusion: The court concluded that the writ-applicants are entitled to the refund of IGST paid on exports, with 7% simple interest from the date of the shipping bills until the actual refund date. The refund should be granted after deducting the differential amount of duty drawback for the specified period. The writ application was allowed, and the respondents were directed to sanction the refund immediately. Rule was made absolute, and direct service was permitted.
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