2020 (11) TMI 783 - HC - GST

Refund of Input Tax Credit - exports of goods outside India - zero rated supplies - Section 16 of the Integrated Goods and Services Tax Act, 2017 - HELD THAT - The admitted position is that the Circular No.14/2018-Customs dated 04th June, 2018 is neither clarificatory nor it determines the eligibility of allowing refund of Input Tax Credit on exports. In any event, the new procedure cannot be made applicable from a retrospective date. The impugned orders dated 01st June, 2020 passed by respondent no.3 as well as the orders dated 11th March, 2019 and 22nd July, 2019 issued by respondent no.2 are set aside - the matter is remanded back to the Original Adjudicating Authority i.e. Assistant Commissioner, who in turn is directed to decide the same in accordance with law - Petition allowed by way of remand.

Summary

Issues:
Challenge to denial of refund for exports made prior to the effective date of new regulations. Interpretation of Circular No.14/2018-Customs regarding eligibility for refund of Input Tax Credit on exports through postal mode. Applicability of new procedures for filing postal bill of exports on substantive right to claim refund of input tax credit.

Analysis:
The petitioner challenged the denial of refund for exports made before the effective date of new regulations, citing Section 16 of the IGST Act and Section 54(3) of the CGST Act. The impugned order stated that exports made in August and September 2017 were not 'zero rated' due to the circular dated 04.06.2018, which clarified that the facility of IGST refund for exports through Foreign Post Offices (FPO) would not be effective retrospectively. The petitioner argued that the new regulations did not affect the status of supplies as zero-rated under the relevant Acts and highlighted that exports had indeed taken place with confirmation from the Foreign Post Office.

The petitioner contended that the new procedure for filing postal bill of exports did not negate the substantive right to claim refund of input tax credit for zero-rated supplies. The respondent clarified in an affidavit that Circular No.14/2018-Customs was not intended to determine the eligibility for refunds but aimed to dispel doubts among exporters. The circular facilitated the refund process for exports through postal mode without altering the eligibility criteria for refunds. The court noted that the circular did not determine refund eligibility and emphasized that refunds would be assessed based on compliance with existing provisions of GST and Customs laws.

In light of the counter-affidavit and the clarification provided, the court held that the circular did not determine the eligibility for refund of Input Tax Credit on exports. The court set aside the impugned orders and remanded the matter to the Original Adjudicating Authority for a decision in accordance with the law within four weeks. The judgment disposed of the petition and directed the uploading of the order on the website and forwarding a copy to the petitioner's counsel via email.