2020 (12) TMI 1116 - HC - GST

Refund of IGST - Zero Rated Supplies - it appears that the writ-applicant had claimed higher duty drawback - Interest on the amount of refund from the date of shipping bill till the date on which the amount of refund is paid to the petitioner - Circular No.37/2018 Customs dated 09/10/2018 - stance of the respondents is that the condition no.7 of the notification dated 31/10/2016 mentions that if any exporter claims drawback under Column (4) and (5), it means that the drawback includes the Customs, Central Excise and Service Tax component and it's called the Higher drawback - HELD THAT - The Circular No.37/2018 Customs, dated 09/10/2018 referred by the Competent Authority would apply only to the cases, where the exporters have availed the option to take drawback at the higher rate in place of the IGST refund out of their own volition. In the instant case, the assessee had never availed the option to take drawback at higher rate in place of the IGST refund. In such circumstances, the Circular is not applicable to the facts of the present case - Even as per the Condition No.7 of the Notification 131/2016 Cus. (N.T.) dated 31/10/2016, if the rate indicated in the columns (4) i.e. higher duty drawback and (6) i.e. lower duty drawback are the same, then it shall necessarily imply that the same pertains only to the Customs component and is available irrespective of whether the exporter has availed of the CENVET facility or not. The petitioner had exported Rope Making Machine HSN Code 84794000 which attracts the same rate under both the columns (4) (6) respectively i.e. 2 per cent. Thus it is evident that the petitioner has claimed drawback of the customs component only for their exports and there arises no question of denying the refund of IGST. In the case of the writ-applicant, the drawback rates being the same, it represents only the Customs elements, which did not get subsumed in the GST and thus, the writ-applicant cannot be said to have availed double benefit i.e. of the IGST refund and higher duty drawback. The respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.'Zero Rated Supplies' made vide the shipping bills - Petition allowed - decided in favor of petitioner.

Summary

Issues:
- Refund of IGST paid on goods exported
- Rejection of refund claim under CGST Act
- Discrepancy in filing shipping bill
- Circulars affecting refund eligibility
- Interpretation of duty drawback conditions

Refund of IGST paid on goods exported:
The writ applicant sought a writ of mandamus for the immediate sanction of the refund of IGST paid on goods exported as 'Zero Rated Supplies.' The claim for refund was rejected under Section 54 of the CGST Act, citing a higher duty drawback claimed by the applicant. The applicant argued that there is no legal restriction on claiming a higher duty drawback while also seeking a refund of IGST on exported goods.

Rejection of refund claim under CGST Act:
The rejection of the refund claim was based on the contention that the applicant had availed a higher duty drawback, which was considered to preclude eligibility for an IGST refund. However, the court noted that the applicant rectified the mistake in filing the shipping bill by disclosing the IGST paid in subsequent returns under the CGST Act.

Discrepancy in filing shipping bill:
The Custom House Agent initially failed to disclose the IGST paid in the shipping bill, only mentioning the drawback amount. This error was corrected in the returns filed under the CGST Act for the relevant period, aligning with the requirements for refund application.

Circulars affecting refund eligibility:
The respondents relied on Circular No.37/2018Customs to deny the refund, citing the applicant's initial claim for a higher duty drawback. The court held that the circular could not override statutory rules, emphasizing that the circular did not pertain to IGST refunds and was issued after the export in question.

Interpretation of duty drawback conditions:
The court analyzed the duty drawback conditions and notifications to determine the applicant's eligibility for an IGST refund. It was established that since the applicant had claimed the same rate of duty drawback under both categories, only pertaining to Customs component, there was no double benefit accrued, justifying the refund of IGST.

In conclusion, the court allowed the petition, directing the immediate sanction of the IGST refund on exported goods. The court also specified that if the principal refund amount is not paid within six weeks, interest at 9% would accrue. The judgment clarified the legal interpretation regarding duty drawback conditions and upheld the applicant's right to the IGST refund.