2023 (6) TMI 20 - HC - Customs

Refund of the IGST paid with regard to the goods exported - zero rated supplies - rejection due to drawback claimed by the petitioner - HELD THAT - As per Rule 96 of the CGST Rules, 2017, shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India, once Export General Manifest (EGM) and valid GSTR-1 and GSTR-3B for the relevant period has been filed. It was further stated that the petitioner had declared the IGST amount of Rs. 1667/- and Rs. 6363/- in the shipping bills (refund application) and accordingly, IGST refund was processed automatically in the Customs EDI System. The said amount was credited in the designated bank account of the petitioner on 09.06.2018. If, the petitioner would have not made any mistake in filing of IGST amount in shipping bills, he might get the total refund automatically on 09.06.2018. The present one is the second petition filed by the same petitioner seeking the similar benefit. In the present case, IGST paid by the petitioner was corrected as Rs. 2,01,423.31/- for shipping bill No. 7229240 dated 08.07.2017 and Rs. 2,47,486/- for shipping bill No. 7451382 dated 19.07.2017. However, the refund of IGST paid was rejected due to drawback in Part A taken by the petitioner. This prayer of the petitioner for refund is governed by circular dated 30.06.2017 (Annexure R-1) and circular bearing No.37/2018-Customs dated 09.10.2018 (Annexure R-2) - a perusal of circular No. 37/2018-Customs dated 09.10.2018 (Annexure R-2) issued by the Board makes is clear that for exports affected during the transition period by declaring drawback serial number suffixed with A or C, the exporters have consciously relinquished their IGST/ITC claims. Reference, at this stage, can be made to a judgment passed by the High Court of Kerala in G NXT POWER CORP. VERSUS UNION OF INDIA, REPRESENTED BY ITS SECRETARY, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE (CENTRAL BOARD OF EXCISE AND CUSTOMS) , NEW DELHI, CENTRAL BOARD OF INDIRECT TAXES AND CUSTIOMS, NEW DELHI, COMMISSIONER OF CUSTOMS, COCHIN AND DEPUTY COMMISSIONER OF CUSTOMS (REFUNDS AND DRAWBACK) , COCHIN 2019 (9) TMI 515 - KERALA HIGH COURT wherein the revenue was alleging that the petitioner had already availed/drawn higher rate of duty drawback, therefore, while ordering refund of IGST, the petitioner was required to refund higher rate of duty drawback with interest. On the other hand, claim of the petitioner-assessee was that the respondent-revenue was liable to pay interest on IGST paid from the date on which request for refund was made. While deciding the matter, the respondents were directed to adjust amount already availed by the petitioner on account of higher rate of duty drawback and pay balance of IGST payable to petitioner within six weeks. Keeping in view the judgment passed in G.NXT Power Corp. s case, the present petition is disposed of by giving direction to the respondents to adjust the amount already availed by the petitioner on account of higher rate of duty drawback and pay the balance of IGST payable to the petitioner within a period of six weeks from the date of receipt of certified copy of this order, failing which the respondents will pay interest @ 7% together with the balance amount payable from the date on which, a request for refund was made by the petitioner till the date of payment.

Issues Involved:
1. Entitlement to refund of IGST paid on exported goods.
2. Impact of claiming higher duty drawback on IGST refund eligibility.
3. Applicability of CBIC Circulars during the transition period from 01.07.2017 to 30.09.2017.
4. Adjustment of higher duty drawback against IGST refund.

Detailed Analysis:

1. Entitlement to Refund of IGST Paid on Exported Goods:
The petitioner sought a writ of mandamus for the sanction of a refund of IGST paid on exported goods, classified as 'zero rated supplies', under shipping bills dated 08.07.2017 and 19.07.2017. The petitioner, registered with the Ministry of Commerce and holding an Importer-Exporter Code (IEC) and GST Registration Certificate, claimed that the refund was due under Section 54 of the CGST Act, 2017, read with Section 16 of the IGST Act. Corrections in the IGST amounts were made, but the refund was rejected due to the drawback claimed in Part 'A'.

2. Impact of Claiming Higher Duty Drawback on IGST Refund Eligibility:
The petitioner's counsel argued that under Rule 96 (4) of the CGST Rules, 2017, a refund could only be withheld if requested by the jurisdictional Commissioner or if goods were exported in violation of the Customs Act, 1962. The petitioner asserted that claiming a drawback should not preclude the refund of IGST. However, the respondents justified the rejection by referring to CBIC Circular No. 22/2017-Customs and Circular No. 37/2018-Customs, which stipulated that exporters claiming higher duty drawback rates during the transition period relinquished their IGST claims.

3. Applicability of CBIC Circulars During the Transition Period:
The respondents cited CBIC Circular No. 22/2017-Customs and Circular No. 37/2018-Customs, which clarified that during the transition period (01.07.2017 to 30.09.2017), exporters claiming higher duty drawback rates could not subsequently claim IGST refunds. The circulars mandated that exporters who declared drawback serial numbers suffixed with 'A' or 'C' and made necessary declarations in the shipping bills consciously relinquished their IGST/ITC claims. Thus, the petitioner's shipping bills dated 08.07.2017 and 19.07.2017 fell within this period, and the higher duty drawback claim precluded IGST refund eligibility.

4. Adjustment of Higher Duty Drawback Against IGST Refund:
The petitioner's counsel referred to a previous court order in a similar case (CWP No. 2854 of 2021), where the petitioner was granted an IGST refund as no higher duty drawback was claimed. However, in the present case, the refund was rejected due to the higher drawback claimed. The court referenced the Kerala High Court's judgment in G.NXT Power Corp. vs. Union of India, which allowed adjustment of higher duty drawback against IGST refunds. The court directed the respondents to adjust the higher duty drawback amount already availed by the petitioner and pay the balance IGST within six weeks, failing which interest at 7% would be applicable.

Conclusion:
The court disposed of the petition by directing the respondents to adjust the higher duty drawback amount against the IGST refund and pay the balance within six weeks. If the payment was delayed, the respondents would incur an interest penalty of 7% on the balance amount from the date of the refund request until payment. This decision aligns with the precedent set in G.NXT Power Corp.'s case, ensuring fair adjustment and timely refund processing.

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