2023 (10) TMI 148 - HC - GST

Refund of IGST - Zero Rated Supplies - Inaction on the part of the respondents not to sanction the refund claims of IGST on exported goods - Petitioner submitted that, they had inadvertently selected A suffixed with the serial number in the drawback notification which provides for higher drawback rates concerning cases where CENVAT facility has not been availed, instead of B which provides for lower draw back for cases that are otherwise. It was their case that the excess drawback on account of availing of CENVAT credit facility had been repaid with interest and therefore the petitioner is entitled to the refund of IGST in respect of the shipping bills. HELD THAT - It is not in dispute that the issue is covered by a decision of this Court in the case of Amit Cotton 2019 (7) TMI 472 - GUJARAT HIGH COURT which was subsequently followed in the case of Real Prince Spintex Private Limited 2020 (3) TMI 614 - GUJARAT HIGH COURT . Before the coordinate bench of this Court, it was the case of the petitioner therein that it was eligible to seek refund of IGST in accordance with the provisions of the Act inasmuch as the export supplies were Zero Rated Supplies . The Revenue had disputed the claim relying on the very notification dated 31.10.2016 after having considered the issue at hand especially Sections 16 and 54 of the CGST Act, the Division Bench of this Court held the writ-applicant is entitled to claim the refund of the IGST. Relying on a decision of the Supreme Court in the case of J.K. Laxmi Cement Limited v. Commercial Tax Officer, Pali 2016 (9) TMI 721 - SUPREME COURT , the Division Bench held that the circular cannot run contrary to the statutory rule, more particularly, Rule 96. The Division Bench therefore, held that the circular had nothing to do with IGST refund. The petition was allowed directing the respondents to immediately sanction the refund of IGST. The respondents are directed to sanction the refund of IGST paid in context of shipping bills mentioned with simple interest @ of 6% from the date of the shipping bills till the date of actual refund - petition allowed.

Summary

Issues Involved:
1. Sanction of IGST Refund for Exported Goods.
2. Payment of Interest on Delayed Refund.

Summary:

Issue 1: Sanction of IGST Refund for Exported Goods

The petitioner filed a petition under Article 226 of the Constitution of India seeking a writ of mandamus to direct the respondents to sanction the refund of IGST paid on exported goods through Mundra Customs Port and Hazira Port. The petitioner claimed refunds for various shipping bills, asserting that the goods exported were "Zero Rated Supplies" as per Section 16(3)(b) of the IGST Act and Rule 96 of the CGST Rules, 2017. The petitioner argued that due to an oversight, the Custom House Agent selected the wrong suffix in the drawback notification, which was later corrected by repaying the excess drawback with interest. The petitioner cited previous judgments, including Amit Cotton Industries v. Principal Commissioner of Customs, to support their claim for the refund.

The respondents contended that the refund process is automatic and that the petitioner's claim was invalid due to the selection of higher drawback rates. However, the court referred to its earlier decisions, particularly in Amit Cotton Industries, which established that the petitioner is entitled to the refund of IGST paid on zero-rated supplies. The court emphasized that Rule 96 of the CGST Rules provides that the shipping bill is deemed an application for refund and can only be withheld under specific conditions, none of which applied to the petitioner's case.

Issue 2: Payment of Interest on Delayed Refund

The petitioner also sought interest at 6% on the delayed refund amount from the date of the shipping bills until the actual refund date. The court, referencing its previous rulings, directed the respondents to sanction the refund with simple interest at the rate of 6% from the date of the shipping bills till the date of actual refund.

Conclusion

The court allowed the petition, directing the respondents to immediately sanction the refund of IGST paid on the specified shipping bills with interest at 6% from the date of the shipping bills till the date of actual refund. The rule was made absolute with no order as to costs.