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2024 (4) TMI 462 - HC - GSTRefund of IGST on goods exported - Petition challenged the Order for refusal to grant refund - Non-alignment of export data between the ICEGATE Portal maintained by the Customs Department and the Common Portal - whether the petitioner at the relevant time on presentation of the shipping bills in regard to the confirmed sales was entitled to refund of the IGST amounts paid on the goods - HELD THAT - It may also be observed that the obvious implication as brought about by Rules 96 and 96A as may be applicable and the statutory Scheme which permitted the petitioner to make payment of IGST after the exports were undertaken has been completely overlooked by respondent Nos. 3 and 4. Once confirmation of the sale was evident from the shipping bills as presented by the petitioner which were in relation to the goods on which IGST was paid and the confirmed sales admittedly being zero rated supplies there was no question of respondent Nos. 3 and 4 retaining the IGST amounts paid on such confirmed sales. The presentation of shipping bills as per the requirement of Rules 96 / 96A which were squarely applicable itself entitled the petitioner to refund of the IGST amount based on the principles of zero rated supplies as recognized u/s 16 of the IGST Act. Thus there was no question of the circular dated 18 July 2019 being made applicable to the petitioner and/or confining the petitioner to a procedure of refund application to be filed u/s 54. Hence to compel the petitioner to file the refund application at a belated stage and after a long period of the shipping bills being presented by the petitioner (being itself a refund application) and thereafter to hold that the refund application filed u/s 54 is time barred was wholly illegal and unwarranted in the facts and circumstances of the case. Thus the entire approach of respondent Nos. 3 and 4 not only in denying the refund to the petitioner but also compelling the petitioner to apply for a refund under the said circular which was issued subsequent to the shipping bills being presented was a patent illegality. This more particularly when respondent Nos. 5 and 6 (Custom Authorities) had clearly confirmed the export and re-imports thereby confirming the sales to the foreign parties in respect of which respondent Nos. 3 and 4 have not raised any dispute. It is stated that respondent no. 6 is not the competent authority to sanction or reject the IGST claim. It is hence clear that both the authorities are disowning their obligation and/or authority to refund the IGST as paid by the petitioner while not denying that the petitioner was entitled to the refund. The position is something which is not only disturbing but a shocking state of affairs in the authorities inter se not resolving such issues. We also do not find that any attempt was made to resolve the issues by both the parties. Any internal or departmental conflicts cannot cause prejudice to the assessee. Such approach on the part of the authorities is certainly not conducive to international trade and commerce. Considering the clear position in law in the present case the petitioner was entitled to the refund of the IGST amounts. We are of the opinion that in cases where exports involving payment of IGST are concerned in which refund applications are made a special mechanism is required to be devised so that both electronic portals are compatible and refund of duties which could not be retained are processed expeditiously and the assessees do not suffer on account of ineffective systems being followed by the CGST as also the Customs Authorities. Although some circulars are issued to clarify the position however no effective steps are being taken to appreciate the core issues as involved in each of such cases and refunds are not being processed. The present case is a clear example of such confusion. Unless the loose ends on such issues are tied up and a robust mechanism is immediately created and implemented trade and commerce would continue to suffer. Interest - In facts of the case certainly the petitioner would be entitled to interest as the amount has been illegally retained by the respondents without authority in law. Considering the position in law as prescribed under the GST Laws and the constitutional principles as evolved in several decisions the assessees were held to have become entitled to alongwith appropriate interest. In a similar situation the Division Bench of Gujarat High Court in M/s. Vimla Food Products vs. Union of India Ors. 2021 (12) TMI 1328 - GUJARAT HIGH COURT and concerning a supply which was zero rated supply referring to the decision in Amit Cotton Industries Vs. Principal Commissioner of Customs 2019 (7) TMI 472 - GUJARAT HIGH COURT as also to the relevant circulars and notifications and the decisions of the Court in that regard had held that the petitioner was entitled to interest at the rate of 9% from the date on which the bills for refund of IGST were raised by the petitioner till its actual payment. In our opinion the petition needs to succeed. It is accordingly allowed in terms of the following order - (i) The impugned Circular dated 18 July 2019 is declared to be not applicable to the petitioner s refund applications / claim; (ii) The petition stands allowed in terms of prayer clauses (b) (c) (d) and (e). (iii) The rejection of the refund applications by the impugned orders dated 5 August 2022 is declared to be illegal. (iv) The amounts be refunded to the petitioner within a period of three weeks from today along with simple interest at the rate of 9% p.a. failing which the petitioner shall be entitled for realization of further interest at the rate of 9% till its actual payment.
Issues Involved:
1. Refusal to grant refund of IGST paid by the petitioner. 2. Legality of Circular dated 18 July, 2019. 3. Rejection of refund application under Section 54 of the CGST Act. 4. Non-alignment of export data between ICEGATE Portal and GST Common Portal. 5. Entitlement to interest on the refund amount. Summary: 1. Refusal to grant refund of IGST paid by the petitioner: The petitioner challenged the refusal of the respondents-GST authorities to grant a refund of IGST paid on confirmed exports amounting to Rs. 5,26,80,126/- for the period from July 2017 to December 2018. The petitioner argued that the IGST amount was wrongly withheld due to non-alignment of export data between the ICEGATE Portal and the GST Common Portal. The petitioner contended that under Rule 96 and Rule 96A of the CGST Rules, the shipping bill itself should be treated as an application for refund. 2. Legality of Circular dated 18 July, 2019: The petitioner assailed the legality of the Circular dated 18 July, 2019, titled "Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion." The petitioner argued that the circular was ultra vires the Constitution and the provisions of the CGST Act and IGST Act. The court noted that the circular could not override the provisions of the substantive rules framed under the CGST Act and was not applicable to the petitioner's case for the period in question. 3. Rejection of refund application under Section 54 of the CGST Act: The petitioner's refund application under Section 54 of the CGST Act was rejected by respondent no. 4 on the grounds of being time-barred. The court observed that the petitioner's shipping bills, which were presented in accordance with law, should be treated as valid refund applications under Rule 96 and Rule 96A. The court held that the rejection of the refund application on the grounds of limitation was unwarranted and illegal. 4. Non-alignment of export data between ICEGATE Portal and GST Common Portal: The court noted that the non-alignment of data between the ICEGATE Portal and the GST Common Portal was not the fault of the petitioner. The court emphasized that the petitioner should not suffer due to the non-compatibility of electronic portals and systems. The court directed that the refund be processed expeditiously, and the petitioner's entitlement to the refund should not be defeated by technical glitches. 5. Entitlement to interest on the refund amount: The court held that the petitioner was entitled to interest on the refund amount as the amount had been illegally retained by the respondents without authority in law. The court directed that the refund amount be paid to the petitioner within three weeks along with simple interest at the rate of 9% per annum, failing which the petitioner would be entitled to further interest at the same rate till actual payment. Conclusion: The court allowed the petition, declaring the impugned Circular dated 18 July, 2019, as not applicable to the petitioner's refund applications/claim. The court set aside the rejection of the refund applications and directed the respondents to refund the amounts along with interest within three weeks.
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