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2024 (7) TMI 1107 - HC - GST100% EOU - Refund claim - requirement to be filed under Rule 89 of the CGST Rules, 2017 or under Rule 96 of the CGST Rules, 2017. The case of the petitioner is that the petitioner is a 100% Export Oriented Unit EOU and had exported goods out of country and that by mistake, the petitioner had wrongly claimed refund under Rule 96 of the CGST Rules, 2017 on the IGST paid by the petitioner on capital goods and inputs utilized for export of goods instead of Rule 89 of the CGST Rules, 2017. HELD THAT - The petitioner is admittedly a 100% Export Oriented Unit EOU and has wrongly availed the benefit of refund under Rule 96 of CGST Rules, 2017 seeking to grant refund of input tax credit availed and utilized in discharging IGST on the exported goods. It is however subjected to rider or limitation under Rule 96(10) of the CGST Rules, 2017. The petitioner is perhaps entitled to exemption under Rule 89 of the CGST Rules, 2017, as the petitioner has received inputs under CBEC N/N. 48/2017-Central Tax, dated 18.10.2017 and under N/N. 78/2017-Cus (Tariff) dated 13.10.2017 amending N/N. 52/2003-Cus (Tariff) dated 31.03.2003 - the procedural irregularity committed by the petitioner should not come in the legitimate way of grant of export incentives as admittedly exports were made and the refund claims were itself based on the shipping bills. The Court has repeatedly held that procedural irregularity should come in the legitimate way of grant of export incentives - reliance placed on the decision of the Hon'ble Supreme Court in COMMISSIONER OF SALES TAX, U.P. VERSUS AURIAYA CHAMBER OF COMMERCE, ALLAHABAD 1986 (4) TMI 363 - SUPREME COURT , wherein, it has been held that the rules or procedures are hand-maids of justice not its mistress. The impugned order is set aside and the case is remitted back to the fifth respondent to pass fresh order by examining the exports made by the petitioner for grant of refund under Rule 89 of the CGST Rules, 2017 in terms of Section 16(3) of the IGST Act, 2017 - Petition disposed off by way of remand.
Issues Involved:
1. Legitimacy of the refund claim under Rule 96 of the CGST Rules, 2017. 2. Applicability of Rule 89 of the CGST Rules, 2017 for the refund claim. 3. Procedural irregularities and their impact on the grant of export incentives. 4. Invocation of the extended period of limitation under Section 74 of the CGST Act, 2017. 5. Imposition of penalty under Section 122(2)(b) of the CGST Act, 2017. Issue-wise Detailed Analysis: 1. Legitimacy of the Refund Claim under Rule 96 of the CGST Rules, 2017: The petitioner challenged the impugned Order-in-Original No. 01/2022 - GST, dated 23.03.2022, which confirmed the demand of Rs. 22,50,53,102/- for ineligible refund of IGST paid on exports. The impugned order was based on Rule 96(10) of the CGST Rules, 2017, which bars exporters who have availed benefits under certain notifications from claiming a refund of IGST paid on exports. The petitioner had availed benefits under Notification No. 48/2017-Central Tax and Notification No. 78/2017-Customs, which made them ineligible for the refund claimed under Rule 96. 2. Applicability of Rule 89 of the CGST Rules, 2017 for the Refund Claim: The petitioner contended that they should have filed a refund claim under Rule 89 of the CGST Rules, 2017, instead of Rule 96. The petitioner argued that the procedural irregularity should not obstruct the legitimate grant of export incentives. The court noted that the petitioner is entitled to exemption under Rule 89 as the petitioner received inputs under the relevant notifications. The court emphasized that procedural irregularities should not hinder the grant of export incentives. 3. Procedural Irregularities and Their Impact on the Grant of Export Incentives: The court highlighted that procedural irregularities should not prevent the legitimate grant of export incentives. The court referred to the Supreme Court's decision in Commissioner of Sales Tax, Uttar Pradesh Vs. Auriaya Chamber of Commerce, Allahabad, which stated that "rules or procedures are handmaids of justice not its mistress." The court set aside the impugned order and remitted the case back to the fifth respondent to pass a fresh order by examining the exports made by the petitioner for a refund under Rule 89 of the CGST Rules, 2017. 4. Invocation of the Extended Period of Limitation under Section 74 of the CGST Act, 2017: The impugned order invoked the extended period of limitation under Section 74 of the CGST Act, 2017, for recovering the ineligible refund. The petitioner argued that the extended period could not be applied as all details were reflected in the GST Returns, and no information was deliberately withheld. The court found that the petitioner had deliberately paid IGST on exports and availed a refund despite knowing the restrictions under Rule 96(10). The court held that the act of paying IGST and availing a refund amounted to suppression of facts. 5. Imposition of Penalty under Section 122(2)(b) of the CGST Act, 2017: The impugned order imposed a penalty of Rs. 22,50,53,102/- under Section 122(2)(b) of the CGST Act, 2017. The court upheld the imposition of the penalty, stating that the petitioner had deliberately contravened the provisions of Rule 96(10) by paying IGST on exports and availing a refund. The court found that the petitioner's actions amounted to a misstatement of facts, justifying the penalty. Conclusion: The court set aside the impugned order and remitted the case back to the fifth respondent to pass a fresh order by examining the exports made by the petitioner for a refund under Rule 89 of the CGST Rules, 2017. The court directed the fifth respondent to complete this exercise within three months, taking note of the amendments to Rule 96 and the relevant instructions issued by the Central Board of Indirect Taxes and Customs. The writ petition was disposed of without costs.
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