2024 (8) TMI 1060 - AT - Customs

Refund of the interest - interest paid on the IGST imported goods which they paid with delay - taxable event. Taxable event - HELD THAT - The taxable event for levy of IGST is the inter-state supply of goods and services which definition also includes supply in the course of importation. The charging section for collection of IGST on the imported goods is section 4 of the IGST Act read with section 3(8) of the Customs Tariff Act. The Constitutional mandate for collection of IGST is clause (2) of 246A. IGST is credited to Major Budget head 0008 and it has to be apportioned between the Centre and States as decided by Parliament on the recommendations of GST Council. Therefore, the IGST collected when goods are imported is not a duty of customs. Interest is payable on IGST which is paid late or not - HELD THAT - Unlike in the case of customs duties, no rate of IGST is prescribed either in the schedules to the Customs Tariff Act or under any notification issued under the Customs Tariff Act. Section 3 of the Customs Tariff Act refers to the IGST payable under section 5 of the IGST Act. In other words, whatever is payable under the IGST Act on inter-state supplies within India is payable under section 3 of the Customs Tariff Act read with section 5 of the IGST Act if the supplies are in the course of importation. When interest is payable on delayed payment of IGST on inter-state supplies within India, the same bill also apply to delayed payment of IGST on imports. This is especially so since section 3 of the Customs Tariff Act makes IGST payable under IGST Act. There are no legal basis or reason to hold that the interest payable on delayed payment of IGST does not apply if such delayed payment is on supply in the course of imports. The impugned order upheld - appeal dismissed.

Summary

Issues Involved:
1. Entitlement to refund of interest paid on delayed IGST for imported goods.
2. Validity of claiming refund based on judgments in other cases.
3. Requirement to challenge the assessment to claim refund.
4. Nature of IGST on imported goods.
5. Applicability of interest on delayed IGST payment.

Detailed Analysis:

1. Entitlement to Refund of Interest Paid on Delayed IGST:
The appellants sought refunds for the interest paid on delayed IGST payments for imported goods. They argued that IGST, being a tax on supply, does not attract interest under the Customs Tariff Act. They cited the Bombay High Court's decision in Mahindra and Mahindra, which held that no interest is chargeable on delayed payment of additional duties of customs.

2. Validity of Claiming Refund Based on Judgments in Other Cases:
The Tribunal held that refunds cannot be claimed based on judgments in other cases. Refunds are execution proceedings that do not determine mutual rights and liabilities between the assessee and the Revenue. They are limited to refunding the money due as per the assessment. The Tribunal cited the Supreme Court's decision in Mafatlal Industries, which clarified that a judgment in one case does not automatically alter the liabilities of other assessees.

3. Requirement to Challenge the Assessment to Claim Refund:
The Tribunal emphasized that no refund can be sought without challenging the assessment, including self-assessment. The appellants did not contest their own assessments, nor were they modified. As per the Supreme Court's decision in ITC Ltd., refunds cannot be claimed without assailing the assessment. The appellants paid IGST under Section 28(1)(b) of the Customs Act, which does not require the issuance of a show-cause notice (SCN) by the proper officer. This self-assessment attained finality and was not contested.

4. Nature of IGST on Imported Goods:
The Tribunal examined the nature of IGST on imported goods. IGST is a tax on the supply of goods and services, not on importation. The taxable event for IGST is the inter-state supply of goods and services, including imports. The charging section for IGST is Section 5 of the IGST Act, read with Section 3 of the Customs Tariff Act. IGST is credited under Major Budget Head 0008 and apportioned between the Centre and States as per Article 269A of the Constitution. It is not a duty of customs but a tax on supply.

5. Applicability of Interest on Delayed IGST Payment:
The Tribunal held that interest is payable on delayed IGST payments. Section 20 of the IGST Act makes several provisions of the CGST Act, including Section 50, applicable to IGST. Section 50 of the CGST Act provides for interest on delayed payment of tax. The Tribunal found no legal basis to exempt delayed IGST payments on imports from interest. The reliance on the Mahindra and Mahindra judgment was misplaced as it pertained to the pre-GST regime and additional duties of customs, not IGST.

Conclusion:
The Tribunal concluded that:
a) No refund can be sanctioned based on judgments in other cases.
b) Refunds cannot modify the assessment without challenging it.
c) Customs duties are levied on importation or exportation, not on supply.
d) IGST is a tax on supply, not a duty of customs.
e) IGST on imports is not an additional duty of customs.
f) Interest is payable on delayed IGST payments, including on imports.
g) The appellants correctly paid the interest, and the lower authorities rightly rejected the refund claims.

The appeals were dismissed, and the impugned orders were upheld.