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

[Mr. M. GOVINDARAJAN]

In MAN ENERGY SOLUTIONS INDIA PRIVATE LIMITED (FORMERLY KNOWN AS MAN DIESEL & TURBO INDIA PVT. LTD.) , VERSUS UNION OF INDIA, CENTRAL BOARD OF INDIRECT TAX AND CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS AURANGABAD. - 2024 (6) TMI 659 - BOMBAY HIGH COURT, the petitioner is engaged in the business of manufacturing and selling high-capacity diesel engines.  The petitioner exports its articles outside India. The petitioner filed a refund claim of Integrated Goods and Service Tax (for short “IGST”) to the tune of Rs. 2,44,61,247/- in respect of the goods exported out of India by the petitioner under the cover of Shipping Bill No. 7114580.  The statutory obligation under the Central Goods and Services Tax Act, 2017 (for short “CGST Act”) and the Integrated Goods and Services Tax Act, 2017 (for short “IGST Act”) along with its Rules, have been duly discharged by the petitioner. The Department did not refund the claim of the petitioner on the ground that there is a mismatch.  Since the refund claim was not processed the petitioner filed the present writ petition before the High Court. 

The petitioner prayed for the following reliefs from the High Court-

• To direct the department to immediately process and sanction the amount of INR 2,44,61,247/- (Rs. Two Crores Forty Four Lakhs Sixty One Thousand and Two Hundred and Forty Seven only) of IGST paid by the petitioner towards the goods exported from India in respect of Shipping Bill and deemed refund application bearing number 7114580 dated 24 August 2018;
• To direct Respondent No. 3 to pay interest @ 9% to the Petitioner on the amount of IGST mentioned in (i) above, from the date of the Shipping Bill and deemed refund application bearing number 7114580 dated 24 August 2018 was treated as filed till the date on which the amount mentioned in (i) above is paid to the credit of the Petitioner since the Respondents have illegally and arbitrarily failed to process and sanction such amount.

The petitioner submitted the following before the High Court-

• Rule 96 of the Central Goods and Services Tax Rules, 2017 (for short “CGST Rules”) provides that the 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. Accordingly, the shipping bill ought to have been considered by the respondents as application for refund.
• Rule 96(3) of the CGST Rules, the customs authorities were statutorily bound to sanction the rebate upon receiving confirmation regarding the filing of Form GSTR-3B. There was no occasion to withhold the processing of rebate. 
• The mismatch in the data has nothing to do with the petitioner, as it is the prime responsibility of the agent and the customs officers to get the proper data. 
• As the processing of refund has not been initiated within stipulated period, the petitioner deserves to be compensated with interest.

The Revenue submitted the following before the High Court-

• The petitioner had opted for rebate route under Section 16 (3) of the IGST Act for the relevant export of IC Diesel Engine and they had lodged Shipping Bill (for short “SB”) No. 7114580 dated 24th August 2018 along with other supporting documents at port of shipping, ICD, Waluj where the shipping line responsible for conveyance of the goods under export moved the goods to Mumbai Port and were ultimately exported to Singapore.
• The refund was pending for processing in the ICES system for Error / Response Codes SB005 i.e. for invalid invoice number and SB006 Gateway EGM not filed. It is stated that the current status of the EGM, on inquiry in the ICEGATE, shows error code as NC i.e. SB006 N.C. 
• The petitioner was knowing the errors and has not made the corrections to rectify error code - SB006, though the petitioner rectified the error code – SB005. 
• the customs officer – respondent No. 3 cannot authenticate rectification of the errors by the petitioner’s shipping line.
• Even if now the petitioner undertakes to contact the shipping agent and the shipping agent makes the correction, the respondents would process the refund.

Before analyzing the case the High Court first took note of the of the letter issued by Assistant Commissioner, ICD Waluj, Aurangabad to the Assistant Commissioner, Customs Chapter Cell, Aurangabad on 28th October 2021.  In the said letter it was noted that - As per the exporter’s submission it is seen that the Gateway EGM No. 156344 dated 23.08.2018 was filed by the Shipping Line i.e. M/s Samsara Shipping Pvt. Ltd., Mumbai a day before filing of Shipping Bill No. 7114580 dated 24.08.2018 by the exporter. Thus, the details of Gateway EGM were not be updated in the ICEGATE after filing Shipping Bill and the error SB006 still persists as being shown in the ICEGATE document status till date.

As per the said letter the error SB006 only appears to be pending.  The High Court observed that Rule 96 of CGST Rules, 2017 prescribes that the 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, and such bill (deemed application) was presented by the petitioner to the respondents.  The respondents ought to have taken up the proceedings in view of Section 54 of the CGST Act, 2017. As per Section 54 (7) of the CGST Act, the proper officer shall issue the order under Sub-section (5) within sixty days from the date of receipt of the application complete in all respects. 

Despite the repeated reminders of the petitioner the Department did not process the refund claim of the petitioner.  The Circulars dated 16.03.2018 and 02.01.2019 issued by the Department fix the responsibility on the officers and the shipping agent.  Therefore, the Department cannot say that the error should be rectified by the petitioner.  Withholding of the refund is impermissible, it has to be either allowed or rejected, for the reasons to be recorded. No such reasons have been recorded and rejection order has not been passed.

The High Court allowed the writ petition.  The High Court directed the Department to process the refund claim of the petitioner immediately and sanction an amount of Rs. 2,44,61,247/- of IGST paid by the petitioner towards the goods exported from India in respect of Shipping Bill and deemed refund application bearing No. 7114580 dated 24th August 2018, within a period of four weeks from the date of this order.