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2021 (12) TMI 1328 - HC - GSTRefund of IGST - inaction of the respondent Authorities regarding refund of IGST towards three Shipping Bills - export of Organic Soya Bean Feed Grade - zero rated supply - Applicability of Circular dated 09.10.2018 read with Notification 31/2016 Cus (N.T.) dated 31.10.2016 as amended by Notification 59/12 dated 29.06.2017 and Notification 73/2017-Customs (NT) dated 26.07.2017 - grant of interest on refund of IGST - HELD THAT - Section 16 of the IGST Act, 2017 deals with Zero rated supply ie. For supplies of goods or services or both, which includes supplies of export of goods or services or both, and supplies made to the Special Economic Zone Unit or Special Economic Zone Developer and the manner of zero rating. It is not in dispute that the goods in question are one of Zero Rated supplies . A registered person making Zero Rated Supplies becomes eligible to claim refund under the options as provided in sub-clauses (a) and (b) to clause (3) of Section 16 referred to above. Section 54 of the IGST Act, 2017 provides that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him shall make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. In the present case, admittedly, the shipping bills have been amended pursuant to the decision of the Superintendent of Customs (Export) as reflected in communication bearing No.VIII/48-865/EXP/AMD/ MP SEZ/17-18 dated 22.09.2017. It is not in dispute that the Demand Draft of differential drawback aggregating to an amount of ₹ 3,71,236/- has been realized by the respondent Authorities. So far as issue of whether the respondents are justified in withholding the refund of IGST paid by the exporter of the goods i.e. Zero Rated Supply is concerned, is no more res integra. In the case of M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS 2019 (7) TMI 472 - GUJARAT HIGH COURT it was held that the writ-applicant is entitled to claim the refund of the IGST and respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e. 'zero rated supplies', with 7% simple interest from the date of the shipping bills till the date of actual refund. Applicability of Circular dated 09.10.2018 read with Notification 31/2016 Cus (N.T.) dated 31.10.2016 as amended by Notification 59/12 dated 29.06.2017 and Notification 73/2017-Customs (NT) dated 26.07.2017 - HELD THAT - It would be apt to reproduce the observations made by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS M/S RATAN MELTING WIRE INDUSTRIES 2008 (10) TMI 5 - SUPREME COURT , the Constitutional Bench of the Apex Court was considering the binding nature of a circular issued under the Central Excise act, 1944 which were contrary to decisions rendered by the Supreme Court, where it was held that It is for the Court to declare what the particular provision of statute says and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. Even recently this Court had an occasion to deal with the similar facts in the case of AWADKRUPA PLASTOMECH PVT. LTD. VERSUS UNION OF INDIA 2020 (12) TMI 1116 - GUJARAT HIGH COURT , whereby reliance was made upon the Circular 37/2018-Customs dated 09.10.2018, whereby the competent Authority had withheld the refund of IGST on the ground that exporters had availed the option to take drawback at higher rate in place of the IGST refund out of their own volition. Grant of interest @ 18% on the amount of refund of IGST - HELD THAT - The decisions relied upon by the petitioners in the case SHRI JAGDAMBA POLYMERS LTD. VERSUS UNION OF INDIA 2013 (6) TMI 88 - GUJARAT HIGH COURT and PURNIMA ADVERTISING AGENCY PVT. LTD. AND 1 VERSUS UNION OF INDIA THROUGH SECRETARY AND 2 2016 (4) TMI 291 - GUJARAT HIGH COURT are perused. In both the aforesaid decisions, the issue with regard to entitlement of the interest at appropriate rate for delay in not paying the refund and also for paying interest on interest was under consideration. In the aforesaid decisions, the facts indicate that the petitioners therein have prayed for refund prior to insertion of Section 11BB in the Central Excise Act, 1944, which had been inserted w.e.f. 26.05.1995 thereby providing for interest on delayed refund - In the present matter, the issue relates to inaction of the respondent Authorities in not taking decision with regard to the refund of IGST with regard to the goods exported i.e. at Zero Rated Supplies . Akin provisions in form of Section 56 of the CGST Act, 2017, is incorporated, which deals with the interest on delayed refund. On perusal of Section 56 of the CGST Act, it is explicitly made clear that if the applicant is not refunded the tax amount within 60 days from the date of receipt of the application under Sub-Section 1 of Section 54 then interest at such rate not exceeding 6% as may be specified in the Notification, which may be issued by the Government is payable in respect of such refund from the date immediately after expiry of 60 days from the date of receipt of such application till refund amount is received. The records reveals that the petitioners have raised the refund of IGST immediately within prescribed time and had also made payment of differential amount which has been realized by the respondent Authorities. Thereafter, the petitioners have also made various representations, which are placed on record. On going through entire record, the stand of the respondent Authority to withhold IGST based on non-consideration of Judicial pronouncement is equally irrational and arbitrary - the respondent Authorities are directed to immediately sanction the refund towards IGST paid in respect of goods exported Zero Rated Supplies made under the shipping bill. Petition allowed.
Issues Involved:
1. Inaction of the respondent authorities regarding the refund of IGST. 2. Entitlement of interest on the delayed refund of IGST. Issue-wise Detailed Analysis: 1. Inaction of the respondent authorities regarding the refund of IGST: The petitioners invoked the extraordinary writ jurisdiction under Article 226 of the Constitution of India, seeking a writ of mandamus directing the respondent authorities to sanction the refund of IGST amounting to ?12,00,800/- paid on the export of goods (Organic Soya Bean Feed Grade) under 'Zero Rated Supplies'. The petitioners argued that they had exported goods under various invoices and paid IGST, but inadvertently claimed a higher rate of drawback by selecting option "1201A" instead of "1201B". This mistake led to the retention of a lower rate of drawback amounting to ?65,512/-, and the differential amount was returned to the Customs Department. Despite complying with mandatory provisions and submitting statutory returns, the refund of IGST was not sanctioned. The petitioners made several representations and sent multiple emails to the respondent authorities, but received no response. The respondent authorities objected to the petition, arguing that the petitioners claimed a higher rate of drawback and received a higher amount, which disqualified them from receiving an IGST refund. They relied on instructions issued under Board Circular No.37/2018-Customs dated 09.10.2018, which stated that it would not be justified to allow IGST refunds to those who initially claimed higher drawback benefits. The Court noted that the petitioners had amended the shipping bills and returned the differential drawback amount, which was acknowledged by the respondent authorities. The Court referred to the decision in the case of Amit Cotton Industries Vs. Principal Commissioner of Customs, which held that Rule 96 of the CGST Rules, 2017, provides that shipping bills are deemed to be an application for refund of integrated tax paid on exported goods. The claim for refund can only be withheld under specific circumstances outlined in Rule 96(4), which did not apply to the petitioners' case. The Court concluded that the respondent authorities were not justified in withholding the IGST refund based on the circular, as it could not override statutory rules. 2. Entitlement of interest on the delayed refund of IGST: The petitioners also sought interest at 18% on the delayed refund of IGST. The Court examined Section 56 of the CGST Act, 2017, which mandates interest on delayed refunds if the tax is not refunded within 60 days from the date of receipt of the application. The Court noted that the petitioners had raised the refund claim within the prescribed time and made various representations, but the respondent authorities failed to take a decision. The Court referred to the decision in the case of E.I. Dupont India (P) Ltd. Vs. Union of India, which emphasized that authorities must abide by binding decisions of higher appellate authorities and courts. The Court directed the respondent authorities to immediately sanction the refund of IGST paid on the exported goods and granted interest at 9% from the date when the refund bills were raised until actual payment. The refund amount, along with interest, was to be paid within eight weeks from the date of receipt of the order. Failure to release the amount within the stipulated time would result in further interest at 9% until actual payment. Conclusion: The Gujarat High Court ruled in favor of the petitioners, directing the respondent authorities to sanction the refund of IGST and pay interest at 9% on the delayed refund. The Court emphasized that circulars could not override statutory provisions and that authorities must comply with binding judicial decisions. The judgment reinforced the principles of fairness and accountability in the administration of tax refunds.
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