2019 (11) TMI 819 - HC - GST

Refund of IGST paid - export of goods - additional tax paid due to variation of rates - petitioner claimed refund of ₹ 94,42,39,026/- along with the additional tax paid due to variation of rates in London Metal Exchange - respondents have refunded ₹ 94,42,39,026/-. But they are not in a position to refund the balance amount of ₹ 2,02,94,956/- as the entire process is system managed - Circular No.40 of 2018-Customs F.No.450/119/2017-Cus-IV, dated 24.10.2018 - HELD THAT - The present case on hand is also similar to that of the problem which was faced by the respondents in similar circumstances. When there is no provision in the electronically managed system, they should have visualised the situation prior to its introduction to do away with these anomalies and provided solution to the same. When the issue of refund like the present one was dealt with by the Hon'ble High Court of Gujarat at Ahmedabad in M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS 2019 (7) TMI 472 - GUJARAT HIGH COURT , the High Court has given a direction to the respondents to refund the IGST paid in regard to the goods exported i.e., 'Zero rated Supplies', with 7% Simple Interest in view of circular dated 09.10.2018 and Rule 96 of Central Goods and Services Tax Rules, 2017. When the process is completely system managed, the respondents are supposed to visualise the complications and provide solutions to do away with the anomalies. The very object of encouraging exporters and augmenting the foreign currency will be defeated by such hiccups. Therefore, considering the judgment of Hon'ble High Court of Gujarat as well as the circular issued by the fourth respondent dated 24.10.2018, a direction is given to the respondents to refund the additional IGST paid by the petitioner to the tune of ₹ 2,02,94,956/- within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

Summary

Issues:
Refund of Integrated Goods and Service Tax (IGST) on exported goods.

Analysis:
The petitioner exported goods and paid IGST, later claiming a refund for the tax. The company exported goods through multiple invoices and shipping bills, paying IGST as per the IGST Act. Due to price revisions, the petitioner paid additional tax on certain invoices. The petitioner requested a refund of the initial IGST amount and the additional tax paid due to price variations. While the respondents refunded the initial IGST amount, they were unable to refund the additional tax as the process was system-managed without a provision for manual intervention.

The respondents issued Circular No.40 of 2018 to address discrepancies in IGST refunds, providing a facility for processing eligible differential IGST refunds through an officer interface in the ICES system. This facility was available for shipping bills filed until a specified date. The Circular emphasized the need for exporters to be accurate in filing details to avoid future issues. The exporters were required to submit a Revised Refund Request (RRR) for the differential amount, which would be verified and sanctioned by designated officers in the system.

The court noted that the issue faced by the petitioner was similar to cases addressed in the Circular, indicating a lack of foresight in the system's design to handle such anomalies. Referring to a judgment by the High Court of Gujarat in a similar case, the court directed the respondents to refund the additional IGST paid by the petitioner within four weeks, considering the Circular and the need to support exporters and foreign currency augmentation. The Writ Petition was disposed of with this direction, without imposing any costs on the parties involved.