Refund of cess in case of exports on payment of IGST, Goods and Services Tax - GST

[haribabu koduri]

Can refund of accumulated cess be claimed/allowed, in case of exports on payment of IGST, where the product is not liable for cess. For ex., Input us liable for cess. Output is not liable for cess. Cess got accumulated. Exports are made on payment of IGST. Refund of IGST is claimed from customs. Can refund claim be filed for refund of accumulated cess, in proportion to exports?

Posts / Replies

[RaamSrinivasan Kalpathi]

Please refer to the discussion wherein your question has been beautifully delineated by experts in query no.119531.  

[Rajagopalan Ranganathan]

Sir,

Since cess not leviable on the exported goods and you are exporting the goods on payment of IGST, you cannot claim. The accumulated cess is to be allowed to lapse,

[KASTURI SETHI]

(i)  In this situation,   export on payment of IGST is a hurdle  in getting  refund  claim of accumulated compensation cess. 

(ii) The department should be concerned with the actual export of goods as per the parameters laid down in the definition of  'Éxport'  as per Section 2 (5) of IGST Act and  'zero rated supply' as per Section 16  of IGST Act  for the purpose of sanctioning refund claim  of accumulated compensation cess.

(iii) It is well settled law that a circular cannot override Rules & Notifications   and Rules & Notifications  cannot  override the Act. 

(iv) So if any rule or circular or notification is not in consonance with an Act that need to be either amended or withdrawn  in the interest of fair justice to the exporter.

(v) If compensation cess is not leviable on the final product, the tax payer/exporter should not suffer without his fault. Export is always in the interest of economy of India  and, in turn, for the welfare of our country. 

[haribabu koduri]

There is no reason for differentiating between exports under LUT or on payment of duty, for refund of cess accumulated on account of exports. 

Cess gets accumulated since input is liable for cess, but not output. If the tax payer exports part of the output, he should be granted refund of cess in proportionate to exports. Not allowing refund in case of exports on payment of IGST, is against the basic principle of "NOT TO EXPORT TAXES". 

As usual, we have to litigate the matter and approach higher forums, since the department has rejected the refund claims stating that - refund of cess is permissible only in case of exports under LUT, but not in case of export exports on payment o IGST

[KASTURI SETHI]

Yes. I agree with you. The issue is worth contesting.

[Shilpi Jain]

If you have done an export with payment of tax you can take the credit though you will not be eligible for refund.

Also, the law has provided certain conditions and procedures to follow to be eligible for refund. So in case you wish to challenge that, note that it will not be an easy battle. Legislature is given the latitude to put it s conditions and restrictions.

Atleast for future exports consider doing them under LUT to encash cess credits.