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TMI Blog2019 (7) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of clause (4) of Rule 96 of the Rules, 2017:- (a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of subsection (10) or sub-section (11) of Section 54; or (b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962. Reliability on Circular No.37/2018-Customs dated 9th October 2018 - HELD THAT:- Apart from being merely in the form of instructions or guidance to the concerned department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Over and above the same, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents. The writ-applicant is entitled to claim the refund of the IGST - 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in a business of procuring raw cotton from farmers, ginning the same, pressing the same, carrying out necessary process, converting it into bales and then exporting these cotton bales out of India. 5.2. As required under the statute, they are registered with the Goods and Service Tax (hereinafter referred to as 'GST') Authorities. The hold GST Registration certificate bearing No. 24AAEFA672D1Z1. 5.3. Any supplies made from registered premises i.e. factory of the petitioner herein would attract GST. Therefore, GST is paid by the petitioner in accordance with law. However, since the goods are exported out of India, the same are to be termed as 'Zero Rate Supply' in accordance with Section 16 of the IGST Act. 5.4. According to the said provision, a registered person making 'Zero Rated Supply' has an option to claim refund in accordance with Section 16(3)(b) in a manner as to, he may supply goods or services or both, on payment of Integrated Tax and claim refund of such tax paid on goods or services or both supplied, in accordance with Section 54 of CGST Act. 5.5. As provided in Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 7437636 - 19/07/2017 6,98,628/- 2 7512885 - 21/07/2017 6,88,986/-, 3 7662194 - 28/07/2017 5,17,506/- TOTAL 19,05,120/- 5.7. As provided in Section 54 of CGST Act, 2017, read with Section 16 of IGST Act, 2017, immediately after the goods are exported, considering the shipping bills as application for refund of IGST paid in regard to the export goods, the respondent authorities are supposed to immediately refund the said amount of IGST to the petitioner. 5.8. In this case, exports were made in July 2017 but till date, IGST is not refunded. It is pertinent to note that no reason for withholding the amount of refund is assigned by the respondent authorities so far. 5.9. Time and again, the petition herein had approached respondent No.02 herein and requested him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [email protected]. The same confirms that only reason for withholding refund is that the petitioner had first claimed more rate of draw-back. However, very conveniently, it failed to deal with the fact that the said higher rate is given away/paid back by the petitioner. A copy of the said email is annexed herewith and marked as Annexure-G. On perusing the said email, it may be found that the same further talks about circular No.37/2018- Customs, dated 9.10.2018. However, the said circular is not relevant in this case because the circular restricts Drawback if refund is availed and not the other way around. In any case, since the higher rate of draw-back is now given away/paid-back, even otherwise the question of with-holding refund would not arise. 4. Thus, it appears from the pleadings as aforesaid that the writ-applicant had exported goods in July 2017. It is the case of the writ-applicant that it is eligible to seek refund of the IGST in accordance with the provisions of the IGST Act, 2017. However, according to the writ-applicant, without any valid reason the refund to the tune of ₹ 19,05,121=00 has been withheld. According to the writ-applicant, the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below details attached Challans which are submitted back to the customs. SR. NO. SHIPPING BILL NO. DT. DD NO. CHALLAN NO. AMOUNT (INR) WITH INT. 1 7512885 DTD. 21.07.2017 500787/500783 1445 DTD.04.10.2018 137850/- 2. 7437636 DTD. 18.07.2017 500789/500782 1443 DTD. 04.10.2018 132180/- 3. 7662194 DTD. 28.07.2018 500788/500784 1444 DTD. 04.10.2018 103480/- Thanking you Yours faithfully Sd/- Amit Cotton Industries 10. Mr.Trivedi invited the attention of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent authorities to kindly sanction the refund at the earliest. F. As provided in Rule 96 of CGST Rules, 2017, 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 application shall be deemed to have been filed only when the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return in Form GSTR-3 or Form GSTR- 3B. In this case, as could be observed from the documents mentioned hereinabove, shipping bills were generated and Export General Manifest were also generated. The petitioner has also furnished valid Return in GSTR-3B. Therefore, all the necessary requirements under Rule 96(1) is complied with. As such, no formal refund application is required to be filed. The respondent authorities is required to sanction refund amount considering the shipping bills as refund application. However, the same is not done so far, therefore Your Lordships may direct the respondent authorities to kindly sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the drawback are discussed. A reading of these Notifications and Rules would suggest that in all cases where IGST refund is availed, the authorities concerned may not allow higher rate of drawback. However, there is no provision in the Central Goods and Service Tax Act, 2017 or the Integrated Goods and Service Tax, 2017 or that there is no such circular or instructions even, under the GST law which would provide for restriction of IGST refund for the reason that higher rate of drawback is claimed. In short, the provisions discussed in the circular relied upon in the email pertains to reverse situation than the present one. Therefore, the circular is not correct. J. Without prejudice to the above, it is further submitted that in any case, the circulars are not law. They are not binding precedents. They are only binding on the department and not the assessee. Even in that view of the matter, reliance placed on the said circular is not sustainable for the purpose of withholding refund. K. In any view of the matter, as far as the petitioner is concerned, since they have already reversed/paid back the difference amount of the higher rate and lower r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns that if any exporter claims drawback under Column (4) and (5), it means that drawback includes Customs, Central excise and Service Tax component and it's called Higher drawback. Similarly, if any exporter claims drawback under Column (6) and (7), it means the drawback included Customs only and it's called Lower drawback. 11. I say and submit that after the introduction of IGST, the condition 11 of Notification 131/2016 Cust (N.T) dated 31.10.2016 has been amended by Notification 59/2017 dated 29.06.2017. I submit that the condition no. 11(d) mentions that drawback under Column (4) and (5) i.e. Higher Drawback is not applicable to the goods if good is exported by claiming refund of integrated goods and services tax paid on such exports. I submit that in the present case, the Petitioner has exported goods and claimed Higher drawback. The drawback details as claimed by the petitioner obtained from Customs system have been given in Annex A. The claiming of higher drawback can be ascertained from the facts that the drawback serial number has been affixed with 'A' which denotes higher drawback. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentions that the IGST refund shall be claimed in accordance with the provisions of Section 54 of the CGS I act, 2017. The bare provision of Section 16 relevant to the issue is reproduced hereunder: ( 3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: - ( a) .... ( b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, art payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. I submit that the provision of Section 54 of the CGST Act of 2017 (as Annexure: D) is made applicable to the refund of IGST as per Section 16 of the IGST Act, 2017. I submit that the provisions of the Acts as stated clearly spell it out that the refund of IGST shall not be allowed if the supplier of goods or services i.e. exporter avails drawback in respect of Central tax or claims refund of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has been unlawfully withheld without any legal basis by the respondent authorities. I reiterate that it is not a proper claim on part of the Petitioner. I submit that the IGST refund mechanism is system based and processed electronically as per the declaration given by the exporter in the shipping bill and the GST return. I submit that in the present case, the Petitioner has availed higher drawback as evident from their shipping bills and because of this the system has denied them the IGST refund. I submit that as the Petitioner is ineligible for the IGST refund, it is not proper to accuse the Respondent no.1 and Respondent no. 2 for the non-sanction of IGST refund. 18. In response to para 5.D of the Petition, I say and submit that the Petitioner has quoted the provisions of Section 16(3) of IGST Act, 2017 and Section 54 of the CGST Act, 2017 to say that IGST refund has to be sanctioned. I say and submit that as per the above paras, the refund of IGST and Higher drawback cannot be simultaneously availed as per the quoted legal provisions. 19. In response to paras 5.E, 5.F, 5.G and 5.H of the Petition, I say and submit that the above paras expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub : Cases where IGST refunds have not been granted due to claiming higher rate of drawback OR where higher rate and lower rate were identical reg Sir/Madam, Numerous representations have been received from exporters/export associations, regarding cases where IGST refunds have not been granted because higher rate of drawback has been claimed or where higher rate and lower rate were identical. 2.0 The issue has been examined extensively in this Ministry. The legal provisions related to Drawback claims are as under : 2.1 Notes and condition (11) of Notification No.131/2016- Cus(NT) dated 31.10.2016 (as amended by Notification No.59/2017-Cus(NT) dated 29.6.2017 and 73/2017- Cus(NT) dated 26.7.2017), prescribed that 'The rates and caps of drawback specified in columns (4) and (5) of the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is .... ( d) exported claiming refund of the integrated goods and services tax paid on such exports'. 2.2 Notes and Condition (12A) of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maninder Kumar) O.S.D. (Cus-IV) 17. In such circumstances referred to above, Mr.Bhatt, the learned standing counsel appearing for the respondents, prays that there being no merit in this writ-application, the same be rejected. 18. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the respondents are justified in withholding the refund of the IGST paid by the writ-applicant in connection with the goods exported, i.e. 'zero rated supplies'. 19. On 20th December 2018, this Court passed the following order : 1. The learned advocate for the petitioner has tendered a draft amendment. The amendment is allowed in terms of the draft. The same shall be carried out forthwith. 2. The learned advocate for the petitioner invited the attention of the court to the provisions of section 16 of the Integrated Goods and Services Tax Act, 2017 which makes a provision for Zero rated supply . It was submitted that under sub-section (3) thereof, a registered p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an exempt supply. ( 3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely: ( a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or ( b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. 21. Section 54 of the CGST Act, 2017, reads thus : 54. Refund of tax.-- (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. ( 5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57. ( 6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer may- ( a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; ( b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. Explanation . For the purposes of this sub-section, the expression specified date shall mean the last date for filing an appeal under this Act. ( 11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. ( 12) Where a refund is withheld under sub-section (11), the taxable person shall, notwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemselves or, as the case may be, the inputs or input services used in such services, the date of ( i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or ( ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice; ( d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction; ( e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises; ( f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; ( g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration particulars and as intimated to the Customs authorities. ( 4) The claim for refund shall be withheld where,- ( a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or ( b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962. ( 5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal. ( 6) Upon transmission of the intimation under sub-rule (5), the proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veloper and the manner of zero rating. 24. It is not in dispute that the goods in question are one of zero rated supplies. A registered person making zero rated supplies is eligible to claim refund under the options as provided in sub-clauses (a) and (b) to clause (3) of Section 16 referred to above. 25. Section 54 of the CGST 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. If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined will have to be credited to the Fund referred to in Section 57 of the CGST Act, 2017. 26. Rule 96 of the CGST Rules provides for a deeming fiction. The shipping bill that the exporter of goods may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India. Section 54 referred to above should be read along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court as regards the binding nature of the circulars and instructions issued by the Central Government. 32. In the case of Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries, reported in 2008(12) S.T.R. 416 (S.C.), the Supreme Court observed as under : 4. Learned counsel for the Union of India submitted that the law declared by this Court is supreme law of the land under Article 141 of the Constitution of India, 1950 (in short the Constitution ). The Circulars cannot be given primacy over the decisions. 5. Learned counsel for the assessee on the other hand submitted that once the circular has been issued it is binding on the revenue authorities and even if it runs counter to the decision of this Court, the revenue authorities cannot say that they are not bound by it. The circulars issued by the Board are not binding on the assessee but are binding on revenue authorities. It was submitted that once the Board issues a circular, the revenue authorities cannot take advantage of a decision of the Supreme Court. The consequences of issuing a circular are that the authorities cannot act co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the understanding by the assessee and the Revenue, for the circular dated 15.04.1994, is not to the specific effect as suggested and, further notification dated 07.03.1994 was valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997 vide notification dated 12.03.1997) and not thereafter. The Commercial Tax Department, by a circular, could have extended the benefit under a notification and, therefore, principle of estoppel would apply, though there are authorities which opine that a circular could not have altered and restricted the notification to the determent of the assessee. Circulars issued under tax enactments can tone down the rigour of law, for an authority which wields power for its own advantage is given right to forego advantage when required and considered necessary. This power to issue circulars is for just, proper and efficient management of the work and in public interest. It is a beneficial power for proper administration of fiscal law, so that undue hardship may not be caused. Circulars are binding on the authorities administering the enactment but cannot alter the provision of the enactment, etc. to the detriment of the assessee. Needless to emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said doctrine has to be applied with caution and the Rule must give way when the language of the statute is plain and unambiguous. On a careful scrutiny of the language employed in paragraph 3 of the notification dated 21.01.2000, it is difficult to hold that the said notification is ambiguous or susceptible to two views of interpretations. The language being plain and clear, it does not admit of two different interpretations. 29. In this regard, we may state that the circular dated 15.04.1994 was ambiguous and, therefore, as long as it was in operation and applicable possibly doctrine of contemporanea exposition could be taken aid of for its applicability. It is absolutely clear that the benefit and advantage was given under the circular and not under the notification dated 07.03.1994, which was lucid and couched in different terms. The circular having been withdrawn, the contention of contemporanea exposition does not commend acceptation and has to be repelled and we do so. We hold that it would certainly not apply to the notification dated 21.01.2000. 34. We take notice of two things so far as the circular is concerned. Apart from being merely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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