Kishan Lal Kuria Mal International Vs Union Of India

The present writ petitions challenge the validity of certain provisions and notifications related to the Goods and Services Tax (GST) framework in India. Specifically, the petitioners seek declarations that Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the Notification dated 31st October, 2016, as amended by Notifications dated 29th June, 2017 and 26th July, 2017, as well as Circular No. 37/2018 dated 9th October, 2018, are ultra vires (beyond the legal authority) of Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, Section 54 of the Central Goods and Services Tax (CGST) Act, 2017, and Rule 96 of the CGST Rules, 2017. The petitioners argue that these provisions violate Articles 14, 19, and 21 of the Constitution of India, which guarantee the right to equality, freedom, and life, respectively.

The petitioners also seek directions from the court to compel the respondents (presumably the tax authorities) to grant refunds of the IGST paid on goods exported by the petitioners during the Transitional Period (July-September 2017). They request that these refunds be issued after deducting the differential amount of duty drawback, and they seek interest on such refunds from the date of the shipping bill until the actual refund is made.

The writ petitions challenge the legality of certain notifications and circulars related to the refund of Integrated Goods and Services Tax (IGST) paid on exported goods. The specific provisions under scrutiny are Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the Notification dated 31st October 2016, as amended by Notifications dated 29th June 2017 and 26th July 2017, and Circular No. 37/2018 dated 9th October 2018.

The petitioners argue that these provisions are ultra vires (beyond the powers conferred by) Section 16 of the IGST Act, 2017, Section 54 of the Central Goods and Services Tax (CGST) Act, 2017, and Rule 96 of the CGST Rules, 2017. They claim that these provisions violate Articles 14 (equality before the law), 19 (protection of certain rights regarding freedom of speech, etc.), and 21 (protection of life and personal liberty) of the Constitution of India.

The petitioners request that the court declare these provisions invalid and direct the respondents (the government authorities) to refund the IGST paid on goods exported during the transitional period (July-September 2017). They also seek the differential amount of duty drawback (a rebate on customs and excise duties), along with appropriate interest from the date of the shipping bill until the actual refund is made.

The petitioners’ counsel argues that the combined effect of the contested instruments is to unjustly deny exporters the refund of IGST paid on exported goods when they claimed a higher rate of duty drawback under column A of the Drawback Schedule.

n the present cases, the learned counsel for the Petitioners argues that despite the drawback rates for the exported goods being higher in column A (1%) compared to column B (0.15%), the Integrated Goods and Services Tax (IGST) rate paid on these goods was significantly higher at 18%. This discrepancy means that the Petitioners did not gain any advantage from claiming the drawback, as the IGST paid far exceeded the benefits derived from the drawback rates listed in either column.

In the present cases, the Petitioners argue that although the drawback rates for their exported goods were higher in column A (1%) compared to column B (0.15%), the Integrated Goods and Services Tax (IGST) rate they paid (18%) on these goods was significantly higher than the rate in column A. Therefore, they claim there was no advantage in opting for the higher drawback rate under column A at the expense of losing their IGST refund. They attribute their choice of claiming the drawback under column A to the confusion and lack of technical knowledge during the transitional phase of the new indirect tax laws.

The Petitioners’ counsel contends that the issue at hand has already been resolved in a similar case, Maxam India Private Limited v. Union of India & Ors., W.P. (C) No. 6172 of 2022. In that case, the court allowed the refund of IGST paid on exported goods during the transitional period, which had been withheld because the petitioner claimed a higher duty drawback rate under column A instead of the lower rate under column B of the Drawback Schedule. The Petitioners argue that this precedent supports their claim for an IGST refund despite having claimed the higher drawback rate under column A.

The learned counsel representing the Petitioners argues that despite higher drawback rates specified under Column A (1%) compared to Column B (0.15%), the IGST (18%) paid on exported goods was significantly higher than Column A rates. Therefore, claiming drawback under Column A did not provide any financial benefit over claiming an IGST refund. The decision to opt for Column A was attributed to confusion and lack of technical understanding during the transition to new indirect tax laws.

Additionally, counsel asserts that the issue raised in the writ petition has already been settled in the judgment of Maxam India Private Limited v. Union of India & Ors., where the court allowed the refund of IGST paid during the Transitional Period, despite higher drawback claims under Column A. This contrasts with the department’s stance of withholding IGST refunds due to the higher drawback claims under Column A instead of Column B.

On the other hand, counsel for the Respondents, despite having sought time for instructions which have not been received, defends the Respondents’ actions, citing adherence to Circular dated October 9th, 2018, paragraph 3. They argue that the writ petitions should be dismissed due to the non-joinder of necessary parties, specifically various Jurisdictional Commissionerates handling the Petitioners’ refund claims, who have not been included as parties.

The court’s scrutiny of the case records indicates that the issue at hand aligns with the Gujarat High Court’s ruling in M/s Amit Cotton Industries v. [respondent], highlighting a relevant precedent in resolving similar disputes.

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