Case tittle | AIM Worldwide (P.) Ltd. VS Union of India |
Court | Gujarat High Court |
Honourable Judge | Justice Sonia Gokani Justice Nisha M. Thakore |
Citation | 2021 (12) GSTPanacea 182 HC Gujarat R/Special Civil Applicatioον Νο. 15648 Of 2020 |
Judgment Date | 22-December-2021 |
The petitioners, who are engaged in the trading and export of cotton, yarn, textiles, fabrics, etc., and hold a valid GST Registration No.27AAKCS0140G1ZL, have raised a principal grievance regarding the inaction of the respondent Authorities concerning the refund of Integrated Goods and Services Tax (IGST) for Shipping Bills dated between July 5, 2017, and August 10, 2017. The petitioners claim that they exported goods (Comber Noil) under various invoices for which they paid an IGST amounting to Rs.14,94,739/-. They relied on forms GSTR-1 and GSTR-3B, which they assert were filed within the prescribed timeframe.
The petitioners acknowledge that they mistakenly claimed a higher drawback rate by selecting options “5202A” and “600699A” instead of the lower rate options “5202B” and “600699B” while generating the shipping bills. Realizing this error, they promptly requested an amendment to the shipping bills on September 12, 2017, from the Deputy Commissioner of Customs (Export) at Customs House, Mundra. They sought to correct the error by treating the selection of “A” as “B” under Section 149 of the Customs Act, 1962.
On September 15, 2017, the petitioners submitted another request to the Deputy Commissioner of Customs (Exports) at Customs House, Mundra, to consider their case for the IGST refund. They expressed their willingness to not claim the higher drawback and offered to return the differential drawback amount. The petitioner company drew a demand draft in furtherance of their intention to rectify the error and facilitate the refund process.
The inaction of the respondent Authorities regarding the petitioners’ request for an IGST refund, despite their prompt attempts to rectify the mistake and their readiness to return the excess drawback claimed, forms the crux of the petitioners’ grievance. The petitioners seek judicial intervention to ensure the refund of the IGST paid, arguing that the error was inadvertent and promptly addressed.
The primary grievance of the petitioners revolves around the respondent authorities’ inaction regarding the refund of Integrated Goods and Services Tax (IGST) for shipping bills dated between July 5, 2017, and August 10, 2017. The petitioners are engaged in trading and exporting cotton, yarn, textiles, fabrics, etc., and possess a valid GST registration number 27AAKCS0140G1ZL. They claim to have exported goods (Comber Noil) under various invoices for which they paid IGST amounting to Rs. 14,94,739/-. The petitioners have referenced and relied upon form GSTR-1 and GSTR-3B, which they claim to have filed within the prescribed timeframe.
The issue arose because the petitioners inadvertently claimed a higher drawback rate by selecting options “5202A” and “600699A” instead of the lower rate options “5202B” and “600699B” when generating shipping bills. Upon realizing this mistake, the petitioners immediately requested the Deputy Commissioner of Customs (Export) at Customs House, Mundra, to amend the shipping bills under Section 149 of the Customs Act, 1962, through a letter dated September 12, 2017. They requested that the selection of “A” be treated as “B”. On September 15, 2017, the petitioners also submitted a request to the Deputy Commissioner to consider their case for an IGST refund and expressed their willingness to return the differential drawback amount.
The petitioners’ advocate further contended that the goods supplied by the registered person were neither NIL rated goods nor exempt supplies. These supplies were subject to IGST payment under Section 16(3)(b) of the IGST Act. According to this provision, a registered person making a “Zero Rated Supply” has the option to claim a refund under Section 16(3)(b) or supply goods or services on payment of integrated tax and claim a refund of the tax paid on these supplies under Section 54 of the Central Goods and Services Tax Act, 2017. The court’s attention was also drawn to Rule 96 of the CGST Rules, 2017, which states that the shipping bill filed by the exporter of goods is deemed an application for a refund of the integrated tax paid on goods exported out of India. This application is considered filed only when the person in charge of the conveyance carrying the export goods files an export manifest or an export report covering the shipping or bills of export.
Despite these submissions and the clear legal provisions, the petitioners faced inaction from the respondent authorities regarding their refund request.
The petitioners, engaged in the trading and export of cotton, yarn, textiles, and fabrics, hold a valid GST registration (No. 27AAKCS0140G1ZL). Their principal grievance concerns the inaction of the respondent authorities in refunding the Integrated Goods and Services Tax (IGST) for shipping bills dated between July 5, 2017, and August 10, 2017. They had exported goods (Comber Noil) under various invoices, for which they paid IGST amounting to Rs. 14,94,739/-.
The petitioners assert that they filed the necessary forms, GSTR-1 and GSTR-3B, within the prescribed time. However, due to an inadvertent mistake, they claimed a higher drawback rate by selecting options “5202A” and “600699A” instead of the correct options “5202B” and “600699B” while generating shipping bills. Realizing this error, the petitioners immediately requested the Deputy Commissioner of Customs (Export) at Mundra to amend the shipping bills under Section 149 of the Customs Act, 1962. They sought to rectify the mistake by treating the punching of “A” as “B”.
On September 15, 2017, the petitioner company submitted a request to the Deputy Commissioner of Customs to consider their case for an IGST refund and expressed their willingness to return the differential drawback amount. The petitioners provided demand drafts totaling Rs. 3,39,245/-, which were credited to the Customs Department.
The petitioners’ advocate argued that the supplied goods were not NIL rated or exempt and were subject to IGST, in accordance with Section 16(3)(b) of the IGST Act. According to this provision, a registered person making “Zero Rated Supply” has the option to claim a refund under Section 16(3)(b) of the Act or supply goods or services on payment of integrated tax and claim a refund of such tax paid under Section 54 of the Central Goods and Service Tax Act, 2017. The advocate emphasized that the shipping bill filed by the exporter should be deemed an application for refund of integrated tax paid on goods exported out of India once the export manifest or report is filed.
The petitioners highlighted that the Superintendent of Customs (Export) at Mundra confirmed the approval of the shipping bill amendments on October 30, 2017. Despite this, the respondent authorities’ inaction has caused significant monetary loss to the petitioners due to the delayed IGST refund. The petitioners’ advocate referenced past court decisions, urging the court to direct the respondent authorities to release the IGST refund with interest. The advocate cited decisions in Amit Cotton, Shri Jagdamba Polymers Ltd. Vs. Union of India, and Purnima Advertising Agency Pvt. Ltd. Vs. Union of India, arguing for compensation due to the undue delay and inaction of the respondent authorities in processing the IGST refund.
The respondent authorities, represented by the Assistant Commissioner of Customs, have objected to the petitioner’s prayer by filing an affidavit. They argue that the petitioner company, in their July-August 2017 shipping bills, voluntarily chose option “A” and received a higher drawback of Rs. 4,22,900/-. As a result, the authorities claim that the petitioner’s goods are not eligible for an Integrated Goods and Services Tax (IGST) refund, especially since the company is legally required to complete mandatory export consignment records to avail such benefits. The respondent authorities rely heavily on the instructions issued under Board Circular No.37/2018-Customs dated October 9, 2018, and Notification No.131/2016-Cus (NT) dated July 26, 2017. They contend that allowing the petitioners to avail IGST refund after claiming higher drawbacks initially would be unjustified.
Mr. Utkarsh Sharma, the learned counsel representing respondent Nos. 1 to 3, emphasizes that the petitioner company voluntarily chose option “A” and received higher drawbacks. He further asserts that the respondent authorities are bound by the instructions under the Board Circular and, therefore, cannot approve the IGST refund.
The petitioner, represented by a company, has submitted a prayer which the respondent Authorities, through the Assistant Commissioner of Customs, have objected to by filing an affidavit in reply. The respondents, representing authorities Nos. 1 to 3, rely on various shipping bills submitted by the petitioner company during July-August 2017. They assert that the petitioners had chosen option “A” at that time and received a higher drawback amounting to Rs. 4,22,900/-. The respondents argue that, under these circumstances, the petitioner’s goods are not eligible for an IGST refund. The respondent Authorities base their argument on the petitioner’s legal obligation to complete the mandatory records for their export consignment to avail such benefits.
The respondents cite instructions issued under Board Circular No.37/2018-Customs dated 09.10.2018 and Notification No.131/2016-Cus (NT) dated 26.07.2017. They contend that allowing the petitioners to avail of an IGST refund, after initially claiming benefits of a higher drawback, would be unjustified.
Learned Counsel Mr. Utkarsh Sharma, appearing for respondents Nos. 1 to 3, reiterates that the petitioner company voluntarily selected option “A” and received a higher drawback. He emphasizes that the respondent authorities are bound by the instructions issued under the Board Circular and cannot sanction the IGST refund. Additionally, Mr. Sharma notes that the decision rendered in the case of Amit Cotton, which is relevant to this matter, has been challenged before the Hon’ble Apex Court. Although an appeal was not entertained due to delay, another SLP concerning the same decision is pending before the Hon’ble Apex Court. Mr. Sharma acknowledges that no stay has been granted by the Apex Court in the pending SLP.
After hearing the learned advocates for both parties and reviewing the records, it appears that the petitioners exported goods in July-August 2017 from Mundra Port. The petitioners hold valid registration No. 27AAKCS0140G1ZL and are governed by the provisions of the CGST and IGST Rules, 2017.
To understand the issue involved, it is essential to review the relevant provisions of Sections 16 of the IGST Act, 2017, Section 54 of the CGST Act, and Rule 96 of the CGST Rules, 2017. These sections include definitions and conditions for zero-rated supply, which applies to exports of goods or services and supplies to Special Economic Zone developers or units. They also outline that credit of input tax may be availed for making zero-rated supplies, despite such supplies being exempt.
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