Case tittle | Awadkrupa Plastomech (P.) Ltd. VS Union of India |
Court | Gujarat High Court |
Honourable Judge | Justice J.B.Pardiwala Justice Ilesh J. Vora |
Citation | 2020 (12) GSTPanacea 137 HC Gujarat R/Special Civil Application No. 1014 Of 2020 |
Judgment Date | 15-December-2020 |
The writ-application under Article 226 of the Constitution of India seeks the following reliefs:
(A) The petitioner requests the issuance of a writ of mandamus, or a writ in the nature of mandamus, or any other suitable writ, order, or direction to compel the respondent authorities to promptly approve the refund of Integrated Goods and Services Tax (IGST) paid on goods exported, specifically termed as ‘Zero Rated Supplies’ in the shipping bills referenced herein.
(B) Additionally, the petitioner seeks a directive for the respondent authorities to pay interest at a rate of 9% per annum to the petitioner from the date of the respective shipping bills until the date when the refund amount is actually disbursed to the petitioner. This claim is grounded on the assertion that the withholding of the refund by the respondent authorities is arbitrary and unlawful.
The writ application under Article 226 of the Constitution of India seeks several reliefs from the court. Firstly, it requests the issuance of a writ of mandamus or any appropriate writ, order, or direction directing the respondent authorities to promptly sanction the refund of Integrated Goods and Service Tax (IGST) paid on goods exported as ‘Zero Rated Supplies’, as detailed in specified shipping bills. Secondly, it demands that the respondent authorities pay interest at 9% per annum to the petitioner from the date of the shipping bills until the actual refund is disbursed, citing arbitrary and illegal withholding of the refund. Thirdly, the application seeks an interim order in favor of the petitioner on the aforementioned reliefs. Lastly, it asks for any other necessary relief deemed fit by the court in the interest of justice.
The contention arises from the respondent authorities allegedly withholding the IGST refund pertaining to goods exported as ‘Zero Rated Supplies’, specifically under shipping Bill No.7452830 dated 19/07/2017. The writ-applicant asserts that the refusal to refund the IGST under Section 54 of the Central Goods and Service Tax Act, 2017, combined with Section 16 of the Integrated Goods and Service Tax Act, 2017, was based on the erroneous grounds of claiming a higher duty drawback. The applicant argues that there is no legal impediment to simultaneously claiming a higher duty drawback and receiving a refund of IGST for ‘Zero Rated Supplies’.
Further details provided by the applicant indicate that in July 2017, goods were exported under ‘Zero Rated Supply’ provisions of the IGST, with a total invoice value of Rs.29,73,166/- and a taxable value of Rs.25,19,632/-. The applicant contends that the refusal to refund IGST on the basis of claiming higher duty drawback is unjustified, urging the court to intervene and grant relief in accordance with the facts and circumstances of the case.
The writ application is grounded on the assertion of procedural legality and the petitioner’s entitlement to a refund of IGST, highlighting perceived inconsistencies in the respondent authorities’ decision-making process.
In this case, the issue revolves around the application of Integrated Goods and Services Tax (IGST) on supplies made by a registered person. The goods supplied were neither Nil Rated nor exempt, thereby falling under the purview of IGST payment as per Section 16(3)(b) of the Act. This section grants registered persons making ‘Zero Rated Supply’ the option to pay IGST and subsequently claim a refund under Section 54 of the CGST Act for the tax paid on such supplies.
Additionally, Rule 96 of the CGST Rules, 2017 stipulates that a shipping bill filed by an exporter shall be considered as an application for refund of IGST paid on goods exported out of India. This application is deemed filed only upon submission of an export manifest or report covering the shipping details, coupled with the submission of a valid return in either Form GSTR-3 or GSTR-3B.
However, in this instance, a Custom House Agent (CHA) inadvertently failed to disclose the IGST amount of Rs. 4,53,534/- when filing the shipping bill, only declaring the drawback amount. This error was subsequently rectified when the IGST amount was properly disclosed in the return filed under the CGST Act for July 2017, using Forms GSTR-01 and GSTR-3B.
In response to various IGST refund delays caused by invoice and shipping bill mismatches, the Central Board of Excise & Customs (CBIC) issued Circular No. 05/2018-Customs on 23rd February 2018. This circular introduced an alternative mechanism allowing exporters to rectify such errors, aiming to expedite the processing of IGST refunds.
Overall, the case involves compliance with IGST regulations, rectification of procedural errors, and utilization of statutory provisions and circulars to ensure proper refund processing for export transactions.
The goods supplied by a registered person were neither Nil Rated nor exempt supplies. As per Section 16(3)(b) of the Act, they are affected by payment of IGST. This provision allows a registered person making Zero Rated Supply to opt for refund by supplying goods/services on payment of IGST and claiming refund under Section 54 of the CGST Act.
Under Rule 96 of the CGST Rules, 2017, a shipping bill filed by an exporter is deemed as an application for refund of IGST on exported goods. However, due to an oversight by the Custom House Agent (CHA), the IGST details amounting to Rs. 4,53,534 were initially not disclosed but were later rectified and properly disclosed in the GST return filed for July 2017 (Form GSTR-01 and GSTR-3B).
Due to mismatches between invoices and shipping bills, the CBIC issued Circular No. 05/2018-Customs, dated 23.02.2018, allowing exporters to rectify errors by submitting a concordance table. The petitioner complied with this requirement on 19.03.2018.
The respondents, however, invoked Circular No. 37/2018-Customs, dated 09/10/2018, to deny the refund. They relied on Notification 131/2016–Cus. (N.T.) dated 31.10.2016, which specifies drawback rates subject to conditions. The respondents argued that under condition no. 11(d) of this notification, exporters cannot claim higher drawback rates if they opt for IGST refund on exports.
In conclusion, the respondents contended that exporters who initially claimed higher drawback rates voluntarily opted out of IGST refunds, making it unjustifiable to allow IGST refunds later.
The case involves a dispute regarding the refund of Integrated Goods and Services Tax (IGST) paid on exports due to an initial omission in the shipping bill regarding IGST details. Here’s a detailed summary:
The petitioner, a registered person, supplied goods that were not Nil Rated or exempt supplies, thus falling under the category of taxable supplies. As per Section 16(3)(b) of the IGST Act, for Zero Rated Supplies, the registered person has the option to either supply goods/services on payment of IGST and claim a refund, as per Section 54 of the CGST Act.
In compliance with Rule 96 of the CGST Rules, 2017, the shipping bill serves as an application for refund of IGST paid on exported goods, contingent upon the submission of an export manifest or report and a valid GST return (GSTR-3 or GSTR-3B). Initially, the Custom House Agent (CHA) failed to disclose the IGST paid amount in the shipping bill, rectifying this omission later in the GSTR-01 and GSTR-3B for July 2017.
To address issues with IGST refund delays due to invoice and shipping bill mismatches, the Central Board of Excise & Customs issued Circular No. 05/2018-Customs, allowing exporters to rectify such errors by submitting a concordance table mapping GST invoices to shipping bills, which the petitioner complied with on 19th March 2018.
However, the respondents invoked Circular No. 37/2018-Customs, relying on Notification 131/2016-Cus. (N.T.), which specifies duty drawback rates. They argued that by initially opting for higher duty drawback rates under Column (4) and (5), the petitioner forfeited the option to claim IGST refund under Column (6) and (7). This position was supported by an amendment under Notification 59/2017, stipulating that claiming higher drawback excludes eligibility for IGST refund.
The petitioner contested this interpretation, citing precedents and legal provisions under Section 16 of the IGST Act and Section 54 of the CGST Act, emphasizing their entitlement to IGST refund for zero-rated supplies. They referenced the decision in Amit Cotton Industries vs. Principal Commissioner of Customs, which affirmed the right to claim IGST refunds despite initial claims for higher duty drawback rates, provided conditions under Rule 96(4) of the CGST Rules are met.
In conclusion, the petitioner sought relief from the court, arguing that they fulfilled all statutory requirements and should not be denied IGST refunds based on a misinterpretation of duty drawback notifications. They emphasized compliance with Circulars and Rules governing IGST refunds, asserting their right to claim refunds for zero-rated supplies under applicable legal provisions.
This summary encapsulates the key legal and procedural arguments in the case regarding IGST refunds on exports, highlighting the complexities of tax laws and administrative circulars impacting exporters in India.
The case involves a registered person who supplied goods that were neither Nil Rated nor exempt supplies. These supplies were subject to payment of Integrated Goods and Services Tax (IGST) under Section 16(3)(b) of the Act. This section allows a registered person making ‘Zero Rated Supply’ to opt for either IGST payment with subsequent refund or direct exemption, pursuant to Section 54 of the CGST Act.
Regarding the refund process, Rule 96 of the CGST Rules, 2017 states that a shipping bill filed by an exporter shall be deemed an application for IGST refund on goods exported out of India. However, an issue arose when the Custom House Agent (CHA) inadvertently failed to disclose IGST details amounting to Rs. 4,53,534, only indicating the drawback amount. This mistake was rectified in subsequent returns filed for July 2017 under Forms GSTR-01 and GSTR-3B.
To address discrepancies causing IGST refund delays, the Central Board of Excise & Customs (CBIC) issued Circular No. 05/2018-Customs, allowing exporters to rectify errors through a concordance table mapping GST invoices to shipping bills. The petitioner complied with this requirement on 19th March 2018.
However, the respondents relied on Circular No. 37/2018-Customs and Notification 131/2016-Cus. (N.T.) dated 31st October 2016, which stipulates conditions for drawback rates. Notably, the amendment through Notification 59/2017 dated 29th June 2017 specified that goods claimed under higher duty drawback (Column 4 and 5) would not qualify for IGST refund. The respondents argued that exporters, having initially opted for higher duty drawback, should not subsequently claim IGST refunds.
The petitioner contested this stance, citing legal precedents such as the case of Amit Cotton Industries Vs. Principal Commissioner of Customs [2019] 107 taxmann.com 167 (Gujarat), which affirmed the entitlement to IGST refunds under Section 16 and Rule 96 of the CGST Rules, 2017. The court held that the circulars issued by the government cannot override statutory rules and emphasized the clarity of Rule 96 in facilitating IGST refunds.
In conclusion, the petitioner sought relief from the court to enforce their entitlement to IGST refund despite initial claims under higher duty drawback, arguing that statutory provisions and legal precedents support their position.
This summary encapsulates the legal complexities and arguments presented in the case regarding IGST refunds and duty drawbacks under GST regulations.
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