Petitioner | Phoenix Contact India Private Limited |
Respondent | Commissioner Of Customs (Exports), New Delhi |
Decision by | Delhi High Court
|
Date of order or Judgement | 4-May-2022 |
Citation no. |
2022 (5) GSTPanacea 38 HC Delhi W.P.(C) 13152/2019 |
Hon’ble Judge | Justice Rajiv Shakdher, Justice Poonam A. Bamba |
Decision | In Favour of Assessee |
Zero Rated Supplies-The petitioner in terms of Section 16 of the IGST Act read with Section 54 of the CGST Act, 2017 is clearly entitled to refund of IGST. Rule 96 of the CGST Rules also clearly provides for refund of IGST in respect of zero rated supplies. Interest will be paid at the rate of 7% (simple) per annum, albeit from 25.10.2018
Zero Rated Supplies-Facts of the Case
Zero Rated Supplies-The petitioner is a manufacturer and exporter of electrical connectors falling under Chapter 85 of the Central Excise Tariff.
The petitioner through this writ petition claims refund of IGST against two shipping bills bearing nos. 7837037, dated 05.08.2017 and 8697421, dated 16.09.2017.
It is not disputed that the petitioner had paid IGST i.e., local tax @ 28% of the export value.
The refund amount claimed against the two shipping bills i.e., bill no. 7837037 is Rs. 8,00,621/-, while against shipping bill bearing no. 8697421, the refund claimed is Rs. 8,25,349/-.
These refunds are claimed under Section 16 of the IGST Act, 2017 read with Rule 96 of the Central Goods and Service Tax (CGST) Rules, 2017.
It appears that the petitioner by oversight had claimed duty drawback by referring to the code no. 853699“A” instead of 853699“B”. Resultantly, the respondent/revenue granted duty drawback @ 2% of the FOB (free on board) value of exports amounting to Rs. 1,17,162/-, and not the IGST paid on the goods exported.
Argument Before Court
Zero Rated Supplies-Petitioner’s Contention
Zero Rated Supplies-The petitioner having realised the mistake applied for correction. The respondent/revenue permitted the correction to be made upon payment of fee and penalty amounting to Rs.4,000/-, in respect of each of the aforementioned two shipping bills.
Therefore, the petitioner was allowed to correct the duty drawback code; the correct code being 853699“B”, as noted above.
Despite the correction having been permitted, the refund of IGST was not granted to the petitioner.
The petitioner has remained engaged with the respondent in this regard since October, 2018. Because there was no movement in the matter, the petitioner was propelled to file the instant petition.
Zero Rated Supplies-Respondent’s Argument
Zero Rated Supplies-The respondent, seeks to place reliance on the CBIC Circular dated 09.10.2018. In particular, respondent has relied upon paragraph 3 of the said circular.
For the sake of convenience, the said paragraph is extracted hereafter:
“3. It has been noted that exporters had availed the option to take drawback at higher rate in place of IGST refund out of their own volition. Considering the fact that exporters have made aforesaid declaration while claiming the higher rate of drawback, it has been decided that it would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback. There is no justification for re-opening the issue at this stage.”
Delhi High Court Held
Zero Rated Supplies-The Hon’ble High Court is of the view that the writ petition would have to be allowed. The refund would have to be ordered and interest would also have to be granted at the rate indicated hereafter.
There is no dispute that the petitioner has paid the IGST.
The petitioner in terms of Section 16 of the IGST Act read with Section 54 of the CGST Act, 2017 is clearly entitled to refund of IGST. Rule 96 of the CGST Rules also clearly provides for refund of IGST in respect of zero rated supplies.
Argument advanced on behalf of the respondent is concerned, which is, that because the petitioner claimed duty drawback at higher rate, and, therefore, it cannot be permitted now to seek refund of IGST, is factually incorrect.
The Schedule, appended to the notification dated 31.10.2016 shows that the duty drawback against tariff entry no. 853699 with respect to Column A and Column B is identical i.e., 2%. Therefore, paragraph 3 of the circular dated 09.10.2018 will have no application in the instant case.
The petitioner had sought amendment of the duty drawback code, which was permitted upon payment of Rs. 4,000/- as fee and penalty in respect of each of the subject shipping bills. This amendment was permitted in October, 2018.
The respondent/revenue is directed to refund IGST against the aforementioned shipping bills.
Moreover, having regard to the fact that the necessary fee and penalty was paid as far back as on 24.10.2018, interest will be paid at the rate of 7% (simple) per annum, albeit from 25.10.2018, when correction was effected by the respondent. [Amit Cotton Industries and the judgment of this Court rendered in W.P.(C) No.2694/2019, titled TMA International Pvt. Ltd. & Ors. v. Union of India and Anr., dated 26.03.2021.]
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