The Delhi High Court directed to grant a refund of Integrated Goods and Service Tax (IGST) during a transitional period after deducting the differential amount of duty drawback.
Intec Export India Private Limited, the petitioner prayed to declare that paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the Notification No.131/2016Cus.(N.T.) dated 31.10.2016 (Annexure P-4) [as amended by Notification No.59/2017-Cus. (NT) dated 29.06.2017 (Annexure P-5) and Notification No.73/2017-Cus. (NT) dated 26.07.2017 (Annexure P6)] are (i) ultra vires Section 16 of the Integrated Goods and Service Tax (IGST) Act, 2017 read with Section 54 of CGST Act, 2017 and Rule 96 of CGST Rules, 20177, & (ii) unconstitutional and violative of Article 14, 19 and 21 of the Constitution of India.
Further to direct Respondent Authorities to grant a refund of IGST, amounting to Rs.7,98,444/-, paid in respect of goods exported by the Petitioner during the Transitional Period about which duty drawback rates were higher in Column A than in B, after deducting the differential amount of duty drawback, i.e. grant refund of Rs.63,039/- [i.e. Rs.1,07,551 – (Rs.57,960 – Rs.13,444)], along with appropriate interest on such refund from the date of the shipping bill till the date of actual refund.
The petitioner is a merchant exporter and is engaged in the business of exporting goods out of India. The petitioner was aggrieved by the denial of refund of Integrated Goods and Service Tax (‘IGST’) paid by the petitioner on goods exported out of India during the transition period after the rollout of the GST Regime (from 01.07.2017 to 30.09.2017).
A taxpayer can be denied a refund of IGST in respect of the goods exported by the impugned notifications and the circular dated 09.10.2018 if the taxpayer had claimed a higher duty drawback. The aforementioned notifications prescribe two rates of duty drawback with respect to the specified goods. The higher rate, as specified in column ‘A’, covers duty drawback to compensate the taxpayer in respect of customs duty, excise duty, service tax and other indirect taxes. The lower rate of drawback in column ‘B’ is to neutralize the effect of custom duty paid on inputs.
Under the scheme of the notifications and the circular, if an exporter claims drawback at higher rates, it would not be allowed a refund of IGST. The petitioner has been denied a refund of IGST as it had claimed duty drawback at the rates specified in Column ‘A’.
In the case of M/s Amit Cotton Industries, the writ petitions are allowed directing the Respondent authorities to grant a refund of IGST paid on the goods exported by the Petitioners during the transitional period, after deducting the differential amount of duty drawback, if the said differential amount has not already been returned by the petitioner, within twelve weeks along with appropriate interest at the rate of 7% p.a. on such refund from the date of the shipping bill till the date of actual refund.
In light of various decisions, the division bench of Justice Vibhu Bakhru and Justice Amit Mahaj directed the respondents to process the petitioner’s claim for refund along with applicable interest by the law.
It was clarified that the concerned officer is also entitled to verify the extent of duty drawback availed by the petitioner and other relevant facts for processing the petitioner’s claim for refund. Needless to say, the concerned officer is also required to make the requisite adjustments where necessary in respect of duty drawback while processing the petitioner’s refund claim.
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