The Bombay High Court addressed a petition regarding the denial of an Integrated Goods and Services Tax (IGST) refund for exported goods. The petitioner, who had exported stainless steel articles in 2017, sought a refund of IGST paid on these exports, which were categorized as "Zero Rated Supplies" under Section 16 of the IGST Act. The refund was denied by the customs authorities on the grounds that the petitioner had claimed a higher rate of drawback. The Court ruled in favor of the petitioner, holding that the refund of IGST paid on exported goods, as stipulated under Section 16(3)(b) of the IGST Act and Rule 96 of the CGST Rules, cannot be denied solely because a higher rate of drawback was claimed.

1. Introduction

The case involves a petition filed by an exporter who sought a refund of IGST paid on goods exported in 2017. The petitioner claimed that the IGST paid on "Zero Rated Supplies" should be refunded as per the provisions of the IGST Act, CGST Act, and the relevant rules.

2. Petitioner's Claims

• The petitioner exported stainless steel articles in July, August, and September 2017.
• IGST was paid on these exports, and the petitioner also filed the required GSTR-1 and GSTR-3B forms on time.
• The petitioner claimed a higher rate of drawback at 9% by selecting Column "A" while generating the shipping bills, leading to the denial of the IGST refund by the customs authorities.

3. Legal Provisions Cited

• Section 16 of the IGST Act: Defines "Zero Rated Supplies" and stipulates that exporters are eligible for a refund of IGST paid.
• Section 54 of the CGST Act: Outlines the procedures for claiming refunds, including those related to exports.
• Rule 96 of the CGST Rules: States that the shipping bill serves as an application for refund, eliminating the need for a separate application.

4. Respondents' Argument

The customs authorities argued that since the petitioner claimed a higher drawback rate, they were not eligible for an IGST refund. This was based on the interpretation that claiming a higher rate of drawback disqualifies the exporter from receiving an IGST refund.

5. Court's Findings

• The Court found that Section 54(3) of the CGST Act restricts the refund of unutilized input tax credit when a higher drawback rate is claimed, but this does not apply to IGST refunds on exported goods.
• The Court held that Section 16(3)(b) of the IGST Act, along with Rule 96 of the CGST Rules, specifically governs the refund of IGST on exported goods, and the petitioner's claim should not be denied on the grounds of claiming a higher drawback.

6. Conclusion

The Bombay High Court ruled that the petitioner's refund of IGST on exported goods cannot be withheld or denied based on the claim of a higher rate of drawback. The Court directed the customs authorities to refund the IGST amount claimed by the petitioner.

7. Implications

This judgment clarifies the distinction between the refund of unutilized input tax credit and the refund of IGST paid on exported goods, providing relief to exporters who may have claimed a higher rate of drawback.