Bombay High Court Allows Refund of IGST Paid on Exported Goods Despite Claim of Higher Drawback Rate. Petitioner entitled to refund of IGST under Section 16(3)(b) of IGST Act read with Section 54 of CGST Act and Rule 96 of CGST Rules, as selection of higher drawback column does not disentitle refund.

High Court: Bombay High Court In Favour of Prosecution
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Case Note & Summary

The petitioner, Kunal Housewares Private Limited, exported stainless steel household articles in July, August, and September 2017. The petitioner paid IGST on the exported goods and claimed drawback by selecting column 'A' (higher rate) in the shipping bills. Under Section 16 of the IGST Act, exports are zero-rated supplies, and the exporter is entitled to a refund of IGST paid. The procedure for refund is governed by Section 54 of the CGST Act and Rule 96 of the CGST Rules, which treats the shipping bill as an application for refund. Despite filing GSTR-1 and GSTR-3B on time, the refund was not credited. The petitioner's custom house agent was orally informed that claiming higher drawback (column 'A') disentitled the petitioner to IGST refund. After a letter dated 13 March 2020, the respondents failed to act, leading to the filing of the writ petition. The court directed the respondents to consider the matter, and the Commissioner of Customs passed an order dated 6 October 2023 rejecting the refund claim. The petitioner challenged this order. The court held that the provisions for refund of IGST and drawback are independent. Section 16(3)(b) of the IGST Act, Section 54 of the CGST Act, and Rule 96 of the CGST Rules govern IGST refund, and there is no provision linking drawback selection to IGST refund eligibility. The court allowed the petition, quashed the order dated 6 October 2023, and directed the respondents to process the refund of Rs. 45,88,237/- with interest within eight weeks.

Headnote

A) Customs and GST - Refund of IGST on Export - Section 16(3)(b) IGST Act, Section 54 CGST Act, Rule 96 CGST Rules - Refund of IGST paid on zero-rated supply cannot be denied merely because the exporter claimed higher rate of drawback by selecting column 'A' in the shipping bill - Held that the provisions for refund of IGST and drawback are independent and the selection of drawback column does not affect entitlement to IGST refund (Paras 10-13).

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Issue of Consideration

Whether the petitioner is entitled to refund of IGST paid on exported goods despite having claimed higher rate of drawback by selecting column 'A' in the shipping bill.

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Final Decision

The petition is allowed. The order dated 6 October 2023 passed by the Commissioner of Customs is quashed and set aside. The respondents are directed to process the refund of IGST of Rs. 45,88,237/- along with interest as per law within eight weeks from today.

Law Points

  • Refund of IGST on zero-rated supply
  • Drawback and IGST refund are independent
  • Rule 96 CGST Rules
  • Section 16 IGST Act
  • Section 54 CGST Act
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Case Details

2024 LawText (BOM) (8) 269

Writ Petition No. 2215 of 2023

2024-08-26

G. S. Kulkarni, Firdosh P. Pooniwalla

Devashish K. Trivedi, Garvit Khandelwal for Petitioner; Jitendra B. Mishra, Ashutosh Mishra, Maya Majumdar, Rupesh Dubey for Respondents

Kunal Housewares Private Limited

The Union of India, Assistant Commissioner of Customs, Principal Chief Commissioner of Customs

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Nature of Litigation

Writ petition seeking refund of IGST paid on exported goods.

Remedy Sought

Refund of IGST amount of Rs. 45,88,237/- with interest.

Filing Reason

Respondents failed to refund IGST paid on exports despite the petitioner complying with all requirements.

Previous Decisions

Commissioner of Customs passed an order dated 6 October 2023 rejecting the petitioner's refund claim.

Issues

Whether the petitioner is entitled to refund of IGST paid on exported goods despite having claimed higher rate of drawback by selecting column 'A' in the shipping bill.

Submissions/Arguments

Petitioner argued that refund of IGST is governed by Section 16(3)(b) of IGST Act, Section 54 of CGST Act, and Rule 96 of CGST Rules, and the selection of drawback column does not affect entitlement to IGST refund. Respondents argued that the petitioner claimed higher drawback and therefore is not entitled to IGST refund.

Ratio Decidendi

The provisions for refund of IGST on zero-rated supplies and drawback are independent. Selection of higher drawback column in the shipping bill does not disentitle the exporter to refund of IGST paid on exported goods. The refund of IGST is governed by Section 16(3)(b) of the IGST Act, Section 54 of the CGST Act, and Rule 96 of the CGST Rules, and there is no provision linking drawback selection to IGST refund eligibility.

Judgment Excerpts

The provisions for refund of IGST and drawback are independent. Selection of higher drawback column does not disentitle the exporter to refund of IGST paid on exported goods.

Procedural History

The petitioner exported goods in July-September 2017 and paid IGST. Refund not credited. Letter dated 13 March 2020 to respondent no.2. Filed writ petition. Court on 25 September 2023 directed respondents to consider. Commissioner passed order dated 6 October 2023 rejecting refund. Petitioner amended petition to challenge that order. Heard finally on 1 March 2024, judgment on 26 August 2024.

Acts & Sections

  • Integrated Goods and Services Tax Act, 2017: Section 16
  • Central Goods and Services Tax Act, 2017: Section 54
  • Central Goods and Service Tax Rules, 2017: Rule 96
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