G NXT Power Corp Vs Union of India

Heard Mr. John Varrghese for petitioners and Sri P.R. Sreejith for respondents.

2. The petitioners in these two writ petitions though are distinct entities, as the writ prayers are substantially same, the writ petitions are disposed of by this common judgment. The counsel have treated W.P.(C) No.2981 of 2019 as the lead writ petition and have made submissions by referring to the materials in W.P.(C) No.2981 of 2019. It is further stated that consideration of circumstances in lead writ petition would be sufficient for disposing of the other writ petition as well.

3. The petitioner is an exporter. The petitioner through Exts. P3 and P4 have exported goods. It is relevant to note that GST has been introduced in the country with effect from 01.07.2017. The goods exported comes under IGST. The petitioner has been granted drawback of Central Excise component and denied IGST paid as cash. The petitioner by filing the instant writ petition contends that he is entitled for refund of IGST paid during the transition period as per Ext.P6. According to petitioner, the amended claim for refund could be submitted in terms of Section 149 of Customs Act, 1962. The denial of refund of IGST on a transaction which is otherwise zero-rated transaction is illegal, contrary to Article 265 of Constitution of India and prays for appropriate directions for refund of the IGST paid by the petitioner. The petitioner refers to and relies on the judgement in M/s. Amit Cotton Industries through Partner, Veljibhai Virjibhai, Ranipa Vs. Principal Commissioner of Customs1 and the operative portion reads thus:

“ 26. Rule 96 of the CGST Rules provides for a deeming fiction. The shipping bill that the exporter of goods may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India. Section 54 referred to above should be read along with Rule 96 of the Rules. Rule 96(4) makes it abundantly clear that the claim for refund can be withheld only in two circumstances as provided in sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017.

27. In the aforesaid context, the respodnents have fairly conceded that the case of the writ-applicant is not falling within sub-clauses (a) and (b) respectively of clause (4) of Rules 96 of the Rules, 2017. The stance of the department is that, as the writ applicant had availed higher duty drawback and as there is no provision for accepting the refund of such higher duty drawback, the writ-applicant is not entitled to seek the refund of the IGST paid in connection with the goods exported, i.e. ‘zero rated supplies’.

28. If the claim of the writ-applicant is to be rejected only on the basis of the circular issued by the Government of India dated 9th October 2018 referred to above, then we are afraid the submission canvassed on behalf of the respondents should fail as the same is not sustainable in law.

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30. Rule 96 is relevant for two purposes. The shipping bill that the exporter may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India and the claim for refund can be withheld only in the following contingencies:

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of subsection (10) or sub-section (11) of Section 54; or

(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of Customs Act, 1962.

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34. We take notice of two things so far as the circular is concerned. Apart from being merely in the form of instructions or guidance to the concerned department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Over and above the same, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents. We are of the view that Rule 96 of the Rules, 2017, is very clear.

35. In view of the same, the writ applicant is entitled to claim the refund of the IGST.

36. In the result, this writ-application succeeds and is hereby allowed. The respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e., ‘zero rated supplies’, with 7% simple interest from the date of the shipping bills till the date of actual refund.”

4. The learned Standing Counsel appearing for respondents does not dispute the fact that the subject transaction in fact is with effect from 01.07.2017, come  under Section 16 of IGST Act and are zero-rated. It is also not disputed that the voluntary or erroneous payment of IGST is required to be refunded to petitioner. The objection pointed out by Sri Sreejith is that the petitioner has already drawn or availed the higher rate of duty drawback and therefore while ordering refund of IGST the petitioner is required to refund the higher rate of duty drawback already availed by the petitioner with interest. Adv. John Varrghese by way of reply submits that the respondents if insist upon refund of higher rate of duty drawback by the petitioner with interest, the respondents are also required to pay interest to petitioner from the date on which the petitioner requested for refund of IGST. After hearing the counsel on the adjustment, the Court has suggested refund of IGST after adjusting the higher rate of duty drawback availed by the petitioner without refunding IGST amount. The counsel have consented to disposing of the writ petition by this order:

a) The respondents are given liberty to adjust the amount already availed by the petitioner on account of higher rate of duty drawback and pay the balance of IGST payable to petitioner within six weeks from the date of receipt of a copy of this judgement.

b) The respondents are directed to pay the balance amount i.e., IGST minus higher rate of duty drawback already availed by the petitioner within the time granted by this Court and avoid the additional burden of interest payment on IGST refund. The respondents, if commit default in payment of balance amount as directed by this judgement, the respondents will be obligated to pay interest @ 7% together with balance amount payable from the date on which a request for refund is made by the petitioner till the date of payment.

Having regard to the above discussion W.P.(C) No.2457 of 2019 disposed of on the same terms and conditions as noted above.