M/S Vimla Food Products vs. Union Of INDIA

Held

The Court held that the petitioner is entitled to the refund of IGST paid on the zero-rated supplies. The Court reasoned that the inadvertent claim of a higher drawback, with the differential amount being returned, should not disentitle the petitioner from claiming the IGST refund. The Court relied heavily on the binding precedent of *Amit Cotton Industries (Supra)*, which was affirmed by the Supreme Court, establishing that the claim for IGST refund on exports is independent of any claim for drawback. The Court also noted that the respondent authorities had failed to act in accordance with this settled legal position, which was deemed irrational and arbitrary, citing *E.I. Dupont India (P) Ltd. Vs. Union of India* to emphasize the need for authorities to abide by higher judicial pronouncements. The Court directed the respondent authorities to immediately sanction the refund of IGST. Furthermore, the Court directed the payment of interest at 9% per annum on the IGST refund amount from the date the refund bills were raised until actual payment, with a further 9% interest if payment is delayed beyond eight weeks from the order's receipt.

Facts

The petitioner, M/s Vimla Food Products, sought a writ of mandamus from the Gujarat High Court directing the respondent authorities to sanction the refund of IGST amounting to Rs. 12,00,800/- for goods exported as 'Zero Rated Supplies' vide three shipping bills dated 28.07.2017, 02.08.2017, and 07.08.2017. The petitioner had inadvertently claimed a higher rate of drawback (1%) by selecting option "1201A" instead of the correct lower rate (0.15%) by selecting option "1201B" while generating the shipping bills. The differential drawback amount was returned, but the IGST refund remained unsanctioned despite multiple representations and emails. The petitioner argued that they had complied with statutory requirements, including filing GSTR-1 and GSTR-3B returns, and that the shipping bills should be deemed as refund applications. The Customs department had sanctioned amendments to the shipping bills.

Key Issues

1. Whether the petitioner is entitled to a refund of IGST paid on 'Zero Rated Supplies' despite an inadvertent claim of a higher drawback amount, considering the differential drawback was returned and amendments to shipping bills were sanctioned? Petitioner's Arguments: - The petitioner contended that the supplies were 'Zero Rated Supplies' under Section 16 of the IGST Act, and they had an option to claim a refund of IGST paid as per Section 16(3)(b) of the IGST Act or Section 54 of the CGST Act. - They argued that Rule 96 of the CGST Rules, 2017, deems shipping bills as refund applications, and they had filed valid returns (GSTR-3/GSTR-3B). - The mistake in claiming a higher drawback was inadvertent, and the differential amount was returned. They relied on the High Court's decision in *Amit Cotton Industries (Supra)*, which was upheld by the Supreme Court, holding that IGST refund is admissible even if drawback is claimed. - They also cited *E.I. Dupont India (P) Ltd. Vs. Union of India* to disapprove arbitrary actions of authorities ignoring binding judicial pronouncements. Revenue's Arguments: - The judgment does not record specific arguments made by the revenue or state authorities in opposition to the refund claim.