M/S Amit Cotton Industries Throu Partner, Veljibhai Virjibhai Ranipa vs. Principal Commissioner Of Customs

Held

The Court held that the writ-applicant (petitioner) is entitled to claim the refund of the IGST paid on the exported goods. The Court found that Rule 96 of the CGST Rules, 2017, is clear and that the shipping bill filed by an exporter of goods is deemed to be an application for refund of Integrated Tax paid on goods exported out of India. The Court also noted that a circular dated 9th October 2018, which the respondents might have implicitly relied upon, was issued after the export took place (July 2017) and dealt with drawback provisions, not IGST refunds. Therefore, this circular could not justify withholding the IGST refund. The Court directed the respondents to immediately sanction the refund of IGST paid on the exported goods. Additionally, the Court ordered the respondents to pay simple interest at the rate of 7% per annum on the refund amount from the date of the shipping bills until the date of actual refund.

Facts

The petitioner, M/s Amit Cotton Industries, engaged in exporting cotton bales, paid IGST on these zero-rated supplies. They sought a refund of the IGST paid, amounting to Rs. 19,05,120/-, for exports made in July 2017. The petitioner contended that as per Section 16 of the IGST Act and Rule 96 of the CGST Rules, 2017, the shipping bill should be deemed an application for refund. The respondent authorities initially withheld the refund, verbally informing the petitioner that it was due to a higher drawback claim (1%) compared to the permissible rate. The petitioner subsequently returned the excess drawback (0.85%) along with interest to resolve this issue. Despite this, the refund remained unsanctioned, prompting the petitioner to file this writ application seeking the refund and interest.

Key Issues

1. Whether the petitioner is entitled to a refund of IGST paid on zero-rated supplies (exports) under Section 16 of the IGST Act, 2017, read with Section 54 of the CGST Act, 2017, and Rule 96 of the CGST Rules, 2017, despite having claimed a drawback on the exported goods? Petitioner's Arguments: The petitioner argued that they are entitled to the IGST refund as per the provisions of the IGST Act and CGST Rules. They emphasized that the shipping bill itself serves as an application for refund. They also contended that the issue of drawback had been resolved by returning the excess amount with interest, and no legal provision justified withholding the IGST refund on this ground. They relied on Rule 96 of the CGST Rules, 2017, which deems the shipping bill as a refund application. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue. However, the facts indicate the revenue's initial stance was that the refund was withheld due to the petitioner claiming a higher drawback rate.