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2019 (12) TMI 1268 - HC - GSTDuty Drawback - Refund of IGST - transitional credit - Vires Section 16 of the IGST Act, 2017 read with Section 54 of CGST Act, 2017 and Rule 96 of CGST Rules, 2017 - Circular No. 37/2018- CUSTOMS dated 09.10.2018 - HELD THAT:- Though, the challenge in the present petition is also to the vires of the circulars enumerated above, however, Petitioners are primarily concerned with the refund of IGST paid on goods exported by them during the transitional period. The Respondents’ concern is well founded that the Petitioners should not take undue advantage of the drawback scheme. The purpose behind impugned circular is to ensure that the exporters do not claim AIRs of duty drawback and simultaneously avail tax neutralization under GST as this would amount to exporter availing double benefits of neutralization of taxes. However, the fact remains that at no point of time, the petitioners declared that they would forego the claim of IGST refund. During the transitional period, Petitioners have inadvertently claimed benefit under a wrong provision, since there was lack of clarity with respect to the refund of IGST. Should we deny the benefit simply for this mistake when the cardinal rule is that taxes should not exported? Government would have to embrace initiatives that would help the taxpayers in the transformation to the new regime. This would require understanding the difficulties faced by the industry which would be crucial step for success of GST law. Instant case is one such example where Petitioners have been victim of technical glitches on account of confusion during transitional phase. We are thus of the view that taxpayers like the Petitioners should not be denied the substantive benefit of the IGST paid by them on exports. The Petitioners have enclosed the cost analysis which captures the denial of IGST refund causing severe financial crunch to the exporters business. The impact is significant. To us such an error, that is purely inadvertent and not intentional, should not come in the way of calming refund of IGST. The respondents have also been alive to the situation and in matters relating to technical glitches, they have constituted IT Redressal Grievance Committees to address the grievances of the taxpayers - there is no reason as to why the Petitioners should not be extended similar benefit. Since the Respondents have expressed their apprehension about double benefit of neutralisation of taxes, it would be appropriate that before issuing final directions, Respondents verify the extent of the duty drawback availed by the Petitioners and also whether they have availed duty drawback / CENVAT credit of Central Excise and Service Tax component in respect of the exports made by them. List on 27th April, 2020.
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