TMI Blog2019 (12) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in accordance with Section 16(3) of the IGST Act, 2017, paid by them on goods exported during the transitional period after introduction of GST Regime i.e. from 01.07.2017 to 30.09.2017. The factual narrative in the petition is that, export of goods from India is zero rated i.e. the Petitioners are exempted from payment of tax on the goods exported from India. The government provides various types of export incentives and refund mechanisms to ensure that exports are made duty and tax free. Prior to the introduction of GST regime in India, Petitioners were governed by Customs Act, 1962 read with Central Excise Duties and Service Tax Drawback Rules, 1995; Central Excise Rules, 2002; and Central Sales Tax Act, 1956 read with Central Sales Tax rules, 1957. Under the pre-GST regime, Petitioners used to issue FORM CT-1 and FORM ARE-1, for procuring excisable goods without payment of excise duty; and H FORM to avail exemption from payment of Sales Tax; Pertinently, a duty drawback scheme was available to them to neutralize the customs duty, central excise duty and service tax charged on any imported materials or excisable materials used as input services in the manufacture of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid provision, Petitioners awaited refund of IGST in their bank accounts. When the same was not credited, correspondence was initiated with Customs Department. Initially, the claim of IGST refund was not denied and it was in fact assured to them that the refund would be received by them in due course of time. However, despite repeated communication in the form of letters and mails written by the Petitioners to the Custom Departments of various state agencies, no action was taken. On the contrary, on 9.10.2018, Respondent No. 2 issued the Circular No. 37/2018 (hereinafter the impugned circular ), whereafter the Petitioners have been held disentitled to claim refund of the IGST. The relevant portion of the said circular reads as under: 3. It has been noted that exporters had availed the option to take drawback at higher rate in place of IGST refund out of their own volition. Considering the fact that exporters have made aforesaid declaration while claiming the higher rate of drawback, it has been decided that it would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback. There is no justification for reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same pertains to only Customs component and is available irrespective of whether the exporter has availed of Cenvat facility or not He argues that Petitioners opted for the drawback claim under column A inadvertently, as a mere technical glitch, due to confusion prevailing during the transitional phase. He submits that Respondents have failed to address their grievances, not withholding numerous representations made to them and now they are constrained to approach this court. 8. Respondent No. 2 in its counter affidavit has submitted that duty drawback scheme and zero rating of export under GST are mutually exclusive schemes for neutralization of separate input taxes on exported goods. It is further submitted that a clear and unambiguous option was provided to the exporters to either claim AIRs under Column A or claim tax neutralization under GST legislation and the Petitioners went with the former option and they cannot now turn around and claim benefit of the provision that was not availed in the first instance. 9. In rejoinder, Petitioners submitted that simultaneous availment of drawback of custom portion and refund of IGST paid on export of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t availed by the petitioner on account of higher rate of duty drawback and pay the balance of IGST payable to petitioner i.e., IGST minus higher rate of duty drawback already availed by the petitioner and avoid the additional burden of interest payment on IGST refund. 13. We have given due consideration to the contentions raised by the learned counsels for the parties. 14. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead of A for claiming drawback. Since the condition for not claiming IGST refund is not applicable to cases where duty drawback has been claimed under Column B, exporters would have received IGST refund also on mentioning B . Therefore, exporters did not have any benefit in claiming drawback under Column A. It is not pointed out by the Respondents that the Petitioners derived any undue advantage by their aforesaid mistake. On the contrary, it would result in causing loss for the value of the IGST paid on exports. By way of illustration, we take note of one such instance as pointed out by Mr. Bansal that if Steel Strips (HSN7211) are exported then whether duty drawback is claimed under Column A or Column B, the rate is 2%. However, rate of IGST on the said export is 18%. In such a situation under no circumstances it can be assumed that the exporters intentionally decided to claim duty drawback should forego IGST refund. Besides, if the petitioners have claimed and received only the customs duty portion of the drawback and element of IGST (earlier Central Excise Duty and Service Tax) was not included in the drawback rate, granting of IGST refund would not result in double neutr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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