TMI Blog2021 (11) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... non-committal stand of the respondents in the counter indicating a time frame for completion of the verification in respect of L2 supplier also cannot be countenanced, since it is not the duty of the exporter, like the petitioner, to get such verification done, more so, when there is no such prescription to cause verification by the exporter, like the petitioner, before purchasing any goods from its supplier. The stand of the respondents in not completing the exercise, even if it is required to be undertaken at their end, is contrary to the instructions contained in internal circular No.20/16/07/2020-GST, dt.20.05.2020, issued by the Board wherein the Board had made changes to the SOP dt.23.01.2020 for verification of IGST refunds and specified that in future, all verifications are to be completed and report sent to the 5th respondent within a maximum period of three weeks of receipt of request for verification. The action of the respondents, and in particular the 2nd respondent, in not granting refund of IGST paid by the petitioner on exports made during the period - 15.02.2021 to 21.05.2021, in a sum of ₹ 14,78,99,959/-, cannot be held to be valid and also the non-grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , once both the export general manifest and valid return in Form GSTR 3 or Form GSTR 3B, as the case may be, has been filed; that in terms of Rule 91 of the CGST Rules, a provisional refund to the extent of 90% of the amount claimed on account of zero rated supplies had to be given within seven days from the date of acknowledgment of complete application claiming refund, unless and until the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim of refund relates, been prosecuted for any offence under the CGST Act. 5. It is also contended that on petitioner filing Shipping Bill No.9221484, dt.09.03.2021, the Deputy Commissioner of Customs, ICD, Sanathnagar, Hyderabad, issued letter dt.10.03.2021 informing the petitioner that the system has given an alert for 100% examination for their export of goods to China and the refund scroll is suspended; that the petitioner was intimated to submit Annexure - A with relevant information to the jurisdictional CGST authorities for further necessary action; that in compliance of the above letter, petitioner submitted details to the jurisdictional CGST authorities, vide its lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questing the said authority to expedite the formalities and remove the system alert and advise the custom authorities to release IGST/Drawback refund, since complete verification was done before the CGST authorities and a verification report was also submitted. The petitioner also brought to the notice of the authorities that it is an MSME unit, and non-grant of refund of IGST paid is causing blockage of working capital resulting in the petitioner facing severe financial constraints. 9. A counter-affidavit has been filed by the 3rd respondent. 10. It is contended by the respondents that the 5th respondent is the Apex Body under the 1st respondent for data analysis and risk management; as large number of cases relating to fake input tax credit (ITC) have been detected since the roll out of GST, among which one most prominent modus oprandi is to avail fake ITC and seek refund of IGST paid, after export of goods on payment of IGST, measures to safeguard Government revenue have been taken and a risk mitigation strategy has been made to weed out fraudulent exporters from genuine ones; that the said exercise includes identification of risky exporters and the corresponding suppliers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. 14. We have taken note of the submissions made by the learned counsel for the petitioner; the learned Assistant Solicitor General and Sri B.Narasimha Sarma, learned Senior Standing Counsel for Central Taxes. 15. Section 16 of the IGST Act deals with zero rated supply covering export of goods or services or both. Sub-section (2) of Section 16 provides for availing input tax credit for making zero rated supplies. Sub-section (3) of Section 16 provides for a registered person making zero rated supplies eligible to claim refund of integrated tax paid on supply of goods or services, if such supply of goods or services is made on payment of integrated tax; and that such refund of IGST paid is governed by provisions of Section 54 of the CGST Act. 16. In the facts of the present case, it is not in dispute that the petitioner had effected zero rate supplies and would be eligible to claim refund of such Integrated tax paid on goods or services or both under Section 16(3)(b) of the IGST Act. 17. By the counter affidavit filed, the respondents have sought to justify their action of non-refund of IGST paid, on the ground of system alert generated on 01.03.2020, requiring to exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of suppliers of the petitioner up to two levels is to be accepted, since, the proportion of such suspicious suppliers, the respondents ought to have granted provisional refund to the extent of 90% as provided under Section 54(6) read with Rule 91 of the CGST Rules, which the respondents failed to do. Further, it is also to be seen that in the verification report submitted with regard to L1 suppliers submitted by the jurisdictional authorities to the 5th respondent, none of the L1 suppliers of the petitioner, from whom it had purchased goods by paying applicable taxes under the GST law, are found to be suspicious. If the suppliers of the petitioner are found to be genuine, the petitioner is entitled to claim credit of the taxes paid on such purchases effected. 22. The provisions of the CGST Act and the IGST Act do not mandate the petitioner to verify the genuineness of the suppliers of its supplier, inasmuch as enough safeguards/mechanism are provided under the Act to recover the taxes, if not paid or wrong credit is availed by the petitioner s supplier or supplier s supplier. 23. Inasmuch as no discrepancy has been found with regard to the suppliers of the petitioner, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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