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TMI Blog2024 (4) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... or short "the said period"). The petitioner's application for refund has been rejected by the impugned order dated 11 July, 2022, which according to the petitioner, is per se illegal on several counts. Further even the refund application filed by the petitioner under Section 54 of the Central Goods and Services Tax Act, 2017 (for short, "CGST Act") being rejected by respondent no. 4 is assailed by the petitioner. 3. It is the case of the petitioner that the IGST amount has been wrongly withheld by the respondent due to non-alignment of export data between the ICEGATE Portal maintained by the Customs Department and the Common Portal (the Goods and Services Tax Electronic Portal maintained under section 146 of the CGST Act). The petitioner, in these circumstances, also assails the legality of Circular dated 18 July, 2019 titled "Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export promotion". The substantive prayers as made in the petition are prayer clauses (a) to (e) which read thus: "A. Declare that the impugned circular dated 18 July, 2019 being Reference No. CBEC-20/06/03/2019-GST and titled "Clarification in respect of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trading and export of 'rough diamonds' and 'cut and polished diamonds' (for short "said goods"). Its trading operations are conducted from Mumbai and manufacturing operations from Gujarat, since past several years. It also enjoys a status of a Four Star Export House under the Foreign Trade Policy 2015-2020 (FTP). The exports of the goods are undertaken by the petitioner on "Consignment/Approval/Exhibition basis" as contemplated under paragraph 4.53 of the FTP, which provides for the export of diamonds on consignment basis subject to the compliances and procedures as laid down in the Handbook of Procedures and Customs Rules and Regulations issued by the Ministry of Commerce and Industry, Government of India and more particularly as provided for in paragraph 4.93 of the Handbook. 5. In the context in hand, the statutory mechanism, which the petitioner describes to be relevant for its trade, is to the effect that, the goods in question were being exported by the petitioner on "Consignment basis and Exhibition basis" to a foreign consignee, along with the issuance of a Shipping bill which provided the details of the goods so exported. Once such goods so exported crystallize wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had accordingly exported goods to various foreign consignees between the period July, 2017 to December, 2018 and the corresponding shipping bills were raised for each such export consignment. 10. On the approval of the goods sent on consignment basis, the petitioner from time to time and regularly declared such confirmation on the 'Common Portal' and paid the proportionate amount of IGST thereon through credit available to the petitioner. Forms GSTR-3B and GSTR-1 which contain details of such confirmed sales were also filled and uploaded on the Common Portal on a regular basis. Accordingly, for the said period (July 2017 to December, 2018) the petitioner has paid IGST to the tune of Rs. 5,26,80,126/- the details of which are set out in a chart at Exhibit "G" to the petition. 11. The petitioner contends that once the re-imported goods entered the territory of India, the same were declared and examined by the Customs Department and the relevant Bills of Entry were prepared of such re-imported goods. The petitioner states that it had diligently ensured all the compliances with all the relevant provisions concerning Customs and Goods and Service Tax, and had ensured that it had all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral course of business, the invoice on confirmed goods, would be of a date subsequent to the date of the shipping bill (being the date of the export of goods on consignment basis) as well the Export General Manifesto (EGM) Data, maintained by the Custom Department. The petitioner contends that it was hence being deprived of making an application for refund of IGST. 15. The petitioner would further contend that neither the amount of IGST paid to the respondents was disputed by the respondents, nor the actual quantum of exports made were being disputed by respondent nos. 5 and 6. However, due to mere non-coordination of data between the two authorities, the petitioner was subjected to unnecessary ordeal in getting the refunds. The petitioner has contended that the entire process of refund of IGST is based on the coordination of data between the two systems i.e. GST Common Portal and the ICEGATE Portal. It is contended that hence, withholding of the refund legitimately entitled to the petitioner due to such confusion was clearly in violation of the petitioner's legal rights to avail the refund as well as of the procedure recognized by law. This more particularly as sub-rule (2) of Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort promotion - reg.". Such circular provided that the goods sent by exporters on 'exhibition/consignment' basis would not be considered as 'zero rated supply' as the tax was paid on such goods, after the issuance of the shipping bills. Hence, the IGST paid by the petitioner on the confirmed goods would not be eligible for refund by submission of refund bills. 19. It is the petitioner's case that for the first time the respondents had issued such instructions/norms as prior to this, the petitioner was under a genuine and bona fide impression, that the shipping bill itself would be considered as an application for refund. The petitioner has stated that the said circular indicated that only those exports which were not confirmed within six months from the date of the shipping bill were not eligible for benefit as "zero rated supply". 20. The petitioner hence contends that the circular was illegal as it narrowed down and limited the scope of Section 16 and the provisions of the Act and the rules made thereunder. It is contended that even the Act does not contemplate or provide any such limitations, hence the circular could not limit the application of the Act. For such reason, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner fell within the scope of 'zero rated supply' and further advised the petitioner to file an appropriate application for refund under Section 54 of the CGST Act. 25. In the above circumstances, the petitioner being helpless and without prejudice to its rights and contentions and having collected and collated all the documents from its offices in Mumbai and Surat preferred an application for refund on 28 February, 2022. Also a Deficiency Memo dated 12 March, 2022 was communicated to the petitioner. Such defects were also rectified and the refund applications were filed afresh on 30 April, 2022. 26. To the petitioner's surprise, a communication dated 15 June, 2022 was received by the petitioner from respondent no. 4 recording that the claim of the petitioner for refund of IGST could not be made under Section 54 and hence, the same was rejected. Further respondent no. 4 also claimed that the claim of the IGST paid by the petitioner to the tune of Rs. 72,21,150/- was rejected as time barred. It is thus contended by the petitioner that a substantial sum of money i.e. Rs. 5,26,80,126/- paid towards IGST was entitled to be refunded, the retention of such refund amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the petitioner's case that admittedly, the petitioner had paid IGST on such transactions exercising an option provided by the respondents, on which IGST was not payable, thereby becoming entitled for refund of the said amounts. Also the respondents had accepted such IGST and since almost last five years, refund was not being processed. 30. The petitioner has also contended that it is not the case of the respondents that the petitioner was liable to pay the sum of Rs. 5,26,80,126/- as IGST or that any sum was payable by it with respect to the said invoices. However, under one pretext or the other, citing mechanism errors having applied under the incorrect category, the refund amounts payable to the petitioner were being withheld unlawfully, and without any reason acceptable in law. It is contended by the petitioner that the impugned action of the respondents is in the teeth of the provisions of Article 265 of the Constitution of India. It is on such backdrop, the present petition has been filed praying for the reliefs as noted by us above. 31. Learned counsel for the petitioner has made detailed submissions on the case of the petitioner which we have noted hereinabove to conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 5,26,80,126/-. It is stated that the petitioner's application for refund as filed on 30 April, 2022 was time barred, even considering the Covid relaxation. It is contended that as per the Circular dated 15 November, 2017, the Deputy Commissioner was empowered to sanction refund under Section 54(3) of CGST Act. It is next contended that in view of the provisions of sub-section (10) of Section 54, a registered person may claim refund of any unutilized input tax credit at the end of any tax period subject to sub-sections (1) and (2). In such context, it is contended that the petitioner having exported the goods on payment of duty, the refund cannot be processed under section 54 of the CGST Act but would be covered under Rule 96A of the CGST Rules, 2017 which has to be dealt with by the customs authorities. It is thus contended that the Deputy Commissioner, CGST and Central Excise is not the refund sanctioning authority, as the export has been made with payment of duty. However, it is not denied that the refund applications of the petitioner were rejected by the Deputy Commissioner, Division-IV on the ground of being time barred for the reason Section 54(1) of CGST Act permits refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m/application was time barred. It is, hence, submitted that respondent no. 6 has no role to play in the sanctioning or rejecting of the IGST refund. It is stated that respondent no. 6 is not the Competent authority to sanction or reject the IGST claim. It is reiterated that respondent no. 4 had rejected the IGST refund on the ground that the date of filing IGST refund claim application of the petitioner was beyond the prescribed limitation of two years. It is hence contended that for such reasons the petition needs to be dismissed. 35. Mr. Jitendra Mishra, learned counsel for the respondents, has made submissions referring to the reply affidavits. He would submit that the action of the department ought not to be faulted and for the reasons as set out in the reply affidavit(s), the petitioner is not entitled for the refund amount. He has placed reliance on the decision of this Court in M/s. Cummins Technologies India Private Limited vs. Union of India & Ors. Writ Petition No. 4193 of 2022 dated 28 August, 2023 to contend that in the said case the Court had not entertained the proceedings and in similar situation had held that the petition was barred by limitation, as the party cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the petition to challenge other orders rejecting the refund applications. 38. It is on the above backdrop we have heard learned counsel for the parties. We have also perused the record. 39. The question which arises for consideration in the present proceedings is as to whether the petitioner at the relevant time, on presentation of the shipping bills in regard to the confirmed sales, was entitled to refund of the IGST amounts, paid on the goods in question, subject matter of the exports as undertaken by the petitioner for the period July 2017 to December, 2018, which is stated to be an amount of Rs, 5,26,80,126/- along with interest. 40. Some of the undisputed facts are required to be noted: It is not in dispute that for the period July, 2017 to December, 2018, the petitioner on 'consignment basis/exhibition basis', had exported the goods in question. The petitioner had exported goods to various foreign consignees during the said period and the corresponding shipping bills were raised for each such consignment sent. It also appears to be not in dispute that upon the subsequent approval of the goods exported from time to time, the petitioner had declared such confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner on the common portal and proportionate amount of IGST through the credit available with the petitioner was paid. Also Forms GSTR-3B and GSTR-1 which contain the details of such confirmed sales were also filled and uploaded on common portal on regular basis. All such details clearly indicate that the petitioner had paid an amount of Rs. 5,26,80,126 for the period July, 2017 to December, 2018. 44. Thus, it is not in dispute that the re-imported goods, when they entered the territory of India, the same were declared and examined by the Customs Department and the relevant bills of entry were prepared of such re-imported goods. In regard to such exported and re-imported goods, all the provisions of Customs Act as also the Goods and Service Tax were followed and the petitioner had ensured that it had all relevant documentary evidence to substantiate its claim for refund. This more particularly for the reason that Rule 96 and Rule 96A entitled the petitioner to seek refund of the amount of IGST paid by it, as such rules ordain that the shipping bills itself would be treated as refund application. 45. Hence, the aforesaid factual position and the consequences Rule 96 and Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the information in Table 6A furnished under the first proviso shall be auto-drafted in Form GSTR-1 for the said tax period. (3) Upon the receipt of the information regarding the furnishing of a valid return in Form GSTR-3-B from the common portal, the system designated by the Customs or the proper officer of Customs, as the case may be, shall process the claim of refund in respect of export of goods and an amount equal to the Integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities. (4) The claim for refund shall be withheld where,- (a) a request has been received from the jurisdictional Commissioner of Central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or (b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962, or (c) The Commissioner in the Board or an officer authorized by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-rule, the export as allowed under bond or Letter of Undertaking shall be withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the provisions of section 79. (4) The export as allowed under bond or Letter of Undertaking withdrawn in terms of sub-rule (3) shall be restored immediately when the registered person pays the amount due. (5) The Board, by way of notification, may specify the conditions and safeguards under which a Letter of Undertaking may be furnished in place of a bond. (6) The provisions of sub rule (1) shall apply, mutatis mutandis, in respect of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated tax." 46. Thus, there cannot be a denial that Rule 96 read with Rule 96-A would be applicable to the facts of the present case, namely that the shipping bills as filed by the petitioner, who is the exporter of the goods, would be deemed to be an application for refund of IGST paid on the goods exported by the petitioner out of India. There is no dispute in regard to all the relevant compliances as mandated by such rules on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortals did not make appropriate provisions, the entitlement of the petitioner to receive the refund being an entitlement under the IGST Act, (considering that the transaction undertaken by the petitioner were "zero rated supplies" within the meaning of Section 16 of IGST Act) could be defeated. There was no dispute in regard to the updating of the shipping bills by the petitioner. 49. The petitioner would also be correct in its contention that the impugned circular could not have been foisted in the petitioner's case, inasmuch as the same was not in existence in regard to the period in which the petitioner had undertaken exports, i.e. the period from July, 2017 to December, 2018. Even otherwise it could not be that the circular would override the provisions of the substantive rules framed under the CGST Act as discussed in the foregoing paragraphs. We find that in fact the department had taken appropriate stand, when a similar issue had reached this Court in the case of Star Rays (supra), who was ultimately paid the amount considering the stand taken by the respondent before the Court in the said proceedings. The order dated 22 October, 2018 passed by the co-ordinate Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples of "zero rated supplies" as recognized under Section 16 of the IGST Act. In these circumstances, there was no question of the circular dated 18 July 2019 being made applicable to the petitioner and/or confining the petitioner to a procedure of refund application to be filed under Section 54. Hence to compel the petitioner to file the refund application at a belated stage and after a long period of the shipping bills being presented by the petitioner (being itself a refund application) and thereafter, to hold that the refund application filed under Section 54 is time barred, was wholly illegal and unwarranted in the facts and circumstances of the case. 52. Thus, the entire approach of respondent Nos. 3 and 4, not only in denying the refund to the petitioner, but also compelling the petitioner to apply for a refund under the said circular which was issued subsequent to the shipping bills being presented, was a patent illegality. This more particularly when respondent Nos. 5 and 6 (Custom Authorities) had clearly confirmed the export and re-imports thereby confirming the sales to the foreign parties, in respect of which respondent Nos. 3 and 4 have not raised any dispute. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to file a refund application under Section 54 and rejecting the same on the ground that it was time barred. Further what is astonishing is that respondent nos. 5 and 6 (customs authorities) in the reply affidavit filed by Mr. Mahendra Rathod, Assistant Commissioner of Customs have taken a contrary stand and stated that respondent no. 6-Deputy Commissioner has no role to play in the sanctioning or rejecting of the IGST refund. It is stated that respondent no. 6 is not the competent authority to sanction or reject the IGST claim. It is, hence, clear that both the authorities are disowning their obligation and/or authority to refund the IGST as paid by the petitioner while not denying that the petitioner was entitled to the refund. The position is something which is not only disturbing but a shocking state of affairs in the authorities inter se not resolving such issues. We also do not find that any attempt was made to resolve the issues by both the parties. Any internal or departmental conflicts cannot cause prejudice to the assessee. Such approach on the part of the authorities is certainly not conducive to international trade and commerce. Considering the clear position in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution would prescribe namely that the respondents would not have any authority in law to levy, retain and collect tax. In the present case, IGST was not payable on such goods and therefore, legitimately it was required to be refunded. In these circumstances, it was a patent error on the part of the respondents to drag the petitioner into the proceedings of refund application under Section 54 of the CGST Act which itself in the present circumstances was not applicable. Once IGST itself was not leviable, there was no question of the same being retained by the respondent. Any retention of such amounts would be without authority in law. (See: The Hongkong and Shanghai Banking Corporation Ltd. v/s. The Union of India & Anr., Writ Petition (L.) No. 24184 of 2023). The petitioner in such context, is also justified in relying upon the decision of the Division Bench of the Delhi High Court in the case of Delhi Metro Rail Corporation Ltd. Vs. the Additional Commissioner, Central Goods and Services Tax, Appeals II & Ors. (supra). 56. We are, thus, not in agreement with Mr. Mishra's submissions also when he supports the action of the department, including referring to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Act, 1944, which had been inserted w.e.f. 26.05.1995 thereby providing for interest on delayed refund. In the present matter, the issue relates to inaction of the respondent Authorities in not taking decision with regard to the refund of IGST with regard to the goods exported i.e. at "Zero Rated Supplies". Akin provisions in form of Section 56 of the CGST Act, 2017, is incorporated, which deals with the interest on delayed refund. Before adverting to the issue of interest, it would be appropriate to reproduce Section 56 of the CGST Act, which reads as under: "Interest on delayed refunds: Section 56: If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax: Provided that where any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST. Despite the aforesaid decision of this Court in the case of Amit Cotton Industries (Supra), for the reasons best known to the adjudicating authority, the adjudicating authority has failed to abide by the aforesaid decision and has chosen not to take decision with regard to the refund of IGST. At this stage, it would be worth to refer to the ratio laid down by this Court in the case of E.I. Dupont India (P) Ltd. Vs. Union of India reported in 2014(305) ELT 282 (Guj), whereby this Court after relying upon the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Kamlakshi Finance Corporation Ltd. reported in 1991 (55) ELT 433 has strongly disapproved such arbitrary act of the adjudicating authority in ignoring binding decisions / orders passed by the higher Appellate Authorities / Courts. This Court in clear and unequivocal message rendered by pronouncement of the decision of the Hon'ble Supreme Court as well as this Court has cautioned the State Authorities to abide by the decision of the higher Appellate Authorities / Courts. To repeat, on going through entire record, the stand of the respondent Authority to withhold IGST based on non-consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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