TMI Blog2024 (4) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, which were in relation to the goods on which IGST was paid, and the confirmed sales admittedly being zero rated supplies, there was no question of respondent Nos. 3 and 4 retaining the IGST amounts paid on such confirmed sales. The presentation of shipping bills as per the requirement of Rules 96 / 96A, which were squarely applicable, itself entitled the petitioner to refund of the IGST amount based on the principles of zero rated supplies as recognized u/s 16 of the IGST Act. Thus, 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 u/s 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 u/s 54 is time barred, was wholly illegal and unwarranted in the facts and circumstances of the case. 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 ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e become entitled to alongwith appropriate interest. In a similar situation, the Division Bench of Gujarat High Court in M/s. Vimla Food Products vs. Union of India Ors. [ 2021 (12) TMI 1328 - GUJARAT HIGH COURT] and concerning a supply which was zero rated supply referring to the decision in Amit Cotton Industries Vs. Principal Commissioner of Customs [ 2019 (7) TMI 472 - GUJARAT HIGH COURT] as also to the relevant circulars and notifications and the decisions of the Court in that regard, had held that the petitioner was entitled to interest at the rate of 9% from the date on which the bills for refund of IGST were raised by the petitioner, till its actual payment. In our opinion, the petition needs to succeed. It is accordingly allowed in terms of the following order:- (i) The impugned Circular dated 18 July, 2019 is declared to be not applicable to the petitioner s refund applications / claim; (ii) The petition stands allowed in terms of prayer clauses (b), (c), (d) and (e). (iii) The rejection of the refund applications by the impugned orders dated 5 August 2022 is declared to be illegal. (iv) The amounts be refunded to the petitioner within a period of three weeks from today a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly strike down the same; B. This Hon ble Court be pleased to issue a Writ of Certiorari, or any other Writ, Order or direction in the nature of Certiorari inter alia calling for the records and proceedings in the matter of the impugned order, viz. Order for rejection for application of refund dated 11 July, 2022 (Exhibit A hereto) and 5 August, 2022 (Exhibit A2 hereto) issued to the petitioner and after considering the legality, validity and proprietary thereof, be pleased to quash and set aside the same. C. This Hon ble Court be pleased to issue a Writ of Certiorari, or any other Writ, Order or direction in the nature of Certiorari inter alia calling for the records and proceedings in the matter of the impugned notice viz. Notice for Rejection for Application of refund dated 15 June, 2022 (Exhibit A1 hereto), issued to the petitioner and after considering the legality, validity, and proprietary thereof, be pleased to quash and set aside the same. D. That this Hon ble Court be pleased to issue Writ of Certiorari or any other Writ, Order or direction in the nature of Writ of Certiorari, calling for the papers and proceedings in the matter of the IGST paid by the petitioner between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n consignment basis, that are not approved are re-imported back to India ( Re-imported goods ). Once the re-imported goods reach the ports of the Indian Territory, the custom authorities at the respective port, verifies the stock of re-imported goods to ensure that the goods returned are from the original exported goods as exported on consignment/approval basis. Upon completion of such verification process, the Customs Department issues Bills of Entries. As per the Customs Notification No. 45/2017 dated 30 June, 2017 at serial no. 5, the re-imported goods are not subject to custom duty, as the petitioner contends. 7. In regard to payment of the Integrated Goods and Services Tax (the IGST ), the IGST Act provides with two options being Export without payment of the IGST upon furnishing a Letter of Undertaking ( LUT ) or a Bond or Export upon payment of IGST. 8. In regard to export of goods on consignment basis , the confirmed goods under export, upon payment of IGST, are declared by the exporter on the common Portal of the GST department. It is contended that the said Notification (No. 50/2017 dated 30 June 2017) in Para (b) thereof, provides that the re-imported goods which were or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the corresponding shipping bills of the exported goods on consignment basis, to reflect the final quantum of Confirmed Goods on which the IGST was paid. The petitioner accordingly approached the Customs department with copies of the shipping bills and the corresponding bills of entry, which would clearly indicate the actual exports i.e. the quantum of Confirmed goods. 13. The petitioner has contended that it was quite a shock to the petitioner in the Custom Department communicating to the petitioner that such amendment was not permitted under the customs practices and for such reason it refused to entertain the petitioner s refund application. This, despite the fact that the petitioner apprised the Customs Department that under the GST regime i.e. under Rule 96 of the CGST Rules a shipping bill is to be considered as an application for refund and in the absence of such amendments being granted, the entire amount of IGST paid by the petitioner through credit facility would be stuck. The petitioner also offered to show the relevant IGST receipts of the taxes paid by the petitioner. It is stated that the concerned officers of the department, however, expressed their inability and adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was disposed of by an order dated 22 October, 2018 passed by a co-ordinate bench of this Court, whereby the Court recorded a statement as made on behalf of the department that the glitch in the portal (similar to the one the petitioner complained) had been rectified, and accordingly the payment of refund shall be made to the petitioner therein. The petitioner also had undertook the process of the rectification in the GSTR-1 and GSTR 3B, in accordance with the updated shipping bills and invoices between July-September, 2018. After completing such exercise, the petitioner being under a legitimate and bona fide belief, that the transactions undertaken by the petitioner being zero rated supplies , within the meaning of section 16 of the IGST Act, 2017, hence, the updated shipping bills itself would be treated as refund applications, as provided in Rule 96 and 96A of the CGST Rules. Also there was no other order, circular or rule within the framework of the said Act requiring any other compliances for refund of the IGST, paid by the petitioner on such re-imports. However, even after updating the shipping bills, no order for rejection of refund application was communicated to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trospective period. 21. The petitioner, in these circumstances, without any delay made a representation to the respondents seeking guidance in regard to the method to adopt and the system to be followed to seek the modalities on its refund claim. It was stated that the GST regime as also the electronic portal, being the new and alien concepts, the assessees were facing difficulties in adapting to such mechanism, hence, an assistance from the department was expected on the method and manner the assessee needs to approach such situation. Such letter was addressed by the petitioner on 18 March, 2020 and immediately thereafter, lock-down was imposed in the country on the outbreak of the Covid-19 pandemic, which continued thereafter for a substantial period. 22. In response to the petitioner s representations, the petitioner received two letters dated 25 October, 2021 and 26 October, 2021 from respondent no. 6-Deputy Commissioner of Customs, that the refund of IGST was indeed granted in a similar case of Star Rays vs. Union of India (supra). On the basis of such letter, the petitioner approached respondent nos. 1 to 5, however, there was no response. The department was also aware that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered various alternatives of submitting necessary undertakings to the respondents so as to facilitate the release of its refund, however, despite extending the fullest cooperation and compliances, even a partial amount was not refunded to the petitioner. This despite the sterling fact that at no stage, the respondents had raised any objection as to non-compliance of any provisions of the law, by the petitioner. 28. It is also the petitioner s case that several other registered persons had raised grievances of a similar nature and the issues were escalated to the GST Policy Wing of respondent no. 2, which issued circular dated 18 July, 2019, as noted above, purportedly issuing a clarification. Clause 9 of the said circular provided that in the event there was a discrepancy in the figures of the shipping bill and the GST invoices as raised, the two documents must be compared and the refund must be issued for an amount which was lower amongst the said two documents, inasmuch as invoice under Section 46 of the CGST Act is raised as per the rate of taxable supply under Section 15 of the IGST Act. Even acting on such circular, the petitioner s refund was not being processed for over a ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed down the scope of the parent statute, was also illegal and would be required to be struck down. Learned counsel for the petitioner has also referred to the circulars no. 05/2018, 08/2018, 15/2018, 22/2018, 40/2018, 26/2019 and 22/2020 issued by the Custom Department to contend that an alternate mechanism with an official interface to resolve invoice mismatches was provided to resolve such issues, however, it was rendered of no consequence in the petitioner s case. It is also submitted that the Board has issued instructions from time to time to resolve all discrepancies so that the refund as payable to the taxpayers are not withheld. Learned counsel for the petitioner has also referred to the orders passed by the Supreme Court in the proceedings of Suo-motu Writ Petition (C) No. 3 of 2020 and the order dated 10 January, 2022 passed therein in regard to the extension of period of limitation. Reliance is also placed on the order dated 12 January, 2022 passed by this Court in the case of Saiher Supply Chain Consulting Private Limited Vs. Union of India Ors. which states that the extension provided by the Supreme Court shall also extend to applications for refund made under Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the sale is finalized subsequently and invoices are raised, on which the claimants are stated to have discharged the GST liability. It is also not disputed that subsequently the petitioner applied for refund to the jurisdictional customs authorities, for refund on the ground that exports were undertaken with payment of IGST and on the re-import of the goods (which were not sold), a request for refund of IGST was denied. However, it is contended that the refund applications were time barred, as Section 54(1) allows for refund applications to be filed within two years of the relevant date. It is thus submitted that on such reasoning, the petition ought not to be entertained. 34. There is a reply affidavit filed on behalf of respondent nos. 5 and 6 by Mr. Mahendra Rathod, Assistant Commissioner of Customs. It is stated that the petitioner has an alternate remedy to challenge the order passed by respondent no. 4 by filing an appeal. Hence, the petition ought not to be entertained. It is stated that insofar as the role of respondent no. 6 (Deputy Commissioner of Customs) is concerned, it is to generate only scroll number of already sanctioned IGST refund. It is stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the order passed in the case of Star Rays (supra) we had passed the following order: 1. We have heard Ms. Parisha Shah, learned counsel for the petitioner quite extensively as also Mr. Mishra, learned counsel for the respondents. We have also perused two reply affidavits which are filed on behalf of respondent nos. 1 to 4 and respondent nos. 5 6 respectively. 2. Learned counsel for the petitioner has also drawn our attention to the orders which were passed in case of Star Rays v/s. Union of India Ors., which according to the petitioner, as also pointed out to the Department, was identically situated. In fact, to this effect, our attention is also drawn to a letter dated 26 October, 2021 as addressed by the Deputy Commissioner of Customs to the petitioner which states that the case of the petitioner was identically placed as in the case of M/s. Star Rays, wherein the said assessee was granted a refund by an order dated 08 February, 2020, a copy of which is placed on record. In our opinion, it appears that in the impugned order, the case of the petitioner relying on the refund order in M/s. Star Rays has not been appropriately dealt with. 3. Considering the aforesaid facts, Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,126/-. The export data along with the corresponding details of the consignees, shipping bill details, final invoice details, value of export sales and the IGST paid thereon was submitted to respondent no. 6 from time to time. The respondent has also not disputed that the re-imported goods were declared by the petitioner and were examined by the Customs Department and the relevant Bills of Entry were prepared of such re-imported goods thereby complying with all the provisions of the Customs Act as also the GST Act. 41. As per the provisions of the IGST Act, read with Rule 96 and 96A, the petitioner was entitled to seek refund of the amount of IGST paid by it. Pursuant thereto, the petitioner had also approached the Customs Department to carry out necessary amendment in the corresponding Shipping Bills of the exported goods on consignment basis to reflect the final quantum of confirmed goods on which the IGST was paid. However, the petitioner was not permitted to undertake such amendment. This, despite the fact that under Rule 96 of the CGST Rules, the shipping bill is required to be considered as an application for refund and in the absence of such amendment, the entire amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t part of Rule 96 and 96A, which reads thus: 96. Refund of integrated tax paid on goods [or services] exported out of India .-(1) The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:- (a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and (b) the applicant has furnished a valid return in Form GSTR-3B; Provided that if there is any mismatch between the data furnished by the exporter of goods in Shipping Bill and those furnished in statement of outward supplies in Form GSTR-1, such application for refund of integrated tax paid on the goods exported out of India shall be deemed to have been filed on such date when such mismatch in respect to the said shipping bill is rectified by the exporter; c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10-B; (2) The details of the relevant export invoices in respect of export of goods contained in Form GSTR-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in Form GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of (a) fifteen days after the expiry of three months or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or (b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India. (2) The details of the export invoices contained in Form GSTR-1 furnished on the common portal shall be electronically transmitted to the system designated by Customs and a confirmation that the goods covered by the said invoices have been exported out of India shall be electronically transmitted to the common portal from the said system. Provided that where the date for furnishing the details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, namely, Customs Department and the GST Department, as also for the reason of non-compatibility with the electronic portals as prevalent under the GST regime, cannot be a ground for the petitioner being denied the refund. Even assuming that the petitioner de hors the requirement of Rule 96 and Rule 96-A of the GST Rules was made to file a fresh refund application, the same could not have been rendered being barred by limitation, as the filing of the shipping bills, which were filed at the appropriate time and which has not been disputed, could not have been overlooked to be valid refund applications. Thus, mere filing of supporting applications, only to make the same compatible with the subsequent clarifications/circulars issued, would not take away the entitlement of the petitioner for the refund claim as per the provisions of the said Rules. In the facts of the case, there is no dispute that the shipping bills were presented by the petitioner in accordance with law and there was no issue of limitation in that regard. 48. Respondent nos. 2 to 4, hence, could not have denied/refused the petitioner s refund claim, which in fact stood approved by respondent nos. 5 and 6. It is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the invoices was not possible. However, the systems has now been rectified and the petitioner can carry out the necessary modifications in Form GSTR-1 and GSTR-3B. 3. Mr. Shah, learned counsel for the petitioners, on instructions, states that the necessary modifications will be carried out within a period of one week from today. 4. Mr. Kantharia, on instructions, states that the refund applications would be disposed of within a period of 8 weeks from the date the petitioners carry out the necessary modifications in the GSTR-1 and GSTR-3B forms and communicating it to the respondents. 5. Petition is disposed of in the above terms. (emphasis supplied) 50. In our opinion, the petitioner is correct in its contention that as to what was followed by the respondent in the case of Star Rays also needs to be followed in the case of the petitioner and accordingly the petitioner would become entitled to maintain its refund applications and grant of the refund amounts. The refund due and payable to the petitioner has been retained for no fault of the petitioner. 51. It may also be observed that the obvious implication as brought about by Rules 96 and 96A as may be applicable and the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 16 of the IGST Act. Even otherwise, the circular does not prohibit a situation as in the present case that, when the export stands confirmed, invoices are issued and such shipping bills are presented and accepted by the Customs, in such circumstances, the authorities cannot refuse to recognise the supply as a zero rated supply and grant refund of the IGST to the petitioner. If such approach of respondent Nos. 3 and 4 is to be attributed to the supply and the tax paid thereon, it would clearly render nugatory the provisions of law as discussed above, as also lead to an absurdity. Also qua the situation in hand, it would amount to reading something alien into the provisions of the CGST and the IGST Act, which is not recognized in such provisions and the relevant rules. 53. Thus, looked at from any angle, the contention of the department in refusing refund claim of the petitioner, cannot be accepted. On the above backdrop, the stand of respondent nos. 1 to 4 in holding respondent nos. 5 and 6 responsible is apparent. There is a direct conflict between the versions of both these respondents from reply affidavits which we have discussed in extenso. In the reply affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a member, observed that the provisions of law are required to be alive to several considerations and the new systems which are implemented under the GST laws, which the registered persons were required to follow and adopt. It was observed that in these circumstances, certainly freeplay in the joints was required. This is not a different case where both the departments itself were required to be alive, to such conflicting stand being taken by each of these departments even in the reply affidavits. In this situation the higher authorities ought to have resolved the issues. The stands which are taken by the respondents inter se, apart from being conflicting, have clearly amounted to nullifying the petitioner s right and entitlement to the refund. In these circumstances, we are also of the opinion that in cases where exports involving payment of IGST are concerned, in which refund applications are made, a special mechanism is required to be devised so that both electronic portals are compatible, and refund of duties, which could not be retained, are processed expeditiously and the assessees do not suffer on account of ineffective systems being followed by the CGST as also the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are barred by limitation, is not well founded. 57. In so far as the petitioner s prayer on interest are concerned, in facts of the case, certainly the petitioner would be entitled to interest as the amount has been illegally retained by the respondents without authority in law. In a similar situation, the Division Bench of Gujarat High Court in M /s. Vimla Food Products vs. Union of India Ors. (supra) and concerning a supply which was zero rated supply referring to the decision in Amit Cotton Industries Vs. Principal Commissioner of Customs (2019) 107 taxmann.com 167 (Gujarat) as also to the relevant circulars and notifications and the decisions of the Court in that regard, had held that the petitioner was entitled to interest at the rate of 9% from the date on which the bills for refund of IGST were raised by the petitioner, till its actual payment, and in the event the authorities fail to release such amount within a period of eight weeks from the date of receipt of the orders of the Court, in that event petitioners were held entitled for realization of further interest at the rate of 9% till its actual payment. The relevant observations of the Court are required to be noted whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund. Explanation : For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5). On bare perusal of the aforesaid Section, it is explicitly made clear that if the applicant is not refunded the tax amount within 60 days from the date of receipt of the application under Sub-Section 1 of Section 54 then interest at such rate not exceeding 6% as may be specified in the Notification, which may be issued by the Government is payable in respect of such refund from the date immediately after expiry of 60 days from the date of receipt of such application till refund amount is received. The records reveals that the petitioners have raised the refund of IGST immediately within prescribed time and had also made payment of differential amount which has been realized by the respondent Authorities. Thereafter, the petitioners have also made various representations, which are placed on record. In fact, the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of refund of IGST along with interest so determined shall be paid within a period of 8 (eight) weeks from the date of receipt of this order. In case the respondent Authorities fail to release such amount, then the petitioners shall be entitled for realization of further interest @ 9% till its actual payment. 58. In Sunlight Cable Industries v/s. The Commissioner of Customs NS II And 2 Ors. Writ Petition No. 284 of 2021, a Division Bench of this Court of which one of us (G. S. Kulkarni, J.) was a member, had taken a similar view and referring to the several decisions in the facts of the case, awarded simple interest at the rate of 7% p.a. 59. The common thread which runs through all these decisions as discussed hereinabove would be total inaction on the part of the authorities to refund the amount, which was retained without authority in law and which certainly, considering the position in law as prescribed under the GST Laws and the constitutional principles as evolved in several decisions, the assessees were held to have become entitled to alongwith appropriate interest. 60. In the light of the aforesaid discussion, in our opinion, the petition needs to succeed. It is ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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