Delhi High Court Directs Authorities To Conduct Verification Exercise For IGST Refund

Delhi High Court Directs Authorities To Conduct Verification Exercise For IGST Refund

The Court granted liberty to the Petitioner to file relevant documents as required by the jurisdictional authority in support of its claim

The Delhi High Court has directed the Respondent – Authorities to carry out a verification exercise for the refund of the IGST (Integrated Goods of Services Tax) claim made by the Petitioner – Company despite claiming drawback through the Drawback Schedule.

The Division Bench of the High Court of Delhi, comprising Justices Manmohan and Navin Chawla dealt with the matter titled M/s Ups Inverter.Com & Anr. V Union of India & Anr.

The petition had been filed by the Petitioner – Company to declare the following notifications and circulars as ultra vires:

• Notification No.131/2016-Cus. (N.T.) dated 31 October 2016 [as amended by Notification No. 59/2017-Cus.(N.T.) dated 29 June 2017 and Notification No. 41/2017-Cus.(N.T.) dated 26 April 2017 (Drawback Schedule)]

• Notification No.73/2017-Cus. (NT) 26 July 2017.

• Circular No.37/2018- CUSTOMS dated 9 October 2018.

The factual background for the case was that the Petitioners were the exporters of inverters, transformers and allied products for which they had made various exports falling under Tariff Item 8504 of the Drawback Schedule on the payment of Integrated Goods of Services Tax (IGST). The Drawback Schedule prescribed identical rates of Duty Drawback under Column 'A' as well as Column 'B' for the said Tariff Order.

It was the case of the Petitioners that they had claimed drawback under Column 'A' instead of under Column 'B' since there were no guidelines from the GST or Customs department in respect of the procedure to be followed in such cases. On the other hand, the Respondent – Authorities denied the refund of IGST on the ground that the exporters were deemed to have consciously relinquished their IGST/ITS claims by having filed the declarations voluntarily. It was further submitted by the Respondent – Authorities that the Petitioner – Company had not enclosed the relevant documents such as the shipping bills for which the refund was claimed.

The Court took these facts into consideration and relied on a judgment of this Court titled as TMA International Pvt Ltd & Ors v Union of India & Anr, wherein it was held that if the Petitioners had claimed and received only the customs duty portion of the drawback and the element of IGST was not included in the drawback rate, then granting of IGST refund would not result in double neutralization of input taxes.

Since the legal issue was already decided by this Court in the aforesaid judgment, the Respondent – Authorities were directed to carry out a verification exercise of the claim made by the Petitioner – Company within 12 weeks. The Court while disposing of this petition further granted liberty to the Petitioner – Company to file the relevant documents as required by the jurisdictional authority in support of its claim.