Exploring GST Refund Eligibility in Cases of Identical Drawback Rates!

Background: In the case of Intec Export India Private Limited vs. Union of India & Others (W.P.(C) 9065/2023), the petitioner, a merchant exporter, sought a refund of Integrated Goods and Service Tax (IGST) paid on goods exported during the transition period after the implementation of the GST Regime (from 01.07.2017 to 30.09.2017). The denial of the refund was based on Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of Notification No. 131/2016-Cus. (N.T.), as amended by subsequent notifications, and Circular No.37/2018-Customs dated 09.10.2018.

Key Issues: The primary issues revolved around the constitutional validity of the mentioned provisions and the denial of IGST refunds to exporters who claimed a higher duty drawback rate. The petitioner challenged the validity on grounds of being ultra vires Section 16 of the IGST Act, 2017, read with Section 54 of the CGST Act, 2017, and unconstitutional under Articles 14, 19, and 21 of the Constitution of India.

Court's Decision: The Delhi High Court, relying on precedent cases such as M/S Amit Cotton Industries, Awadkrupa Plastomech Pvt. Ltd., and M/s. Kishan Lal Kuria Mal International, held in favor of the petitioner. The court directed the respondents to immediately sanction the refund of IGST paid on goods exported during the transitional period, treating them as 'zero-rated supplies.' The decision emphasized that denial of IGST refund should only apply when higher duty drawback reflects the elements of Customs, Central Excise, and Service Tax taken together, and not when the drawback rates are identical for both columns 'A' and 'B.'

Relevance of Precedent Cases: The court highlighted the relevance of precedent cases, including TMA International Pvt. Ltd. & Ors. v. Union Of India & Anr., which had similar findings, and the decision of the Gujarat High Court in Awadkrupa Plastomech Pvt. Ltd. The Gujarat High Court's stance emphasized that identical drawback rates indicated only the Customs elements, not subsumed in the GST, and hence, did not result in double benefits.

Conclusion: In conclusion, the court disposed of the petition, directing the respondents to process the petitioner’s claim for refund along with applicable interest, considering the decisions in line with the petitioner's circumstances. The ruling provides clarity on the eligibility of IGST refund during the transitional period and the interpretation of duty drawback rates under the specified notifications and circular.

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