This Tax Alert summarizes a recent judgement of the Bombay High Court (HC)[1]. The question involved in the writ petition was regarding admissibility of refund of integrated tax (IGST) paid on goods exported on consignment basis, sale of which crystalized at a later date.
The key observations of the HC are:
- Rule 96 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) allows refund of IGST paid on export of goods and as per the said Rule, shipping bills itself would be deemed to be an application for refund of IGST.
- Where appropriate compliances were made, mere non-compatibility of the data between the two authorities, viz., customs and the GST department, cannot be a ground for denial of refund.
- The petitioner should not suffer where the GST common portal and ICEGATE portal did not make a provision to cater to the situation of exports on consignment/exhibit basis.
- Circular[2] denying refund of IGST paid on goods exported on consignment basis overrides the provisions of the substantive rules and hence, illegal.
- Refund of IGST paid on export of goods cannot be processed under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act), rather gets covered under Rule 96 of the CGST Rules. Thus, the authority to sanction such refund resides with the customs authorities and not with the GST authorities.
Basis above, HC held that petitioner is entitled to refund of IGST paid along with interest and allowed the writ petition.
Comments
- This ruling may help the taxpayers whose refunds were denied due to mismatch in data between GST and Customs (ICEGATE) portals.
- Earlier, Madras HC [2019-VIL-563-MAD] had directed Revenue to refund the additional IGST paid by the taxpayer due to change in the value of goods exported. HC commented that when the entire refund process is system managed, Revenue is supposed to visualize the complications and provide solutions to do away with the anomalies.
- This judgment aligns with the above Madras HC ruling on the principle that substantial benefit of refund should not be denied due to technical issues in GST and Customs portal.
[1] 2024-VIL-326-BOM
[2] Circular No. 108/27/2019-GST dated 18 July 2019
