Facts of the Case

The petitioner, Intec Export India Private Limited, a merchant exporter, approached the High Court of Delhi seeking refund of Integrated Goods and Services Tax (IGST) paid on goods exported during the transitional period from 01.07.2017 to 30.09.2017, immediately after the GST rollout. The refund had been denied under Paragraph 11(d) read with Paragraph 12A(a)(ii) of the Notes and Conditions of Notification No.131/2016-Cus.(N.T.) dated 31.10.2016 (as amended) and Circular No.37/2018-Customs dated 09.10.2018, which disallow IGST refund where an exporter has also claimed duty drawback at the higher rate specified in Column A, on the premise that the higher rate already subsumes customs, excise and service tax components. The petitioner sought a refund of Rs. 7,98,444/- for exports where the Column A and Column B drawback rates were identical, and of Rs. 63,039/- for exports where Column A exceeded Column B, after adjusting the differential drawback, along with interest, and also challenged the validity of the underlying notifications and circular under Section 16 of the IGST Act, 2017 read with Section 54 of the CGST Act, 2017 and Rule 96 of the CGST Rules, 2017.

Issues Involved

  1. Whether Paragraph 11(d) read with 12A(a)(ii) of Notification No.131/2016-Cus.(N.T.) and Circular No.37/2018-Customs, denying IGST refund merely because a higher duty drawback rate was claimed, are ultra vires Section 16 of the IGST Act and Section 54 of the CGST Act read with Rule 96 of the CGST Rules.
  2. Whether the petitioner was entitled to refund of IGST paid on exports during the transitional period where the drawback rates under Column A and Column B were identical or only marginally different.
  3. Whether denial of refund in such cases amounted to conferring a double benefit on the exporter.

Petitioner's Arguments

  • Where the Column A and Column B drawback rates are identical, no part of indirect taxes other than customs duty was subsumed, so denying IGST refund is unjustified.
  • The impugned notifications and circular are ultra vires Section 16 of the IGST Act and Section 54 of the CGST Act read with Rule 96, and unconstitutional under Articles 14, 19 and 21.
  • The controversy is covered by this Court's own TMA International Pvt. Ltd. vs Union of India and by the Gujarat High Court in Awadkrupa Plastomech and Amit Cotton Industries, both affirmed by the Supreme Court dismissing the Revenue's SLPs.
  • Per Kishan Lal Kuria Mal International, even where rates differ, the exporter is entitled to the differential IGST refund after adjusting the excess drawback.

Respondent's Arguments

  • An exporter who claims duty drawback at the higher Column A rate — which compensates for customs duty, excise duty and service tax together — is not entitled to a separate IGST refund, as that would be a double benefit.
  • Circular No.37/2018-Customs was relied upon to justify denial of refund for the transitional period.

Court Order/Findings

  • Where Column A and Column B drawback rates are identical, they neutralise only the customs duty component and do not subsume other indirect taxes, so denying IGST refund on that basis is unjustified.
  • Following TMA International and the Gujarat High Court's rulings in Awadkrupa Plastomech and Amit Cotton Industries (both affirmed by the Supreme Court dismissing the Revenue's SLPs), the Court held the claim covered by binding precedent and directed the respondents to process the refund claim, with applicable interest, in accordance with law.
  • Following Kishan Lal Kuria Mal International, the petitioner would also be entitled to the differential amount between IGST paid and duty drawback availed, after adjustments.
  • The concerned officer remains entitled to verify the extent of drawback availed and make requisite adjustments while processing the refund.

Important Clarification

An exporter is not automatically disentitled to IGST refund on transitional-period exports merely because duty drawback was claimed at the higher Column A rate; where the Column A and Column B rates are identical or only marginally different, the drawback reflects only the customs duty component, and the exporter remains entitled to IGST refund (net of any differential drawback benefit) without this amounting to a double benefit.

Sections Involved

  • Section 16, IGST Act, 2017 — provides for zero-rated supply and refund of IGST paid on export of goods/services.
  • Section 54, CGST Act, 2017 — governs the general procedure for claiming refund of tax.
  • Rule 96, CGST Rules, 2017 — prescribes the manner of refund of IGST paid on goods exported out of India.
  • Notification No.131/2016-Cus.(N.T.), 2016 and Circular No.37/2018-Customs — the impugned provisions restricting IGST refund where higher duty drawback is claimed.

Decision – In Favour of

This decision is in favour of the Assessee. The Delhi High Court, applying settled precedent, directed the respondents to process the petitioner's IGST refund claim for the transitional period exports along with applicable interest, subject only to verification of the drawback actually availed.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 9065/2023
  • CNR: Not available
  • Coram: Hon'ble Mr. Justice Vibhu Bakhru and Hon'ble Mr. Justice Amit Mahajan
  • Decision Date: 30 October 2023
  • Disposal Nature: Disposed of; refund of IGST with interest directed

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