ORDER

1. The petitioners have invoked extra ordinary writ jurisdiction under Article 226 of the Constitution of India and have essentially prayed for following reliefs:

“11.

(A) Your Lordships may be pleased to admit this petition.

(B) Your Lordships may be pleased to allow this petition.

(C) Your Lordships may be pleased to issue writ of mandamus or any other appropriate writ directing the respondent authorities to immediately sanction the refund of IGST aggregating to ₹ 14,94,739/- paid in regard to the goods (Comber Noil) exported i.e. ‘Zero Rated Supplies’ made vide aforesaid bills.

(D) Your Lordships may be pleased to direct the respondent authorities to pay interest @ 18% to the petitioner herein on the amount of refund of IGST mentioned hereinabove from the date of shipping bill up till the date on which the amount of refund is paid to the petitioner herein, as the same is arbitrarily and illegally withheld by the respondent authorities.

(E) Your Lordships may be pleased to grant an ex parte ad interim order in favour of the petitioner herein in terms of prayers clause “C” and “D” hereinabove.”

2. The principal grievance raised by the petitioners is the inaction of the respondent Authorities regarding refund of IGST towards Shipping Bills dated 05.07.2017 to 10.08.2017.

3. The petitioners are engaged in trading and export of cotton, yarn, textiles, fabrics, etc. and they hold valid GST Registration No.27AAKCS0140G1ZL. It is the case of the petitioners that they had exported goods (Comber Noil) under various invoices for which they had paid IGST of an amount of ₹ 14,94,739/-. The petitioners have referred to and relied upon form GSTR-1 and GSTR-3B, which they claimed to have filed within prescribed time. It is the case of the petitioners that inadvertently, the petitioners Company had claimed drawback at higher rate by punching option “5202A” and option “600699A” instead of claiming drawback at lower rate by punching option “5202B” and option “600699B”, while generating shipping bills. It is claimed by the petitioners that having realized the aforesaid mistake, vide letter dated 12.09.2017, had immediately requested the Deputy Commissioner of Customs (Export), Customs House, Mundra, to amend the aforesaid shipping bills in exercise of powers conferred under Section 149 of the Customs Act, 1962. The request was also made to the effect of punching of “A” to be treated as punching of “B”. On 15.09.2017, the petitioner Company had submitted to the Deputy Commissioner of Customs (Exports), Customs House, Mundra to consider their case for IGST refund and had further disclosed their intention to not to claim higher drawback thereby showing their willingness to give back differential drawback amount. In furtherance thereof, the petitioner Company had drawn Demand Drafts bearing Nos.332754 and 332755, dated 17.10.2017 and Demand Draft No.044281, dated 13.09.2017 for an aggregate amount of ₹ 3,39,245/- towards differential drawback amount with interest and the said Demand Drafts were realized by the Customs upon deposit of the same on 18.09.2017 and 23.10.2017 respectively. In light of the aforesaid fact, the petitioner Company has pursued their case of refund of IGST by making various representations since then, but in vain. In support of such fact, the petitioner Company has placed on record various representations dated 30.10.2017, 23.07.2018, 27.09.2018 and 15.11.2019.

4. Learned Counsel Mr. D.K. Trivedi, for the petitioner has mainly contended that the petitioner had exported goods and effected “Zero Rated Supply” under Section 16 of the IGST Act on the said goods of total invoices value which is quoted in tabular format as under:

Sr. No.	Shipping Bill No. & Date	Amt. Of Drawback claimed by punching ‘A’ (Higher Rate) Rs.	Amt. Of Drawback in case ‘B’ is punched (Lower Rate) Rs.	Difference of Drawback	Amount of IGST paid
01	7163529 05/07/2017	19113.00	2867.00	16246.00	98901.00
02	7172682 05/07/2017	18521.00	2778.00	15743.00	95999.00
03	7189632 06/07/2017	19069.00	2860.00	16209.00	98797.00
04	7464252 19/07/2017	16530.00	2480.00	14050.00	83945.95
05	7486382 20/07/2017	15734.00	2360.00	13374.00	79930.45
06	7517165 21/07/2017	50059.00	7509.00	42550.00	256364.90
07	7516021 21/07/2017	16298.00	2448.00	13850.00	86681.20
08	7556291 24/07/2017	173115.00	52337.00	120778.00	172239.85
09	7802881 03/08/2017	33856.00	5078.00	28778.00	172239.85
10	7847374 05/08/2017	14689.00	2203.00	12486.00	75167.00
11	7894392 08/08/2017	15074.00	2261.00	12813.00	77117.80
12	7943766 10/08/2017	30842.00	4626.00	26216.00	157952.10
	TOTAL	422900.00	89807.00	333093.00	1494739.30

5. It is further contended by the learned advocate for the petitioner that the goods supplied by the registered person were neither NIL rated goods or exempt supplies. The said supplies are affected by the payment of IGST in accordance with the provisions contained in Section 16(3)(b) of the IGST Act. According to the said provision, a registered person making “Zero Rated Supply” has an option to claim refund in accordance with Section 16(3)(b) of the Act or as he may supply goods or service or both on payment of integrated tax and can claim refund of such tax paid on the goods or services or both supplied as per Section 54 of the Central Goods and Service Tax Act, 2017. The attention of this Court was also drawn to Rule 96 of the CGST Rules, 2017 and it was further contended that shipping bill filed by the exporter of goods shall be deemed to be an application for refund of integrated tax paid on goods exported out of India and such application shall be deemed to have been filed only when the person in charge of conveyance carrying the export goods duly files an export manifest or an export report covering the number and date of shipping or bills of export. It was, therefore, submitted that the petitioner applied under the provisions of law inasmuch as the petitioner had furnished a valid return in the form of GSTR-3 and / or Form GSTR-3B. However, inadvertently, while generating the shipping bills, the petitioner had claimed drawback at higher rate by punching option of “5202A” and punching option of “600699A” instead of claimed drawback at lower rate by punching option of “5202B” and option of “600699B”. In view of the aforesaid mistake, the aggregate amount of drawback of ₹ 4,22,900/- (at higher rate) was inadvertently claimed instead of ₹ 89,807/- (at lower rate). The attention of this Court was drawn to the tabular details furnished in para 6.3 which are reproduced as under:

Sr. No.	GST Invoice No. & Date	Export Invoice No & Date	Shipping Bill No. & Date	Export General Manifest No. & Date	Bill of Lading No & Date
01	AIM/EXP047/17-18 02/07/2017	AIM/EXP/047/17-18 02/07/2017	7163529 05/07/2017	130890 05/08/2017	EGLV100770012279 08/07/2017
02	AIM/EXP050/17-18 04/07/2017	AIM/EXP/050/17-18 04/07/2017	7172682 05/07/2017	130890 05/08/2017	EGLV100770012554 08/07/2017
03	AIM/EXP051/17-18 04/07/2017	AIM/EXP/051/17-18 04/07/2017	7189632 06/07/2017	130782 05/08/2017	EGLV100770012571 16/07/2017
04	AIM/EXP054/17-18 18/07/2017	AIM/EXP/054/17-18 18/07/2017	7464252 19/07/2017	131306 06/08/2017	EGLV100770013194 22/07/2017
05	AIM/EXP055/17-18 19/07/2017	AIM/EXP/055/17-18 19/07/2017	7486382 20/07/2017	132206 05/08/2017	EGLV100770013411 30/07/2017
06	AIM/EXP057/17-18 20/07/2017	AIM/EXP/057/17-18 20/07/2017	7517165 21/07/2017	131305 05/08/2017	EGLV100770013551 27/07/2017
07	AIM/EXP058/17-18 20/07/2017	AIM/EXP/058/17-18 20/07/2017	7516021 21/07/2017	131305 05/08/2017	EGLV100770013305 27/07/2017
08	AIM/EXP059/17-18 22/07/2017	AIM/EXP/059/17-18 22/07/2017	7556291 24/07/2017	131307 05/08/2017	SUDUI7866A1L1439 28/07/2017
09	AIM/EXP060/17-18 02/08/2017	AIM/EXP/060/17-18 02/08/2017	7802881 03/08/2017	132220 29/09/2017	EGLV100770014026 10/08/2017
10	AIM/EXP062/17-18 04/08/2017	AIM/EXP/062/17-18 04/08/2017	7847374 05/08/2017	132243 29/09/2017	EGLV100770013895 12/08/2017
11	AIM/EXP063/17-18 04/08/2017	AIM/EXP/063/17-18 04/08/2017	7894392 08/08/2017	132243 29/09/2017	EGLV100770014352 12/08/2017
12	AIM/EXP065/17-18 09/08/2017	AIM/EXP/065/17-18 09/08/2017	7943766 10/08/2017	133071 29/09/2017	1897X03731 17/08/2017

6. Learned advocate for the petitioner has further drawn attention of this Court to the copies of the Demand Drafts of aggregating amount of ₹ 3,39,245/- paid back by the petitioner Company which has actually been credited in the account of the Customs Department. It was further submitted by the petitioner that the inaction of the respondent authorities is causing serious monetary loss to the petitioner by not refunding such tax in accordance with the provisions of Section 54 of the CGST Act, 2017, more particularly, when the Superintendent of Customs (Export), Customs House, Mundra vide letter dated 30.10.2017 has confirmed the approval of amendment in shipping bills in terms of Section 149 of the Customs Act, 1962. The learned advocate Mr. Trivedi has further referred to and relied upon the decision rendered by this Court in the case of Amit Cotton (supra) and has urged to direct the respondent authorities to forthwith release the refund of IGST, with interest. Learned advocate for the petitioners has pressed into service, the decision of this Court in the case of Shri Jagdamba Polymers Ltd. Vs. Union India reported in 2013(289) E.L.T. 429 (Guj.) as well as the decision in the case of Purnima Advertising Agency Pvt. Ltd. Vs. Union of India reported in 2016(42) S.T.R. 785 (Guj.) and has submitted that the petitioner should be compensated for the prejudice caused due to inordinate delay because of inaction on the part of the respondent Authorities in taking decision with regard to the refund of IGST by awarding interest from the date of raising bills till its actual payment.

7. Aforesaid prayer of the petitioner is objected by the respondent Authorities by filing affidavit in reply, which is filed through the Assistant Commissioner of Customs, on behalf of the respondent Nos.1 to 3 herein. The respondent Authorities have referred to and rely upon the various shipping bills submitted by the petitioner Company in the month of July-August, 2017 and has thereby submitted that the petitioners themselves at the relevant stage has chosen option “A” and has also received higher drawback amounting to ₹ 4,22,900/-. It is, therefore, submitted by the respondent Authorities that the goods of the petitioners cannot be considered for refund of IGST, more particularly, when the petitioner Company are under legal obligation to complete the mandatory records for their export consignment to avail such benefits. The respondent Authorities have solely relied upon the instructions issued under Board Circular No.37/2018-Customs dated 09.10.2018 read with Notification No.131/2016-Cus (NT) dated 26.07.2017. By adverting to the aforesaid instructions, the respondents have contended that it would not be justified to allow the petitioners to avail IGST refund who on their own volition initially claimed benefits of higher drawback.

8. The Learned Counsel Mr. Utkarsh Sharma appearing for the respondent no.1 to 3 had urged that at relevant stage, the petitioner company on it’s own volition had punch option “Ä” and had drawn higher draw back. It is further urged that the respondent authorities are bound by the instructions issued under Board Circular and therefore cannot sanction IGST refund. It is also contended by the learned Counsel for the respondents that the decision rendered by this Court in the case of Amit Cotton (supra) had been challenged by filing SLP before the Hon’ble Apex Court, however, the said appeal has been not entertained on the ground of delay as against that the there is yet another SLP pending before the Hon’ble Apex Court where the very said decision relied upon is under consideration. The Learned Counsel fairly accepted that no stay has been granted by the Hon’ble Apex Court in the pending SLP.

9. Heard learned advocates for the petitioner as well as respondents.

10. On perusal of the records of the case, it appears that the petitioners have exported goods in the month of July-August, 2017 from Mundra Port. The petitioners hold valid registration No. 27AAKCS0140G1ZL and is governed by the provisions of the CGST as well as IGST Rules, 2017. Before adverting to the issue involved, it would be appropriate to have glance look at the relevant provisions of Sections 16 of IGST Act, 2017, Section 54 of the CGST Act and Rule 96 of CGST Rules, 2017 are reproduced below:

“16. Zero rated supply.— (1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.”

“54. Refund of tax.— (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.

(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than –

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

(4) The application shall be accompanied by-

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person:

Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.

(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.

(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under subsection (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.

(7) The proper officer shall issue the order under subsection (5) within sixty days from the date of receipt of application complete in all respects.

(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to–

(a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies;

(b) refund of unutilised input tax credit under subsection (3);

(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;

(d) refund of tax in pursuance of section 77; (e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person;

(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify.

(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8).

(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may-

(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.

Explanation.––For the purposes of this sub-section, expression “specified date” shall mean the last date for filing an appeal under this Act.

(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

(12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.

(13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under subsection (2) of section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39.

(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

Explanation.-For the purposes of this section,––

(1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3).

(2) “relevant date” means-

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,––

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of––

(i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

(e) in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.”

Rule 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 a departure manifest or 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- 3 or FORM GSTR-3B, as the case may be;

(2) The details of the relevant export invoices in respect of export of goods contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India.

Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1 for a tax period has been extended in exercise of the powers conferred under section 37 of the Act, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-1 after the return in FORM GSTR-3B has been furnished and the same shall be transmitted electronically by the common portal to the system designated by the Customs: Provided further that the information in Table 6A furnished under the first proviso shall be auto-drafted in FORM GSTR1 for the said tax period.

(3) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3 or FORM GSTR3B, as the case may be from the common portal, the system designated by the Customs or the proper officer of Customs, as the case may be, shall process the claim of refund in respect of export of goods and an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.

(4) The claim for refund shall be withheld where,-

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or

(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.

(5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal.

(6) Upon transmission of the intimation under sub-rule (5), the proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07.

(7) Where the applicant becomes entitled to refund of the amount withheld under clause (a) of sub-rule (4), the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD- 06.

(8) The Central Government may pay refund of the integrated tax to the Government of Bhutan on the exports to Bhutan for such class of goods as may be notified in this behalf and where such refund is paid to the Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.

(9) The application for refund of integrated tax paid on the services exported out of India shall be filed in FORM GST RFD-01 and shall be dealt with in accordance with the provisions of rule 89.

(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E), dated the 18th October, 2017 or notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 or notification No. 78/2017- Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017.”

11. Section 16 of the IGST Act, 2017 referred to above deals with Zero rated supply ie. For supplies of goods or services or both, which includes supplies of export of goods or services or both, and supplies made to the Special Economic Zone Unit or Special Economic Zone Developer and the manner of zero rating. It is not in dispute that the goods in question are one of “Zero Rated supplies”. A registered person making “Zero Rated Supplies” becomes eligible to claim refund under the options as provided in sub-clauses (a) and (b) to clause (3) of Section 16 referred to above. Section 54 of the IGST Act, 2017 provides that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him shall make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined will have to be credited to the fund referred to in Section 57 of the CGST Act, 2017. So far as Rule 96 of the CGST Rules, 2017 are concerned, the same raises a deeming fiction inasmuch as the shipping bills, which are submitted by the exporter of the goods are deemed to be treated an application for refund of the integrated tax paid on such goods so exported out of India. On bare reading of Section 54 referred to above along with Rule 96, more particularly Rule 96(a), it transpires that the claim for refund can be withheld only in two circumstances as provided in Sub-Clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017.

12. In the present case, admittedly, the shipping bills have been amended pursuant to the decision of the Superintendent of Customs (Export) as reflected in communication bearing No.VIII/48-834/EXP/AMD/ MP&SEZ/17-18 DATED 30.10.2017. It is not in dispute that the Demand Draft of differential drawback aggregating to an amount of ₹ 3,39,245/- has been realized by the respondent Authorities. So far as issue of whether the respondents are justified in withholding the refund of IGST paid by the exporter of the goods i.e. “Zero Rated Supply” is concerned, is no more res integra. This Court had an occasion to deal with such issue in the similar set of facts of the case.

13. In the case of Amit Cotton Industries Vs. Principal Commissioner of Customs reported in [2019] 107 taxmann.com167(Gujarat) is concerned, the relevant observations are reproduced herein below:

“23. Section 16 of the IGST Act, 2017, referred to above provides for zero rating of certain supplies, namely exports, and supplies made to the Special Economic Zone Unit or Special Economic Zone Developer and the manner of zero rating.

24. It is not in dispute that the goods in question are one of zero rated supplies. A registered person making zero rated supplies is eligible to claim refund under the options as provided in sub-clauses (a) and (b) to clause (3) of Section 16 referred to above.

26. Rule 96 of the CGST Rules provides for a deeming fiction. The shipping bill that the exporter of goods may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India. Section 54 referred to above should be read along with Rule 96 of the Rules. Rule 96(4) makes it abundantly clear that the claim for refund can be withheld only in two circumstances as provided in sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017.

27. In the aforesaid context, the respondents have fairly conceded that the case of the writ-applicant is not falling within sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the Rules, 2017. The stance of the department is that, as the writ applicant had availed higher duty drawback and as there is no provision for accepting the refund of such higher duty drawback, the writ-applicant is not entitled to seek the refund of the IGST paid in connection with the goods exported, i.e. ‘zero rated supplies’.

28. If the claim of the writ-applicant is to be rejected only on the basis of the circular issued by the Government of India dated 9th October 2018 referred to above, then we are afraid the submission canvassed on behalf of the respondents should fail as the same is not sustainable in law.

29. We are not impressed by the stance of the respondents that although the writ-applicant might have returned the differential drawback amount, yet as there is no option available in the system to consider the claim, the writ-applicant is not entitled to the refund of the IGST. First, the circular upon which reliance has been placed, in our opinion, cannot be said to have any legal force. The circular cannot run contrary to the statutory rules, more particularly, Rule 96 referred to above.

30. Rule 96 is relevant for two purposes. The shipping bill that the exporter may file is deemed to be an application for refund of the integrated tax paid on the goods exported out of India and the claim for refund can be withheld only in the following contingencies :

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of subsection (10) or sub-section (11) of Section 54; or

(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.

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34. We take notice of two things so far as the circular is concerned. Apart from being merely in the form of instructions or guidance to the concerned department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Over and above the same, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents. We are of the view that Rule 96 of the Rules, 2017, is very clear.”

14. So far as the issue with regard to the applicability of Circular dated 09.10.2018 read with Notification 31/2016 – Cus (N.T.) dated 31.10.2016 as amended by Notification 59/12 dated 29.06.2017 and Notification 73/2017-Customs (NT) dated 26.07.2017 are concerned, it would be apt to reproduce the observations made by the Hon’ble Apex Court in the case of Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries, reported in 2008(12) S.T.R. 416 (S.C.). In the aforesaid decision, the Constitutional Bench of the Apex Court was considering the binding nature of a circular issued under the Central Excise act, 1944 which were contrary to decisions rendered by the Supreme Court. The Apex Court in the above case held that :-

“Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/ circulars issued by the Central Government and S.R.JOSHI 16 of 18 wp-1266-2013 of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the Court. It is for the Court to declare what the particular provision of statute says and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law.”

Again, in the case of J.K.Lakshmi Cement Limited v. Commercial Tax Officer, Pali, reported in 2018(14) G.S.T.L. 497 (S.C.), wherein the Hon’ble Supreme Court has observed at para 25, which reads as under:

“The understanding by the assessee and the Revenue, in the obtaining factual matrix, has its own limitation. It is because the principle of res judicata would have no application in spite of the understanding by the assessee and the Revenue, for the circular dated 15.04.1994, is not to the specific effect as suggested and, further notification dated 07.03.1994 was valid between 1st April, 1994 up to 31st March, 1997 (upto 31st March, 1997 vide notification dated 12.03.1997) and not thereafter.The Commercial Tax Department, by a circular, could have extended the benefit under a notification and, therefore, principle of estoppel would apply, though there are authorities which opine that a circular could not have altered and restricted the notification to the determent of the assessee. Circulars issued under tax enactments can tone down the rigour of law, for an authority which wields power for its own advantage is given right to forego advantage when required and considered necessary. This power to issue circulars is for just, proper and efficient management of the work and in public interest. It is a beneficial power for proper administration of fiscal law, so that undue hardship may not be caused. Circulars are binding on the authorities administering the enactment but cannot alter the provision of the enactment, etc. to the detriment of the assessee. Needless to emphasise that a circular should not be adverse and cause prejudice to the assessee.”

Thus, such Circulars are merely in the form of instructions or guidance to the concerned Department and it explains the provisions of drawback, however, it has nothing to do with the IGST refund. More particularly, Rule 96 of GCST Rules, 2017 is explicitly clear on the said aspect.

15. Even recently this Court had an occasion to deal with the similar facts in the case of Awadkrupa Plastomech Pvt. Ltd. Vs. Union of India in Special Civil Application No.1014 of 2020 dated 15.12.2020, whereby reliance was made upon the Circular 37/2018-Customs dated 09.10.2018, whereby the competent Authority had withheld the refund of IGST on the ground that exporters had availed the option to take drawback at higher rate in place of the IGST refund out of their own volition. This Court held as under:

“9. Even as per the Condition No.7 of the Notification131/2016–Cus. (N.T.) dated 31/10/2016, if the rate indicated in the columns (4) i.e. higher duty drawback and (6) i.e. lower duty drawback are the same, then it shall necessarily imply that the same pertains only to the Customs component and is available irrespective of whether the exporter has availed of the CENVET facility or not.

10. The petitioner had exported Rope Making Machine HSN Code 84794000 which attracts the same rate under both the columns (4) & (6) respectively i.e. 2 percent. Thus it is evident that the petitioner has claimed drawback of the customs component only for their exports and there arises no question of denying the refund of IGST. The rationale for not allowing the refund of IGST for those exporters, who claim higher duty drawback is that the higher duty drawback reflects the elements of Customs, Central Excise and Service Tax taken together and since higher duty drawback is already being availed than granting the IGST refund would amount to double benefit as the Central Excise and Service Tax has been subsumed in the GST. In the case of the writ applicant, the drawback rates being the same, it represents only the Customs elements, which did not get subsumed in the GST and thus, the writ applicant cannot be said to have availed double benefit i.e. of the IGST refund and higher duty drawback.

11. In the result, this petition succeeds and is hereby allowed. The respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e.’Zero Rated Supplies’ made vide the shipping bills. It appears that the writ applicant has also prayed to pay interest at the rate of 9% on the amount of refund from the date of shipping bill till the date on which the amount is actually paid. We may only say that if the refund of the principal amount is not sanctioned and actually paid to the writ applicant within the period of six weeks from the date of the receipt of this order,then interest would start accumulating at the rate of 9% and the amount shall be paid accordingly.”

16. So far as prayer of the petitioners to grant interest @ 18% on the amount of refund of IGST is concerned, we have carefully gone through the decisions relied upon by the petitioners in the case Jagdamba Polymers Ltd. (Supra) and Purnima Advertising Agency Pvt. Ltd. (Supra). In both the aforesaid decisions, the issue with regard to entitlement of the interest at appropriate rate for delay in not paying the refund and also for paying interest on interest was under consideration. In the aforesaid decisions, the facts indicate that the petitioners therein have prayed for refund prior to insertion of Section 11BB in the Central Excise Act, 1944, which had been inserted w.e.f. 26.05.1995 thereby providing for interest on delayed refund. In the present matter, the issue relates to inaction of the respondent Authorities in not taking decision with regard to the refund of IGST with regard to the goods exported i.e. at “Zero Rated Supplies”. Akin provisions in form of Section 56 of the CGST Act, 2017, is incorporated, which deals with the interest on delayed refund. Before adverting to the issue of interest, it would be appropriate to reproduce Section 56 of the CGST Act, which reads as under:

“Interest on delayed refunds:

Section 56: If any tax ordered to be refunded under subsection (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

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 issue with regard to withholding of refund of IGST in connection with the goods exported i.e. “Zero Rated Supplies” vis-a-vis wrong drawback claim has been settled in view of the case of Amit Cotton Industries (Supra) decided on 22.07.2019. The aforesaid decision was further challenged by the respondent Authorities by way of filing appeal being Special Leave Petition (Civil) Diary No.5502 of 2021 before the Hon’ble Supreme Court, which came to be dismissed vide order dated 22.03.2021. Thus, there is a direct binding decision of this Court, which is rendered in favour of the assessee holding the assessee entitled to the refund of IGST. Despite the aforesaid decision of this Court in the case of Amit Cotton Industries (Supra), for the reasons best known to the adjudicating authority, the adjudicating authority has failed to abide by the aforesaid decision and has chosen not to take decision with regard to the refund of IGST. At this stage, it would be worth to refer to the ratio laid down by this Court in the case of E.I. Dupont India (P) Ltd. Vs. Union of India reported in 2014(305) ELT 282 (Guj), whereby this Court after relying upon the decision of the Hon’ble Supreme Court in the case of Union of India Vs. Kamlakshi Finance Corporation Ltd. reported in 1991(55) ELT 433 has strongly disapproved such arbitrary act of the adjudicating authority in ignoring binding decisions / orders passed by the higher Appellate Authorities / Courts. This Court in clear and unequivocal message rendered by pronouncement of the decision of the Hon’ble Supreme Court as well as this Court has cautioned the State Authorities to abide by the decision of the higher Appellate Authorities / Courts. To repeat, on going through entire record, the stand of the respondent Authority to withhold IGST based on non-consideration of Judicial pronouncement is equally irrational and arbitrary.

17. In view of the aforesaid settled legal position, the present petition succeeds. We hereby direct the respondent Authorities to immediately sanction the refund towards IGST paid in respect of goods exported “Zero Rated Supplies” made under the shipping bill as referred hereinabove.

In peculiar facts and circumstances of the case, we further direct respondent authorities to grant interest @ 9% from the date when the bills for refund of IGST were raised by the petitioner, till its actual payment. The 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 released such amount, then the petitioners shall be entitled for realization of further interest @ 9% till its actual payment.