01. 1. This is the second writ petition by the same Petitioner i.e. M/s B.S. Minerals on the issue of denial of refund of unutilized input tax credit (ITC) against export of iron ore fines for which the export duty is nil as a result of an exemption notification.

2. In earlier writ petition of the Petitioner i.e. W.P.(C) No.26685 of 2021, the challenge was to two instructions dated 8th June and 25th June 2021 issued by the Joint Commissioner of CT and GST (Law) at Cuttack instructing Circle Heads in Odisha to treat such export as duty paid and refusing the refund.

3. This Court had in the said writ petition on 8th September 2021, while issuing notice directed that no further steps would be taken vis-à-vis the Petitioner by the Opposite Parties pursuant to those impugned notices. The Petitioner in the said writ petition had also challenged the show cause notice (SCN) dated 21st July 2021 which was pertaining to the period April 2019 to March. 2020. This Court had directed that the proceedings pursuant thereto would continue, but the consequential order would not be given effect to till further orders of this Court.

4. The present writ petition challenges the letters dated 8th June and 25th June 2021 and an SCN dated 21st July 2021 pertaining to the three months i.e. April, May and June, 2020.

5. A development that has taken place subsequent to the above order passed by this Court is that the GST Council at its 45th Meeting on 17th September 2021 decided inter alia to issue a clarification in respect of goods for which the export duty is in fact not paid. It was clarified that “only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54 (3) of the CGST Act, 2017 from availment of refund of accumulated ITC.” As a result of the above decision of the GST Council, a fresh circular dated 20th September 2021 has been issued by the Central Board of Indirect Taxes and Customs (CBITC), GST Policy Wing, Ministry of Finance, Government of India in which one of the questions addressed is, at serial No.3, “whether the first proviso to section 54(3) of the CGST/SGST Act, prohibiting refund of unutilized ITC is applicable in case of exports of goods which are having NIL rate of export duty?” The clarification issued reads as under:

“1. The term ‘subjected to export duty’ used in first proviso to section 54(3) of the CGST Act, 2017 means where the goods are actually leviable to export duty and suffering export duty at the time of export. Therefore, goods in respect of which either NIL rate is specified in Second Schedule to the Customs Tarriff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, cannot be considered to be subjected to any export duty under Customs Tarrif Act, 1975.

2. Accordingly, it is clarified that only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54 (3) from availment of refund of accumulated ITC. Goods, which are not subject to any export duty and in respect of which either NIL rate is specified in Second Schedule to the Customs Tariff Act, 1975 or which are fully exempted from payment of export duty by virtue of any customs notification or which are not covered under Second Schedule to the Customs Tariff Act, 1975, would not be covered by the restriction imposed under the first proviso to section 54 (3) of the CGST Act for the purpose of availment of refund of accumulated ITC.”

6. In view of the above development, Mr. Agrawal, learned counsel appearing for the Petitioner submits that a direction should be issued to the Opposite Parties to once again process the refund application of the Petitioner in light of the fresh circular issued as above.

7. Mr. Mishra, learned Additional Standing Counsel for the Department while producing a copy of the clarification dated 29th September 2021 whereby the earlier clarification issued on 25th June 2021 stands withdrawn, states that if a direction is given for time bound disposal of the refund application, it will be complied with.

8. It is seen that since the instruction dated 25th June 2021 stands withdrawn, clearly the earlier instruction dated 8th June 2021 which is in the same vein also does not survive. Therefore, one of the prayers of the previous petition as well as the present petition challenging the aforementioned circulars does not survive.

9. Since the impugned SCN has been issued only as result of the above circulars, it also does not survive and is accordingly set aside.

10. A direction is now issued to the Opposite Party-authority to reprocess the refund application of the Petitioner in light of the fresh circular issued on 20th September 2021 (Annexure-14) and convey the decision to the Petitioner thereon not later than 7th February, 2022. It is made clear that whatever the technical issues for reprocessing the refund application should be resolved by the authority as expeditiously as possible and in a manner to ensure compliance with the timeline set by this Court in this order. Further, it is directed that Opposite Party Nos.6 and 7 will extend all their cooperation with the Officers of the Department to ensure compliance with the time bound direction issued.

11. In view of the above, the rejection of the refund application does not survive and is hereby set aside. If there is any difficulty in carrying out the above directions, it will be open to the parties to apply to this Court.

12. The writ petition is disposed of in the above terms.

13. An urgent certified copy of this order be issued as per rules.