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December 29, 2022

Refund of IGST & Duty drawback cannot be subject to limitations pertaining to investigations

by CA Shivam Jaiswal in GST, Legal Court Judgement

Refund of IGST & Duty drawback cannot be subject to limitations pertaining to investigations

Facts and issues of the case

The facts of the case is the Petitioner has prayed for a writ of mandamus directing the Respondents to sanction refund of IGST amount of Rs. 5,80,58,350/- and duty drawback amounting to Rs. 39,65,237/- immediately along with interest @ 24 % p.a. and to sanction provisional refund @ 90% of the disputed amount in terms of Section 54 (6) of the Central Goods and Services Tax Act, 2017 read with Central Goods and Services Rules, 2017 and for other reliefs .

It is undeniable that the petitioner’s applications filed by the Petitioner for seeking refund from IGST is pending which was made vide letters dated 03/12/2021, 08/12/2021 and 16/12/2021. These letters were part of the petitioner’s application for a duty drawback. The petitioner has not yet received a response to the letters or applications seeking a refund of the IGST or a duty drawback till date.

Observation

Ms. Neeta Masurakar, the learned counsel for the Respondents, on instructions, states that there are certain investigations going on.

 Mr. Bharat Raichandani, the learned counsel for the Petitioner, tenders copy of the Circular dated 23/01/2020, Press release dated 29/10/2017 and Circular No. 17/17/2017-GST dated 15/11/2017 in support of his contention that the Respondents cannot with hold the payment of refund of IGST as well as duty drawback

In order to strengthen his argument, he also cited the Telangana High Court’s ruling in The Central Board of Indirect Tax and Customs and 5 Ors. in Writ Petition No. 15804 of 2021, 2021-TIOL-2143-HC-Telangana-GST. In view of the fact that the applications for refund of IGST and

 duty drawback are still pending, we direct the Respondent No. 3 to decide the applications for refund of IGST and duty drawback made by the Petitioner referred in aforesaid within a period of four weeks  from today without fail.

The Respondent No. 3 while processing the applications made by the Petitioner shall take into consideration the Circular dated 23/01/2020, Press release dated 29/10/2017 and Circular No. 17/17/2017-GST dated 15/11/2017 and principles laid down by the Telangana High Court in case of Bhagyanagar Copper Private Limited V/s The Central Board of Indirect Tax and Customs and 5 Ors. referred to aforesaid.

The Commissioner of CGST shall also grant personal hearing to the Petitioner before passing the appropriate order.

It is made clear that if according to the Commissioner of CGST any further investigation is required to be made before granting final refund of IGST as well as duty drawback, the Commissioner of CGST shall pass the order for provisional refund within the time prescribed in terms of Section 54(6) of the Central Goods and Services Tax Act, 2017 read with Central Goods and Services Rules, 2017.

Conclusion

Within one week of the day when the Commissioner of CGST passes an order, the Petitioner must be informed of it. In the proposed order, Commissioner of CGST is required to provide justifications. Depending on whether or not the petitioner’s requests for an IGST refund and duty drawback is allowed fully or partly , the refund shall be made within one week from the date of passing of such order.

The petitioner would have the freedom to bring the proper actions if the Respondent No. 3’s order went adversely against him.It is made clear that this Court has not made any pronouncements regarding the issue’s merits. Both parties’ claims are left open for discussion. The Petitioner must receive 48 hours’ prior written notice from Respondent No. 3 of the proposed date of the hearing.

Read full case law given below

R.-K.-Copper-and-Alloy-LLP-Vs-Union-of-India-Bombay-High-Court-1

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