Case Law Details
Reliance Chemotax Industries Ltd. Vs Union of India (Rajasthan High Court)
Department cannot take Coercive Action unless a SCN is issued w.r.t Claim of IGST Refund on Exports under Advance Authorization Scheme
The Hon’ble Rajasthan High Court in Reliance Chemotax Industries Ltd. v. Union of India [Civil Writ Petition No. 6961 of 2023 dated May 13, 2024] has directed the Revenue not to take coercive measures against the Petitioner w.r.t Recovery pertaining to the wrong claim of IGST Refund as the vires of Rule 96(10) have been challenged by the Petitioner and due statutory process viz. issue of Show Cause Notice (“SCN”) was not followed by the Revenue.
Facts:
M/s. Reliance Chemotax Industries Ltd. (“the Petitioner”) is aggrieved by the fact that the Respondents were trying to coercively recover part of the amount of IGST Refund on Exports made under the Advance Authorization Scheme by terming it as an illegitimate refund scheme.
Therefore, the Petitioner has preferred the present Writ Petition and has also challenged the vires of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”)
Issue:
Whether coercive recovery measures can be employed by the Revenue Department without the issuance of SCN?
Held:
The Hon’ble Rajasthan High Court vide Civil Writ Petition No. 6961 of 2023, observed as under:
- Respondents are directed not to proceed with any coercive steps against the Petitioner without adhering to the statutory requirements of the Rules.
- List the matter further on July 22, 2024, for further consideration on challenge to the vires of Rule 96(10) of the CGST Rules.
Our Comments:
Rule 96(10) of the CGST Rules provides that a registered person can claim a refund of IGST paid on the export of goods or services if they do not avail of the benefits of deemed exports, such as Advance Authorisation, Export Promotion Capital Goods Authorisation, Export Oriented Unit status, and others. The said rule is reproduced below for your kind perusal:
“(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have –
“(a) received supplies on which the benefit of Notification No. 48/2017 – Central Tax, dated the 18th October, 2017, except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme or Notification No. 40/2017 – Central Tax (Rate), dated the 23rd October, 2017, or Notification No. 41/2017 – Integrated Tax (Rate), dated the 23rd October, 2017; or
(b) availed the benefit under Notification No. 78/2017 – Customs, dated the 13th October, 2017, or Notification No. 79/2017 – Customs, dated the 13th October, 2017, except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.
Explanation. – For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.”
It must be noted that the vires of Rule 96(10) of the CGST Act are currently under challenge in various High Courts.
Pari Materia reference can be drawn from the Order of the Gujarat High Court in the case of M/s. Sterlite Power Transmission Ltd. Versus Union of India [2023 (75) G. S. T. L. 454 (Guj.)] wherein the Court had entertained several petitions involving the issue of vires of Rule 96(10) of the CGST Rules and has also granted interim protection to the Petitioners concerned. Therefore, by way of interim relief, it was directed that the respondent authority shall not make any coercive recovery from the petitioner in respect of the refund of the integrated tax already paid till further orders.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. Learned counsel for the petitioner submits that in pursuance of the letter dated 14.03.2023 subject of which was “Wrong Claim of IGST Refund on the Exports made under Advance Authorization (AA) Scheme”, the respondents are trying to coercively recover part of the amount while terming it as illegtimate refund scheme. Learned counsel for the petitioner also submits that he has also challenged vires of Rule 96 sub-Rule 10 of CGST Rules, 2017.
2. Learned counsel for Union of India seeks some time to respond on the challenge to the vires, whereas Mr. Rajvendra Sarswat appearing for respondents No.2 and 3 fairly submits that the show-cause notice is yet to be issued to the petitioner, therefore, except for the challenge to the vires, the writ petition is pre-mature.
3. The matter requires consideration.
4. List the matter on 22.07.2024.
5. In the meanwhile, the respondents No.2 and 3 shall not proceed to take any coercive steps against the petitioner without adhering to the statutory requirement of the Rules.
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