TD Power Systems Limited Vs Commissioner of Customs (Madras High Court)
Summary : The Madras High Court allowed TD Power Systems Limited’s writ petition seeking a refund of IGST paid on exported goods. The company filed Shipping Bill No. 9009011 on 29 September 2017 to export AC generators with an FOB value of Rs. 10,16,44,025.99. Customs issued a Let Export Order that day, but a technical issue with ICEGATE prevented it from being registered against the shipping bill. Customs accepted the company’s request for a manual Let Export Order, the consignment was shipped on 4 October 2017, and the export was subsequently regularised through Manual Shipping Bill No. 117972 dated 14 March 2019.
Customs referred the claim to the GST Department and relied in its counter-affidavit on CBIC Circular No. 17/17/2017-GST to contend that manual claims for zero-rated supplies had to be submitted to the jurisdictional GST authority in Form GST RFD-01A. The GST Department stated that it lacked jurisdiction to sanction the refund and acknowledged that the company had furnished Form GSTR-3B. The Court held that Rule 96(3) of the CGST Rules, 2017 assigns processing of the claim to the designated Customs system or the proper officer of Customs. It directed the second respondent to process the claim and sanction the admissible refund with applicable interest within four weeks of receiving a copy of the order. The company also asserted entitlement to drawback and MEIS benefits. The operative direction concerns the IGST refund and applicable interest.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner has approached this Court seeking a direction to the respondents, particularly the second respondent, to sanction the refund of Integrated Goods and Services Tax (IGST) in respect of Manual Shipping Bill No.117972 dated 14.03.2019, along with applicable interest.
2. The petitioner states that, in the course of its business, it filed Shipping Bill No.9009011 dated 29.09.2017 for the export of AC generators, with a free- on-board (FOB) value of Rs.10,16,44,025.99/-. The goods were examined by the Customs officers, and a Let Export Order was issued on 29.09.2017. However, due to technical issues with the ICEGATE software, the Let Export Order could not be registered against the shipping bill. As the petitioner was under pressure from its buyers to dispatch the consignment, it requested the first respondent to issue a manual Let Export Order. The request was accepted, and the consignment was shipped on 04.10.2017.
3. The petitioner claims that it is entitled to the refund of IGST and to the applicable drawback and Merchandise Exports from India Scheme (MEIS) benefits. The petitioner submitted a representation to the second respondent seeking a refund of IGST on the basis of the manual shipping bill. However, the second respondent declined to process the claim, stating that the petitioner should approach the fourth respondent, the GST Department. Aggrieved by the failure to process the refund claim, the petitioner has filed this writ petition.
4. Heard the learned counsel appearing for the parties.
5. There is no dispute that the Let Export Order could not be registered against the shipping bill due to technical issues with the ICEGATE software and that the Customs Department subsequently regularised the export through the manual shipping bill. The petitioner, therefore, submitted a representation to the second respondent seeking a refund of the IGST paid on the exported goods.
6. By letter dated 07.06.2024, the second respondent requested the fourth respondent to process the petitioner’s IGST refund claim on the basis of the manual shipping bill. In response, the fourth respondent, by communication dated 10.07.2024, stated that, under Section 54 of the Central Goods and Services Tax Act, 2017, and the Rules made thereunder, the GST Department had no jurisdiction to sanction a refund of IGST paid on exported goods, whether the claim was made online or manually.
7. In its counter-affidavit, the Customs Department stated that the petitioner had submitted an application dated 10.04.2024 seeking a refund of IGST in respect of the shipping bill. It further stated that, under CBIC Circular No.17/17/2017-GST, manual refund claims relating to zero-rated supplies were required to be submitted to the jurisdictional GST authority in Form GST RFD-01A. The petitioner’s complaint was closed on 22.04.2024, on the ground that the claim relating to the manual shipping bill fell within the jurisdiction of the GST Department.
8. Rule 96 of the Central Goods and Services Tax Rules, 2017, deals with the refund of IGST paid on goods exported out of India. Under sub-rule (3), upon receipt of information regarding the furnishing of a valid return in Form GSTR-3B from the common portal, the system designated by the Customs Department or the proper officer of Customs, as the case may be, shall process the refund claim relating to the export of goods. The amount of IGST paid in respect of each shipping bill or bill of export is then to be electronically credited to the applicant’s registered bank account, subject to the applicable conditions. In the present case, the petitioner has furnished Form GSTR-3B to the fourth respondent, as acknowledged in the communication dated 10.07.2024 addressed to the second respondent.
9. A reading of Rule 96(3) makes it clear that the processing of an IGST refund claim relating to exported goods falls within the domain of the Customs system or the proper officer of Customs, as the case may be. The fourth respondent has also stated that the GST Department has no jurisdiction to sanction the refund claimed in the present case. In these circumstances, the second respondent cannot reject the petitioner’s claim merely on the ground that it falls within the jurisdiction of the GST Department. The second respondent is, therefore, required to process the petitioner’s claim in accordance with Rule 96 of the CGST Rules, 2017, and the other applicable provisions of law.
10. Accordingly, the writ petition is allowed. The second respondent is directed to process the petitioner’s claim for refund of IGST in respect of Manual Shipping Bill No. 117972 dated 14.03.2019 and sanction the admissible refund, along with applicable interest, in accordance with law. The exercise shall be completed within a period of four weeks from the date of receipt of a copy of this order. There shall be no order as to costs.
