GST refund allowed as denial of IGST refund for transitional-period exports was held unsustainable where duty-drawback rates in Columns A and B were identical, as identical rates did not reflect availment of higher composite drawback

Case Details

• Case Title: Intec Export India Private Limited v. Union of India & Others

• Court: High Court of Delhi

• Petition No.: W.P.(C) 9065/2023

• Date of Judgment: 30 October 2023

• Category of Dispute: IGST Refund on Export of Goods (Zero-Rated Supply) – Transitional Period (01.07.2017–30.09.2017)

• Relevant Statutory Provisions:

  • Section 16, IGST Act, 2017 (Zero-rated supply; refund mechanism)

  • Section 54, CGST Act, 2017 (Refund)

  • Rule 96, CGST Rules, 2017 (IGST refund on exports)

  • Duty Drawback Notifications: 131/2016-Cus.(NT), 59/2017-Cus.(NT), 73/2017-Cus.(NT)

  • Circular: 37/2018-Customs

Facts (Paras 1–6)

The petitioner, a merchant exporter, exported goods during the transitional period from 01.07.2017 to 30.09.2017, paying IGST on such exports and claiming refund under Section 54 read with Rule 96. The department denied refund based on para 11(d) read with para 12A(a)(ii) of the Drawback Notification 131/2016-Cus.(NT), as amended, and Circular 37/2018-Customs, which prohibited IGST refund where the exporter had availed higher duty drawback (Column A) instead of the lower rate (Column B).

The petitioner demonstrated that for several exported items, Column A and Column B rates were identical, meaning no composite (Central Excise + Service Tax) component existed and only customs-element drawback was neutralised. The petitioner therefore argued that denial of refund was ultra vires Section 16 of the IGST Act and contrary to Rule 96. The claim also included instances where Column A rate was higher, for which the petitioner sought refund after deducting differential drawback.

Questions / Issues (Paras 5–6, 7–12)

1. Whether IGST refund can be denied solely because the exporter availed “higher” drawback rate under Column A, even where both columns reflected identical rates, indicating absence of excise/service-tax elements?

2. Whether paras 11(d) read with 12A(a)(ii) of the Drawback Notification and Circular 37/2018 are ultra vires the statutory refund scheme under Section 16 IGST Act and Section 54 CGST Act?

3. Whether the petitioner is entitled to refund of IGST along with interest, including refund after adjusting differential drawback where Column A rate was higher?

Observations of the Court (Paras 7–12)

The Court noted that the controversy is fully covered by earlier decisions, beginning with:

• TMA International Pvt. Ltd. v. UOI (Delhi HC) – holding that identical rates in Columns A and B signify only customs-component drawback, and hence IGST refund cannot be denied.

• Awadkrupa Plastomech Pvt. Ltd. v. UOI (Gujarat HC) – elaborating that identical rates demonstrate absence of excise/service-tax components; therefore, no double-benefit arises. The Supreme Court dismissed SLP against this ruling on 30.07.2021.

• Kishan Lal Kuria Mal International v. UOI (Delhi HC) – extending refund entitlement even in cases where higher drawback was taken, by permitting refund post deduction of differential drawback.

• Amit Cotton Industries v. Principal Commissioner of Customs (Gujarat HC) – holding Circular 37/2018 irrelevant to IGST refund under Rule 96; SLP dismissed on 22.03.2021.

The Court reiterated that Rule 96 is clear regarding refund of IGST on exports and cannot be curtailed by circulars or drawback notifications. The rationale that higher drawback prevents refund is inapplicable when rates are identical, as identical rates reflect only customs-component neutralisation.

Judgment / Verdict (Paras 12–14)

The Delhi High Court held that:

• The petitioner’s case is entirely covered by binding precedent, including decisions affirmed by the Supreme Court.

• The respondents are directed to process and grant IGST refund along with applicable interest, after verifying the extent of drawback availed.

• Necessary adjustments must be made where higher drawback was taken, ensuring refund after deduction of differential drawback.

• Refund must be processed strictly in accordance with law and in light of the judgments cited.

The petition was disposed of in these terms.

Summary of Cases Referred (Tabular Form)

Between Fine Lines – Practical Takeaways for Trade

Exporters who, during the early GST rollout phase, claimed drawback in cases where Column A and B rates were identical, remain fully eligible for IGST refund, since identical rates cannot be treated as “higher drawback”. Even where higher drawback was taken, refund remains permissible after deduction of the differential. Denial of IGST refund based on Circular 37/2018 or drawback notifications is unsustainable under Section 16 IGST Act and Rule 96. Exporters may rely on this line of judgments to secure long-pending IGST refunds for transitional-period exports.

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