CASE SUMMARY
W.P.(C) 10822/2022 & W.P.(C) 10406/2021
High Court of Delhi, Judgment dated 06.10.2022**
Category: Refund – IGST on Export of Goods (Transitional Period)
Facts (Paras 1–4)
The petitioners—exporters of goods during the transitional period July–September 2017—paid IGST on exports and simultaneously claimed duty drawback under Column A, which carried higher rates. They sought a declaration that Para 11(d) read with 12A(a)(ii) of the Drawback Notification (31.10.2016), as amended, and CBIC Circular No. 37/2018 dated 09.10.2018, were ultra vires Section 16 of the IGST Act, Section 54 of the CGST Act, and Rule 96 of the CGST Rules. They contended that the impugned instruments wrongly denied IGST refund solely because higher drawback was claimed.
The petitioners argued that although they mistakenly opted for Column A drawback due to transitional confusion, the IGST paid @18% far exceeded the incremental drawback difference; thus they never intended to avail dual benefit. They relied on the Delhi High Court decision in Maxam India Pvt. Ltd. permitting the same relief.
Questions of Law (Paras 1–3)
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Whether claiming higher-rate drawback under Column A bars an exporter from receiving IGST refund on zero-rated supplies under Section 16 of the IGST Act?
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Whether Para 11(d), 12A(a)(ii) of the Drawback Notification and Circular No. 37/2018 can curtail statutory right of refund under Section 16 IGST Act r/w Section 54 CGST Act and Rule 96 of the CGST Rules?
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Whether IGST refund can be denied for transitional-period exports on the basis of administrative instructions, when such instructions post-dated the exports?
Court’s Observations (Paras 5–9)
The Court noted that the Respondents attempted to justify denial of refund based on Circular dated 09.10.2018, but the Court found the matter to be squarely covered by the Gujarat High Court decision in Amit Cotton Industries (2019), which had held that:
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The Circular explaining drawback has no relation to IGST refunds.
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The Circular was issued after the exports; hence it cannot govern earlier transactions.
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Rule 96 of CGST Rules is explicit—IGST paid on export must be refunded.
The Supreme Court had dismissed the SLP against Amit Cotton Industries on 22.03.2021, affirming the legal position.
The Delhi High Court held that the petitioners’ case is pari materia with Amit Cotton Industries and Maxam India Pvt. Ltd. and, therefore, export IGST refund cannot be withheld merely because higher duty drawback was claimed.
The Court further held that jurisdictional authorities may verify:
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the exact duty drawback availed,
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whether Central Excise/Service Tax CENVAT credit was availed, and
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adjust the differential drawback component if required.
Judgment / Final Directions (Paras 8–9)
The writ petitions were allowed, with the following directions:
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Refund of IGST paid on goods exported during July–September 2017 must be granted.
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Differential duty drawback, if not already repaid, may be recovered by adjustment.
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Refund to be issued within 12 weeks.
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Interest at 7% per annum, payable from the date of the shipping bill to the date of actual refund.
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Jurisdictional Commissionerates may verify drawback/CENVAT credit position before sanctioning refund.
Table of Precedents Referred
| Case | Court | Principle / Verdict | Relevance |
|---|---|---|---|
| Amit Cotton Industries v. Principal Commissioner of Customs (2019) | Gujarat High Court | IGST refund cannot be denied due to higher drawback; Circular 37/2018 irrelevant for IGST refunds; 7% interest ordered. | Applied directly; facts identical. |
| SLP Diary No. 5502/2021 (Amit Cotton Industries) | Supreme Court | SLP dismissed; Gujarat HC decision stands. | Reinforces binding nature. |
| Maxam India Pvt. Ltd. v. Union of India (2022) | Delhi High Court | Exporters entitled to IGST refund even if higher drawback mistakenly claimed. | Direct precedent for Delhi HC. |
Between the Fine Lines – Practical Trade Takeaways
Exporters who mistakenly availed higher duty drawback during the chaotic initial GST transition (Jul–Sep 2017) cannot be denied IGST refund. Administrative circulars cannot override statutory refund rights under Section 16 IGST Act. However, exporters must be ready for verification of the differential drawback component, and any excess may be adjusted before granting refund along with 7% interest.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
