www.taxguru.

in
C/SCA/20126/2018 JUDGMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 20126 of 2018

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-

and
HONOURABLE MR.JUSTICE A.C. RAO Sd/-
==============================================================================

1 Whether Reporters of Local Papers may be allowed YES

to see the judgment ?

2 To be referred to the Reporter or not ? YES

3 Whether their Lordships wish to see the fair copy NO

of the judgment ?

4 Whether this case involves a substantial question NO

of law as to the interpretation of the Constitution
of India or any order made thereunder ?

==============================================================================
M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI
RANIPA
Versus
PRINCIPAL COMMISSIONER OF CUSTOMS
==============================================================================
Appearance:
MR D K TRIVEDI for the Petitioner(s)No. 1
MR PARTH H BHATT for the Respondent(s)No. 1
==========================================================

CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA

and
HONOURABLE MR.JUSTICE A.C. RAO

Date: 27/06/2019
ORAL JUDGMENT
(PER: HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1. RULE returnable forthwith. Mr.Parth Bhatt, the learned

counsel waives service of notice of rule for and on behalf of the
respondents.

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2. By this writ-application under Article 226 of the

Constitution of India, the writ-applicant has prayed for the
following reliefs :

“A. Your Lordships may be pleased to admit this petition;

B. Your Lordships may be pleased to allow this petition;

C. Your Lordships may be pleased to issue writ of

mandamus or any other appropriate writ directing the
respondent authorities to immediately sanction the refund of
IGST paid in regard to the goods exported i.e. 'Zero Rated
Supplies' made vide shipping bills mentioned hereinabove;

D. Your Lordships may be pleased to direct the

respondent authorities to pay interest @ 9% to the petitioner
herein on the amount of refund of IGST mentioned
hereinabove from the date of shipping bills uptill the date on
which the amount of refund is paid to the petitioner herein,
as the same is arbitrarily and illegally withheld by the
respondent authorities;

E. Your Lordships may be pleased to grant an ex-parte,

ad interim order in favour of the petitioner herein in terms of
prayer clause 'C' and 'D' hereinabove;

F. Since the petitioner are constrained to approach Your

Lordships by way of this petition only because of illegal act
of respondent authorities, Your Lordships may be pleased to
direct the respondent authorities to pay a cost of this
litigation to the petitioner herein;

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G. Your Lordships may be pleased to grant such other

and further relief/(s) that may be deemed fit and proper in
the interest of justice in favour of the petitioner.”

3. The case of the writ-applicant in its own words as pleaded

in the writ-application is as under :

“5.1. The petitioner herein is a Cotton Ginning Mill. They

are engaged in a business of procuring raw cotton from
farmers, ginning the same, pressing the same, carrying out
necessary process, converting it into bales and then
exporting these cotton bales out of India.

5.2. As required under the statute, they are registered with

the Goods and Service Tax (hereinafter referred to as 'GST')
Authorities. The hold GST Registration certificate bearing
No. 24AAEFA672D1Z1.

5.3. Any supplies made from registered premises i.e.

factory of the petitioner herein would attract GST.
Therefore, GST is paid by the petitioner in accordance with
law. However, since the goods are exported out of India, the
same are to be termed as 'Zero Rate Supply' in accordance
with Section 16 of the IGST Act.

5.4. According to the said provision, a registered person

making 'Zero Rated Supply' has an option to claim refund in
accordance with Section 16(3)(b) in a manner as to, he may
supply goods or services or both, on payment of Integrated

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Tax and claim refund of such tax paid on goods or services

or both supplied, in accordance with Section 54 of CGST Act.

5.5. As provided in Rule 96 of the CGST Rules, 2017, the

shipping bill filed by an exported of goods shall be deemed
to be an application for refund of Integrated Tax paid on the
goods exported out of India and such application shall
deemed to have been filed only when the person in charge
of conveyance carrying the export goods duly files an export
manifest or an export report covering the number and the
date of shipping bills or bills of export and the applicant has
furnished a valid return in Form – GSTR-3 or Form GSTR-3B.

5.6. Accordingly, the petitioner had for the purpose of

exporting goods out of India issued Commercial Invoice,
Export Invoice, Shipping Bills. Export General Manifest and
Bill of Lading were also generated by the Shipping Line.

Sr. Commercial Export Shipping Bill Export Bill of Lading

No. Invoice No. Invoice No. & No. & Date General No. & Date
& Date Date Manifest No.
& Date

1 AC/EXP/ AC/EXP/ 7437636 131676 MSCUUD505

17-18/09 17-18/09 18/07/2017 01/01/2018 394
17/07/2017 17/07/2017 20/07/2017
2 AC/EXP/ AC/EXP/ 7512885 131913 EID0191773
17-18/10 17-18/10 21/07/2017 01/08/2017 26/07/2017
20/07/2017 20/07/2017
3 AC/EXP/ AC/EXP/ 7662194 132230 EID0192292
17-18/11 17-18/11 28/07/2017 08/08/2017 03/08/2017
27/07/2017 27/07/2017

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On perusing the same, it may be observed that goods are

exported top Bangladesh under the aforesaid documents. It
may also be found that following IGST is paid in regard to
the aforesaid goods :

Sr. Shipping Bill No & Date Amount of IGST Paid (Rs)

No.

1 7437636 - 19/07/2017 6,98,628/-

2 7512885 - 21/07/2017 6,88,986/-,
3 7662194 - 28/07/2017 5,17,506/-
TOTAL 19,05,120/-

5.7. As provided in Section 54 of CGST Act, 2017, read

with Section 16 of IGST Act, 2017, immediately after the
goods are exported, considering the shipping bills as
application for refund of IGST paid in regard to the export
goods, the respondent authorities are supposed to
immediately refund the said amount of IGST to the
petitioner.

5.8. In this case, exports were made in July 2017 but till
date, IGST is not refunded. It is pertinent to note that no
reason for withholding the amount of refund is assigned by
the respondent authorities so far.

5.9. Time and again, the petition herein had approached

respondent No.02 herein and requested him to kindly
sanction refund of IGST. It was requested that the same
may be credited in the concerned bank account of the
petitioner in accordance with law. The respondent No.02

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had verbally informed the petitioner that only because the

petitioner had claimed drawback @ 1% in regard to the
exported goods, therefore, refund of IGST would not be
sanctioned. It is also informed that if the petitioner would
have claimed drawback @ 0.15% instead of 1%, their refund
would have been sanctioned.

5.10. Although there is no provision of law under

which refund of IGST could be withheld because of
aforesaid reasons, since the petitioner was suffering from
cash crunch and was in dire need of the refund amount,
they have given away the balance drawback i.e. 0.85% (1%
- 0.15%) along with interest. Subsequently, on 16/10/2018,
petitioner had also written a letter to the Deputy
Commissioner of Customs, Drawback Section (Export),
Mundra, and informed him regarding return of excess
drawback claim under the aforesaid shipping bills. Copy of
letter dtd. 16/10/2018 along with relevant challans and
copies of demand drafts under which the so-called excess
drawback is paid back along with interest are collectively
annexed herewith and marked as ANNEXURE-C Colly.

5.11. Since the respondent authorities had not

credited the refund of IGST in the concerned bank account of
the petitioner so far, vide letter dtd. 05/11/2018; copy
whereof is annexed herewith and marked as ANNEXURE-D,
the petitioner herein had informed the respondent No.1
about reversal of so-called excess drawback along with
interest. It was once again requested that at least in light of

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the fact that the aforesaid amount of drawback was given

away along with interest, the legally payable refund of IGST
amount may kindly be credited to the concerned bank
account of the petitioner in accordance with law.

5.12. Despite repeated follow ups with the respondent

No.01 herein, before and after the date on which aforesaid
letter dtd. 05/11/2018 was submitted, till date, the refund
of IGST amount is not credited to the concerned bank
account of the petitioner herein.

5.13. In response to aforesaid letter dated 5/11/2018

of the petitioner being addressed to the respondent No.2, the
petitioner is in receipt of email dated 28.11.2018 from the
email i.d. [email protected]. The same confirms
that only reason for withholding refund is that the petitioner
had first claimed more rate of draw-back. However, very
conveniently, it failed to deal with the fact that the said
higher rate is given away/paid back by the petitioner. A
copy of the said email is annexed herewith and marked as
Annexure-G. On perusing the said email, it may be found
that the same further talks about circular No.37/2018-
Customs, dated 9.10.2018. However, the said circular is
not relevant in this case because the circular restricts
Drawback if refund is availed and not the other way
around. In any case, since the higher rate of draw-back is
now given away/paid-back, even otherwise the question of
with-holding refund would not arise.”

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4. Thus, it appears from the pleadings as aforesaid that the

writ-applicant had exported goods in July 2017. It is the case of
the writ-applicant that it is eligible to seek refund of the IGST in
accordance with the provisions of the IGST Act, 2017. However,
according to the writ-applicant, without any valid reason the
refund to the tune of Rs.19,05,121=00 has been withheld.
According to the writ-applicant, the respondent no.1 is the
Jurisdictional Head of the Mundra Customs House.. Since the
goods were exported from the Mundra Port, it is the respondent
no.1 who is responsible for the refund in question. According to
the writ-applicant, despite many representations addressed to
the respondent no.2, i.e. the Deputy Commissioner of Customs,
no cognizance has been taken so far as regards the claim for the
lawful refund of the requisite amount.

5. Mr.D.K.Trivedi, the learned counsel appearing for the writ-

applicant, vehemently submitted that there is no legal embargo
on availing the drawback at the rate of 1% higher rate on one
hand and availing refund of the IGST paid in regard to the 'Zero
Rated Supply', i.e. the goods exported out of India, on the other.

6. It is submitted that the refund ought to have been

sanctioned immediately irrespective of the fact, whether the
drawback was claimed at the rate of 1% (higher rate) or at the
rate of 0.15% (lower rate).

7. Mr.Trivedi would submit that the stance of the respondents

that the writ-applicant is not entitled to claim refund as the writ-
applicant had availed drawback at the higher rate in regard to
the finished goods exported out of India, is not sustainable in
law.

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8. Mr.Trivedi submitted that it is not in dispute that his client

paid back to the department the differential drawback amount,
i.e. 0.85%, along with interest.

9. In the aforesaid context, Mr.Trivedi invited the attention of

this Court to page-44 of the paper-book (Annexure-C
collectively). Annexure-C is a letter dated 16th October 2018
addressed by the writ-applicant to the Deputy Commissioner of
Customs, Mundra, with respect to the return of the excess
drawback. The letter reads thus :

“Dt. 16.10.2018
To,
The Deputy Commissioner of Customs,
Drawback Section (Export)
Mundra.

Ref : Return of Excess Drawback Claimed against SB

Nos.7512885 dtd. 21.07.2017, 7437636 dtd. 18.07.2017 &
7662194 dtd. 28.07.2017

Dear Sir,

In continuation to the subject reference we would like to

return the extra drawback claimed due to mistake against
SB Nos.7512885 dtd. 21.07.2017, 7437636 dtd.
18.07.2017 & 7662194 dtd. 28.07.2017.

Pls find below details attached Challans which are

submitted back to the customs.

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SR. NO. SHIPPING BILL DD NO. CHALLAN NO. AMOUNT (INR)

NO. & DT. WITH INT.

1 7512885 DTD. 500787/ 1445 DTD. 137850/-

21.07.2017 500783 04.10.2018

2 7437636 DTD. 500789/ 1443 DTD. 132180/-

18.07.2017 500782 04.10.2018

3 7662194 DTD. 500788/ 1444 DTD. 103480/-

28.07.2018 500784 04.10.2018

Thanking you

Yours faithfully
Sd/-
Amit Cotton Industries”

10. Mr.Trivedi invited the attention of this Court to Section 16

of the IGST Act, 2017, which is with respect to the 'zero rated
supply'. Our attention was thereafter invited to Section 54 of the
CGST Act, 2017, which is with respect to refund of tax. In the
last, Mr.Trivedi invited the attention of this Court to Rule 96 of
the CGST Rule, 2017, which is in respect of the refund of the
integrated tax paid on goods or services exported out of India.
Referring to and relying upon the aforesaid provisions of law,
more particularly, Rule 96, it is submitted that the claim for
refund can be withheld only on two grounds as enumerated in
the sub-clauses (a) and (b) of clause (4) of Rule 96 of the Rules.

11. Mr.Trivedi submitted that it is not in dispute that the

goods were exported to Bangladesh. He pointed out that the
Export Invoices, Shipping Bills, Export General Manifest and Bill
of Lading were generated as regards the export. He would submit
that in such circumstances the said export supplies are 'zero

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rated supplies' in accordance with Section 16 of the IGST Act. He

submitted that as provided in Section 16(3)(b) of the IGST Act,
2017, the writ-applicant had the option to first pay the
integrated tax in regard to the said supplies and then claim the
refund of such tax in accordance with the provisions of Section
54 of the CGST Act, 2017.

12. Mr.Trivedi submitted that as the export supplies were 'zero

rated supplies', his client is entitled to refund as provided in
Section 54 of the CGST Act, 2017. Mr.Trivedi invited our
attention to grounds nos.(E), (F), (G), (H), (I), (J) and (K) as raised
in the writ-application. The aforesaid grounds read thus :

“E. It is pertinent to note that under normal circumstances,

i.e. in case of refund of tax, the proper officer shall issue
order for refund within six months from the date of receipt of
application and the said refund amount must be credited to
the fund referred to in Section 57 of CGST Act, 2017. Same
is in accordance with Section 54(5) read with Section 54(7)
of CGST Act, 2017. However, as provided in Section 54(8) of
CGST Act, 2017, instead of crediting the refund amount to
the fund, same shall be refunded to the petitioner at the
earliest because it is a case of refund of tax paid on 'Zero
Rated Supplies'. Since the same is not done, Your Lordships
may direct the respondent authorities to kindly sanction the
refund at the earliest.

F. As provided in Rule 96 of CGST Rules, 2017, the

shipping bill filed by an exporter of goods shall be deemed
to be an application for refund of Integrated Tax paid on the
goods exported out of India and such application shall be

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deemed to have been filed only when the person in charge

of the conveyance carrying the export goods duly files an
export manifest or an export report covering the number and
the date of shipping bills or bills of export and the applicant
has furnished a valid return in Form GSTR-3 or Form GSTR-
3B. In this case, as could be observed from the documents
mentioned hereinabove, shipping bills were generated and
Export General Manifest were also generated. The petitioner
has also furnished valid Return in GSTR-3B. Therefore, all
the necessary requirements under Rule 96(1) is complied
with. As such, no formal refund application is required to be
filed. The respondent authorities is required to sanction
refund amount considering the shipping bills as refund
application. However, the same is not done so far, therefore
Your Lordships may direct the respondent authorities to
kindly sanction the refund at the earliest.

G. As provided in Rule 96(2) and 96(3), the details of

export invoices in respect of export of goods contained in
Form GSTR-1 shall be transmitted electronically by the
common portal to the system designated by the Customs
and the said system shall electronically transmit to the
common portal, a confirmation that goods covered by the
said invoice have been exported out of India. The refund
amount shall be automatically credited to the concerned
bank account of the petitioner herein. Needless to mention
that since in the case of the petitioner, they had filed their
GSTR-1 return for the month of July 2017 automatically the
system must have acted in accordance with the said
provisions and the refund ought to have been credited to the
concerned bank account of the petitioner. However, the

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same is not done, therefore Your Lordships may direct the

respondent authorities to kindly sanction the refund at the
earliest.

H. Refund could only be withheld if the circumstances

mentioned in Rule 96(4) arises. However, in this case, no
such circumstances arise. Further, if it would have arose,
the petitioner were required to be intimated about the same
in accordance with Rule 96(5) and subsequently, an order in
Part-B of Form GST RFD-07 ought to have been passed and
then the procedures required under Rule 96(7) should have
been followed. However, in this case neither is the refund
withheld because of the circumstances mentioned in Rule
96(4) nor are they intimated, nor is any order passed or nor
is any procedure in accordance with the aforesaid provision
is followed. Therefore, the manner in which the refund is
withheld is completely erroneous, illegal, arbitrary and
therefore Your Lordships may direct the respondent
authorities to kindly sanction the refund at the earliest.

I. On perusing email dated 28.11.2018 being sent to the

petitioner in response to their letter dated 5.11.2018, it may
be observed that the same talks about circular no.37/2018-
Customs, dated 9.10.2018. On perusing the same it may be
observed that although it is issued with a purpose to clarify
situations where IGST refunds have not been granted due to
claiming higher rate of drawback or where higher rate and
lower rate are identical, in order to clarify the same, relevant
Notifications and conditions pertaining to the drawback are
discussed. A reading of these Notifications and Rules would
suggest that in all cases where IGST refund is availed, the

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authorities concerned may not allow higher rate of

drawback. However, there is no provision in the Central
Goods and Service Tax Act, 2017 or the Integrated Goods
and Service Tax, 2017 or that there is no such circular or
instructions even, under the GST law which would provide
for restriction of IGST refund for the reason that higher rate
of drawback is claimed. In short, the provisions discussed in
the circular relied upon in the email pertains to reverse
situation than the present one. Therefore, the circular is not
correct.

J. Without prejudice to the above, it is further submitted

that in any case, the circulars are not law. They are not
binding precedents. They are only binding on the
department and not the assessee. Even in that view of the
matter, reliance placed on the said circular is not
sustainable for the purpose of withholding refund.

K. In any view of the matter, as far as the petitioner is

concerned, since they have already reversed/paid back the
difference amount of the higher rate and lower rate in order
to restrict the drawback claim to lower rate, even the said
circular may not prevent the refund of IGST.”

13. In such circumstances referred to above, Mr.Trivedi prays

that there being merit in this writ-application, the same be
allowed and a writ of mandamus be issued directing the
authorities to immediately sanction the refund of the IGST paid
in regard to the goods exported, i.e. 'zero rated supplies', within
the shipping bills referred to above.

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14. On the other hand, this writ-application has been

vehemently opposed by Mr.Parth Bhatt, the learned standing
counsel appearing for the respondents. Mr.Bhatt submitted that
the writ-applicant is not entitled to claim the refund of the IGST
paid as the writ-applicant had availed higher duty drawback.
Mr.Bhatt pointed out that in the case on hand, the writ-
applicant having availed the higher drawback the provisions of
Section 16 of the IGST Act, 2017, as well as the provisions of
Section 54 of the CGST Act, 2017, will have no application.
Mr.Bhatt submitted that the contention canvassed on behalf of
the writ-applicant that as the differential drawback (higher
drawback) amount came to be refunded to the department, he is
entitled to seek sanction of the refund of the IGST paid, is
without any merit. The argument of Mr.Bhatt is that the writ-
applicant might have returned the differential drawback amount,
but that was a unilateral act on the part of the writ-applicant not
recognized in law. According to Mr.Bhatt, the IGST refund
mechanism is system based and processed electronically in
accordance with the declaration which the exporter may give in
the shipping bill and the GST return. According to Mr.Bhatt, as
the writ-applicant had availed the higher drawback, the system
declined the IGST refund.

15. Mr.Bhatt placed reliance on the following averments made

in the affidavit-in-reply filed on behalf of the respondents duly
affirmed by one Shri B.Jeyanth Malaiyandi, Deputy
Commissioner of Customs :

“10. I say and submit that the legal positions related to

Drawback claims are as under, Notification 131/2016 – Cus
(N.T.) dated 31.10.2016 specified the rate of drawback

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subject to the notes and conditions mentioned in the

notification.

I say and submit that condition 7 of the notification dated

31.10.2016 mentions that if any exporter claims drawback
under Column (4) and (5), it means that drawback includes
Customs, Central excise and Service Tax component and it's
called Higher drawback. Similarly, if any exporter claims
drawback under Column (6) and (7), it means the drawback
included Customs only and it's called Lower drawback.

11. I say and submit that after the introduction of IGST,

the condition 11 of Notification 131/2016 – Cust (N.T) dated
31.10.2016 has been amended by Notification 59/2017
dated 29.06.2017.

I submit that the condition no. 11(d) mentions that drawback

under Column (4) and (5) i.e. Higher Drawback is not
applicable to the goods if good is exported by claiming
refund of integrated goods and services tax paid on such
exports.

I submit that in the present case, the Petitioner has exported

goods and claimed Higher drawback. The drawback details
as claimed by the petitioner obtained from Customs system
have been given in Annex A. The claiming of higher
drawback can be ascertained from the facts that the
drawback serial number has been affixed with 'A' which
denotes higher drawback.

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I submit that in spite of exporting goods under payment of

IGST, the exporter has claimed Higher Drawback and
violated condition 11(d) of the Notification 131/2016 – Cus
(N.T.) dated 31.10.2016 as amended by notification
59/2017 dated 29.06.2017 to gain unlawful benefits.

12. I say and submit that a new condition, condition

no.12A has been introduced after GST in the Notification
131/2016 – Cus (N.T.) dated 31.10.2016 vide Notification
59/2017 dated 29.06.2017 for the purpose of claiming
Higher drawback.

I submit that as per the condition no.12A, it is made clear

that the exporter who avails drawback under Column (4)
and (5) i.e. Higher drawback has to satisfy the condition
that no refund of IGST paid on export product shall be
claimed. In this case, the petitioner has availed Higher
drawback after giving declaration that no refund of IGST
shall be claimed. In this case, after availing the higher
drawback, now the petitioner is claiming for IGST refund
which is undue as per the declaration made by the
petitioner.

13. In response to para 5.8 of the petition, I say and

submit that when the IGST refund is undue as detailed in
the above paras, the question of withholding the refund
doesn't arise.

14. In response to para 5.10 of the petition, I say and

submit that the petitioner has paid back the differential

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drawback (Between Higher drawback and Lower drawback)

along with interest to claim IGST refund. It's to be
highlighted here that the petitioner on their own paid the
differential amount. However, there is no procedure
prescribed under any law/notification that if differential
amount of drawback has been paid, the exporter would be
eligible for IGST refund. I further say and submit that when
a procedure is non-existent, expecting IGST refund is not
proper.

15. In response to para 5A of the petition, I say and

submit that the Petitioner has alleged that there Is no
embargo for simultaneously availed both Higher drawback
and refund of IGST paid in regard to the Zero Rated Supply.
I say and submit that the same is not proper. I submit that it
is clearly provided in the respective provisions of IGST
refund and Drawback that either higher drawback or IGST
refund only can be availed but not both.

I say and submit that Section 16 of the IGST Act of 2016

mentions that the IGST refund shall be claimed in
accordance with the provisions of Section 54 of the CGS’I‘
act, 2017. The bare provision of Section 16 relevant to the
issue is reproduced hereunder:

(3) A registered person making zero rated supply shall be

eligible to claim refund under either of the following options,
namely: -

(a) ....

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(b) he may supply goods or services or both, subject to such

conditions, safeguards and procedure as may be prescribed,
art payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied,

in accordance with the provisions of section 54 of the

Central Goods and Services Tax Act or the rules made
thereunder.

I submit that the provision of Section 54 of the CGST Act of

2017 (as Annexure: D) is made applicable to the refund of
IGST as per Section 16 of the IGST Act, 2017. I submit that
the provisions of the Acts as stated clearly spell it out that
the refund of IGST shall not be allowed if the supplier of
goods or services i.e. exporter avails drawback in respect of
Central tax or claims refund of the integrated tax paid which
is Higher drawback. I say and submit that as per the
referred provisions, they clearly debar any exporter from
availing IGST refund if the exporter has already availed
Higher drawback. In this case also, the Petitioner has
availed Higher drawback and therefore the IGST refund has
been legally denied as per Section 16 of the IGST Act, 2017
read with provisions of Section 54 of the CGST Act, 2017.

16. In response to para 5.B of the Petition, I say and

submit that the Petitioner alleged that the in spite of
returning the differential drawback (Higher drawback -
Lower drawback) amount, the Respondent authorities have
not sanctioned the IGST refund amount.

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I submit that entire IGST refund mechanism is system based

and processed electronically. I submit that there is no
manual intervention in the mechanism unless there is any
error committed by the exporter while filing GST returns or
shipping bill. I say and submit that presently, there is no
option available in the system to consider the claim of the
petitioner. I further say and submit that this payment of
differential drawback amount to claim IGST refund is
nowhere prescribed in the law. I submit that the Petitioner
herein has invented a new procedure in order to try to
obtain the benefit which has already been forgone while
claiming the higher drawback. I submit that for claiming the
higher drawback, the Petitioner has given declaration that
the IGST refund will not be claimed as per condition 12 of
Notification 131/2016 to avail higher drawback. I submit
that the system has processed the IGST refund of the
Petitioner based on the declaration given by them at the time
of filing Shipping bill. I say and submit that there is no role
by either the Respondent no. 1 or the Respondent no. 2 in
non-sanctioning the refund and it is based on the
declaration by the Petitioner at the time of export.

I submit that payment of differential drawback amount and

claiming IGST refund at this juncture by the Petitioner is an
afterthought and not prescribed in the law. As the entire
IGST refund mechanism is system based and the
Petitioner’s claim is not as per prescribed procedure, the
petitioner’s claim has not been considered.

17. In response to para 5.C of the Petition, I say and

submit that the Petitioner has alleged that the amount has

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been unlawfully withheld without any legal basis by the

respondent authorities. I reiterate that it is not a proper
claim on part of the Petitioner. I submit that the IGST refund
mechanism is system based and processed electronically as
per the declaration given by the exporter in the shipping bill
and the GST return. I submit that in the present case, the
Petitioner has availed higher drawback as evident from their
shipping bills and because of this the system has denied
them the IGST refund. I submit that as the Petitioner is
ineligible for the IGST refund, it is not proper to accuse the
Respondent no.1 and Respondent no. 2 for the non-sanction
of IGST refund.

18. In response to para 5.D of the Petition, I say and

submit that the Petitioner has quoted the provisions of
Section 16(3) of IGST Act, 2017 and Section 54 of the CGST
Act, 2017 to say that IGST refund has to be sanctioned. I
say and submit that as per the above paras, the refund of
IGST and Higher drawback cannot be simultaneously
availed as per the quoted legal provisions.

19. In response to paras 5.E, 5.F, 5.G and 5.H of the

Petition, I say and submit that the above paras explain the
process of sanctioning of the IGST refund, the same further
clarify the reasoning as to why the Petitioner is ineligible for
the IGST refund when they have already availed the Higher
drawback. In respect of this, the Central Board of Indirect
Taxes and Customs (CBIC) has examined the issue and
issued circular 37/2018-Cus dated 9.10.2018. A copy of the
circular dated 09.10.2018 is annexed hereto and marked as
Annexure: E.

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I submit that from the above circular, it is made clear that

the simultaneous availing of higher drawback and IGST
refund is not permissible in the eyes of law. I submit that in
the present case, the Petitioner has demanded the IGST
refund after payment of the differential drawback amount. I
submit that the same is not a legal procedure which can be
accepted and it is not possible to be considered as the entire
IGST refund mechanism is system based. I further say and
submit that the Petitioner has consciously relinquished the
IGST refund claim for claiming the Higher drawback. I
submit that the law is very specific and there are conditions
to be followed to avail any benefits either IGST refund or
Drawback. I submit that in the instant case, the declaration
has been given electronically by the petitioner on their own
volition at the time of filing shipping bills to avail the Higher
drawback benefit.”

16. Mr.Bhatt invited the attention of this Court to the Circular

No.37/2018-Customs dated 9th October 2018 issued by the
Government of India, Ministry of Finance, Department of
Revenue, as regards the IGST refunds. The Circular relied upon
by the respondents reads thus :

“Circular No.37/2018-Customs

F.No.450/119/2017-Cus IV
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Indirect Taxes & Customs)
**********

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Room No.229A, North Block

New Delhi, dated the 9th October, 2018

To,

All Principal Chief Commissioner/Chief Commissioner of

Customs/ Customs & Central Tax/ Customs (Preventive)

All Principal Commissioner/Commissioner of Customs/

Customs & Central Tax/ Customs (Preventive)

All Director Generals under CBIC.

Sub : Cases where IGST refunds have not been granted due
to claiming higher rate of drawback OR where higher rate
and lower rate were identical – reg

Sir/Madam,

Numerous representations have been received from

exporters/export associations, regarding cases where IGST
refunds have not been granted because higher rate of
drawback has been claimed or where higher rate and lower
rate were identical.

2.0 The issue has been examined extensively in this

Ministry. The legal provisions related to Drawback claims
are as under :

2.1 Notes and condition (11) of Notification No.131/2016-

Cus(NT) dated 31.10.2016 (as amended by Notification
No.59/2017-Cus(NT) dated 29.6.2017 and 73/2017-
Cus(NT) dated 26.7.2017), prescribed that 'The rates and
caps of drawback specified in columns (4) and (5) of the said
Schedule shall not be applicable to export of a commodity or

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product if such commodity or product is –

....

(d) exported claiming refund of the integrated goods and

services tax paid on such exports'.

2.2 Notes and Condition (12A) of Notification

No.131/2016-Cus(NT) dated 31.10.2016 (as amended by
Notification No.59/2017-Cus(NT) dated 29.6.2017 and
73/2017-Cus(NT) dated 26.7.2017) prescribed that 'The
rates and caps of drawback specified in columns (4) and (5)
of the said Schedule shall be applicable to export of a
commodity or product if the exporter satisfies the following
conditions, namely:-

... ... ...

(ii) If the goods are exported on payment of integrated

goods and services tax, the exporter shall declare that no
refund of integrated goods and services tax paid on export
product shall be claimed;…..'

2.3 In terms of Rules 12 and 13 of the Customs, Central

Excise Duties and Service Tax Drawback Rules, 1995, the
shipping bill itself is treated as claim for drawback in terms
of the declarations made on the shipping bill.

2.4 The declarations required in terms of above Notes and

Conditions and provisions of the Drawback Rules are made
electronically in the EDI System. When composite drawback
rate was claimed (by declaring suffix A or C with Drawback
serial number), exporter was required to tick DBK002 and

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DBK003 declarations in the shipping bills. In fact, for period

1.7.2017 to 26.7.2017, a manual declaration was also
required to be given as the changes made on 26.7.2017
were made applicable for exports made from 1.7.2017
onwards.

2.5 By declaring drawback serial number suffixed with A

or C and by making above stated declarations, the exporters
consciously relinquished their IGST/ITC claims.

3. It has been noted that exporters had availed the option

to take drawback at higher rate in place of IGST refund out
of their own volition. Considering the fact that exporters
have made aforesaid declaration while claiming the higher
rate of drawback, it has been decided that it would not be
justified allowing exporters to avail IGST refund after
initially claiming the benefit of higher drawback. There is no
justification for re-opening the issue at this stage.

4. Field formations may, therefore, take necessary steps

to bring these changes to the knowledge of exporters.

5. Difficulties, if any, may be brought to the notice of the

Board. Hindi version will follow.

Yours faithfully,
Sd/-
(Maninder Kumar)
O.S.D. (Cus-IV)”

17. In such circumstances referred to above, Mr.Bhatt, the

learned standing counsel appearing for the respondents, prays

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that there being no merit in this writ-application, the same be

rejected.

18. Having heard the learned counsel appearing for the parties
and having gone through the materials on record, the only
question that falls for our consideration is, whether the
respondents are justified in withholding the refund of the IGST
paid by the writ-applicant in connection with the goods exported,
i.e. 'zero rated supplies'.

19. On 20th December 2018, this Court passed the following

order :

“1. The learned advocate for the petitioner has tendered a

draft amendment. The amendment is allowed in terms of the
draft. The same shall be carried out forthwith.

2. The learned advocate for the petitioner invited the

attention of the court to the provisions of section 16 of the
Integrated Goods and Services Tax Act, 2017 which makes
a provision for “Zero rated supply”. It was submitted that
under sub-section (3) thereof, a registered person making
zero rated supply is eligible to claim refund as provided
therein. It was submitted that the provision for refund of
integrated tax paid on goods exported out of India is made
under rule 96 of the Central Goods and services Tax Rules,
2017 (hereinafter referred to as “the rules”). It was
submitted that all the requirements for claiming refund
under the said rule have been fulfilled by the petitioner.
Referring to sub-rule (4) of rule 96 of the rules, it was
submitted that the claim for refund can be withheld only in

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the two eventualities mentioned therein, none of which are

attracted in the present case. Reference was made to the e-
mail dated 28.11.2018 issued by the IGST Section, Customs
House, Mundra drawing the attention of the petitioner to the
Board Circular No.37/2018-Customs dated 9.8.2018
wherein it is clearly mentioned that by declaring drawback
claim serial number suffixed with A or C, the exporters
consciously relinquished their IGST/ITC claim. Reference
was made to Circular No.37/2018-Customs dated
9.10.2018 to submit that the same does not relate to IGST
and would have no applicability to the facts of the present
case. It was submitted that in any case, the petitioner has
already returned back the differential drawback amount,
and hence, there is no impediment in the way of the
respondents in granting the refund to the petitioner.

2. Having regard to the submissions advanced by the

learned advocate for the petitioner, Issue Notice returnable
on 24th January, 2019. ”

20. Before adverting to the rival submissions canvassed on

either side, we may refer to the three provisions of law relevant
for the purpose of deciding the controversy between the parties.

Section 16 of the IGST Act, 2017, reads thus :

“16. Zero rated supply.-- (1) “zero rated supply” means any
of the following supplies of goods or services or both,
namely:––

(a) export of goods or services or both; or

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(b) supply of goods or services or both to a Special Economic

Zone developer or a Special Economic Zone unit.

(2) Subject to the provisions of sub-section (5) of section 17 of

the Central Goods and Services Tax Act, credit of input tax
may be availed for making zero-rated supplies,
notwithstanding that such supply may be an exempt
supply.

(3) A registered person making zero rated supply shall be

eligible to claim refund under either of the following options,
namely:––

(a) he may supply goods or services or both under bond or

Letter of Undertaking, subject to such conditions,
safeguards and procedure as may be prescribed, without
payment of integrated tax and claim refund of unutilised
input tax credit; or

(b) he may supply goods or services or both, subject to such

conditions, safeguards and procedure as may be prescribed,
on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied,

in accordance with the provisions of section 54 of the

Central Goods and Services Tax Act or the rules made
thereunder.”

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21. Section 54 of the CGST Act, 2017, reads thus :

“54. Refund of tax.-- (1) Any person claiming refund of any

tax and interest, if any, paid on such tax or any other
amount paid by him, may make an application before the
expiry of two years from the relevant date in such form and
manner as may be prescribed:

Provided that a registered person, claiming refund of any

balance in the electronic cash ledger in accordance with the
provisions of sub-section (6) of section 49, may claim such
refund in the return furnished under section 39 in such
manner as may be prescribed.

(2) A specialised agency of the United Nations

Organisation or any Multilateral Financial Institution and
Organisation notified under the United Nations (Privileges
and Immunities) Act, 1947, Consulate or Embassy of foreign
countries or any other person or class of persons, as notified
under section 55, entitled to a refund of tax paid by it on
inward supplies of goods or services or both, may make an
application for such refund, in such form and manner as
may be prescribed, before the expiry of six months from the
last day of the quarter in which such supply was received.

(3) Subject to the provisions of sub-section (10), a

registered person may claim refund of any unutilised input
tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall

be allowed in cases other than––

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(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of

rate of tax on inputs being higher than the rate of tax
on output supplies (other than nil rated or fully exempt
supplies), except supplies of goods or services or both
as may be notified by the Government on the
recommendations of the Council:

Provided further that no refund of unutilised input tax credit

shall be allowed in cases where the goods exported out of
India are subjected to export duty:

Provided also that no refund of input tax credit shall be

allowed, if the supplier of goods or services or both avails of
drawback in respect of central tax or claims refund of the
integrated tax paid on such supplies.

(4) The application shall be accompanied by—

(a) such documentary evidence as may be prescribed

to establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the

documents referred to in section 33) as the applicant
may furnish to establish that the amount of tax and
interest, if any, paid on such tax or any other amount
paid in relation to which such refund is claimed was

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collected from, or paid by, him and the incidence of

such tax and interest had not been passed on to any
other person:

Provided that where the amount claimed as refund is less

than two lakh rupees, it shall not be necessary for the
applicant to furnish any documentary and other evidences
but he may file a declaration, based on the documentary or
other evidences available with him, certifying that the
incidence of such tax and interest had not been passed on
to any other person.

(5) If, on receipt of any such application, the proper officer

is satisfied that the whole or part of the amount claimed as
refund is refundable, he may make an order accordingly
and the amount so determined shall be credited to the Fund
referred to in section 57.

(6) Notwithstanding anything contained in sub-section (5),

the proper officer may, in the case of any claim for refund on
account of zero-rated supply of goods or services or both
made by registered persons, other than such category of
registered persons as may be notified by the Government on
the recommendations of the Council, refund on a provisional
basis, ninety per cent. of the total amount so claimed,
excluding the amount of input tax credit provisionally
accepted, in such manner and subject to such conditions,
limitations and safeguards as may be prescribed and
thereafter make an order under subsection (5) for final
settlement of the refund claim after due verification of

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documents furnished by the applicant.

(7) The proper officer shall issue the order under sub-
section (5) within sixty days from the date of receipt of
application complete in all respects.

(8) Notwithstanding anything contained in sub-section (5),

the refundable amount shall, instead of being credited to the
Fund, be paid to the applicant, if such amount is relatable
to--

(a) refund of tax paid on zero-rated supplies of goods

or services or both or on inputs or input services used
in making such zero-rated supplies;

(b) refund of unutilised input tax credit under sub-

section (3);

(c) refund of tax paid on a supply which is not

provided, either wholly or partially, and for which
invoice has not been issued, or where a refund
voucher has been issued;

(d) refund of tax in pursuance of section 77;

(e) the tax and interest, if any, or any other amount

paid by the applicant, if he had not passed on the
incidence of such tax and interest to any other person;
or

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(f) the tax or interest borne by such other class of

applicants as the Government may, on the
recommendations of the Council, by notification,
specify.

(9) Notwithstanding anything to the contrary contained in

any judgment, decree, order or direction of the Appellate
Tribunal or any court or in any other provisions of this Act or
the rules made thereunder or in any other law for the time
being in force, no refund shall be made except in accordance
with the provisions of sub-section (8).

(10) Where any refund is due under sub-section (3) to a

registered person who has defaulted in furnishing any
return or who is required to pay any tax, interest or penalty,
which has not been stayed by any court, Tribunal or
Appellate Authority by the specified date, the proper officer
may—

(a) withhold payment of refund due until the said

person has furnished the return or paid the tax,
interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest,

penalty, fee or any other amount which the taxable
person is liable to pay but which remains unpaid
under this Act or under the existing law.

Explanation.––For the purposes of this sub-section, the

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expression “specified date” shall mean the last date for

filing an appeal under this Act.

(11) Where an order giving rise to a refund is the subject

matter of an appeal or further proceedings or where any
other proceedings under this Act is pending and the
Commissioner is of the opinion that grant of such refund is
likely to adversely affect the revenue in the said appeal or
other proceedings on account of malfeasance or fraud
committed, he may, after giving the taxable person an
opportunity of being heard, withhold the refund till such
time as he may determine.

(12) Where a refund is withheld under sub-section (11), the

taxable person shall, notwithstanding anything contained in
section 56, be entitled to interest at such rate not exceeding
six per cent. as may be notified on the recommendations of
the Council, if as a result of the appeal or further
proceedings he becomes entitled to refund.

(13) Notwithstanding anything to the contrary contained in

this section, the amount of advance tax deposited by a
casual taxable person or a non-resident taxable person
under sub-section (2) of section 27, shall not be refunded
unless such person has, in respect of the entire period for
which the certificate of registration granted to him had
remained in force, furnished all the returns required under
section 39.

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(14) Notwithstanding anything contained in this section, no

refund under sub-section (5) or sub-section (6) shall be paid
to an applicant, if the amount is less than one thousand
rupees.

Explanation.—For the purposes of this section,––

(1) “refund” includes refund of tax paid on zero-rated

supplies of goods or services or both or on inputs or input
services used in making such zero-rated supplies, or refund
of tax on the supply of goods regarded as deemed exports,
or refund of unutilised input tax credit as provided under
sub-section (3).

(2) “relevant date” means—

(a) in the case of goods exported out of India where a refund

of tax paid is available in respect of goods themselves or, as
the case may be, the inputs or input services used in such
goods,––

(i) if the goods are exported by sea or air, the date on

which the ship or the aircraft in which such goods are
loaded, leaves India; or

(ii) if the goods are exported by land, the date on

which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of

despatch of goods by the Post Office concerned to a

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place outside India;

(b) in the case of supply of goods regarded as deemed

exports where a refund of tax paid is available in respect of
the goods, the date on which the return relating to such
deemed exports is furnished;

(c) in the case of services exported out of India where a

refund of tax paid is available in respect of services
themselves or, as the case may be, the inputs or input
services used in such services, the date of––

(i) receipt of payment in convertible foreign exchange,

where the supply of services had been completed prior
to the receipt of such payment; or

(ii) issue of invoice, where payment for the services

had been received in advance prior to the date of issue
of the invoice;

(d) in case where the tax becomes refundable as a

consequence of judgment, decree, order or direction of the
Appellate Authority, Appellate Tribunal or any court, the
date of communication of such judgment, decree, order or
direction;

(e) in the case of refund of unutilised input tax credit under

sub-section (3), the end of the financial year in which such
claim for refund arises;

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(f) in the case where tax is paid provisionally under this Act
or the rules made thereunder, the date of adjustment of tax
after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date
of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.”

22. Rule 96 of the CGST Rules, 2017, reads thus :

“Rule 96: Refund of integrated tax paid on goods or services

exported out of India.-- (1) The shipping bill filed by an
exporter of goods shall be deemed to be an application for
refund of integrated tax paid on the goods exported out of
India and such application shall be deemed to have been
filed only when:-

(a) the person in charge of the conveyance carrying the

export goods duly files a departure manifest or an
export manifest or an export report covering the
number and the date of shipping bills or bills of export;
and

(b) the applicant has furnished a valid return in FORM

GSTR-3 or FORM GSTR-3B, as the case may be;

(2) The details of the relevant export invoices in respect of

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export of goods contained in FORM GSTR-1 shall be

transmitted electronically by the common portal to the
system designated by the Customs and the said system
shall electronically transmit to the common portal, a
confirmation that the goods covered by the said invoices
have been exported out of India.

Provided that where the date for furnishing the details of

outward supplies in FORM GSTR-1 for a tax period has been
extended in exercise of the powers conferred under section
37 of the Act, the supplier shall furnish the information
relating to exports as specified in Table 6A of FORM GSTR-1
after the return in FORM GSTR-3B has been furnished and
the same shall be transmitted electronically by the common
portal to the system designated by the Customs:

Provided further that the information in Table 6A furnished

under the first proviso shall be auto-drafted in FORM GSTR-
1 for the said tax period.

(3) Upon the receipt of the information regarding the

furnishing of a valid return in FORM GSTR-3 or FORM GSTR-
3B, as the case may be from the common portal, the system
designated by the Customs or the proper officer of Customs,
as the case may be, shall process the claim of refund in
respect of export of goods and an amount equal to the
integrated tax paid in respect of each shipping bill or bill of
export shall be electronically credited to the bank account of
the applicant mentioned in his registration particulars and
as intimated to the Customs authorities.

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(4) The claim for refund shall be withheld where,-

(a) a request has been received from the jurisdictional

Commissioner of central tax, State tax or Union
territory tax to withhold the payment of refund due to
the person claiming refund in accordance with the
provisions of sub-section (10) or sub-section (11) of
section 54; or

(b) the proper officer of Customs determines that the

goods were exported in violation of the provisions of
the Customs Act, 1962.

(5) Where refund is withheld in accordance with the

provisions of clause (a) of sub-rule (4), the proper officer of
integrated tax at the Customs station shall intimate the
applicant and the jurisdictional Commissioner of central tax,
State tax or Union territory tax, as the case may be, and a
copy of such intimation shall be transmitted to the common
portal.

(6) Upon transmission of the intimation under sub-rule (5),

the proper officer of central tax or State tax or Union territory
tax, as the case may be, shall pass an order in Part B of
FORM GST RFD-07.

(7) Where the applicant becomes entitled to refund of the

amount withheld under clause (a) of sub-rule (4), the

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concerned jurisdictional officer of central tax, State tax or

Union territory tax, as the case may be, shall proceed to
refund the amount after passing an order in FORM GST
RFD-06.

(8) The Central Government may pay refund of the

integrated tax to the Government of Bhutan on the exports to
Bhutan for such class of goods as may be notified in this
behalf and where such refund is paid to the Government of
Bhutan, the exporter shall not be paid any refund of the
integrated tax.

(9) The application for refund of integrated tax paid on the

services exported out of India shall be filed in FORM GST
RFD-01 and shall be dealt with in accordance with the
provisions of rule 89.

(10) The persons claiming refund of integrated tax paid on

exports of goods or services should not have received
supplies on which the benefit of the Government of India,
Ministry of Finance notification No. 48/2017-Central Tax,
dated the 18th October, 2017, published in the Gazette of
India, Extraordinary, Part II, Section 3, Sub-section (i), vide
number G.S.R 1305 (E), dated the 18th October, 2017 or
notification No. 40/2017-Central Tax (Rate), dated the 23rd
October, 2017 published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number
G.S.R 1320 (E), dated the 23rd October, 2017 or notification
No. 41/2017-Integrated Tax (Rate), dated the 23rd October,
2017, published in the Gazette of India, Extraordinary, Part

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II, Section 3, Sub-section (i), vide number G.S.R 1321 (E),

dated the 23rd October, 2017 or notification No. 78/2017-
Customs, dated the 13th October, 2017, published in the
Gazette of India, Extraordinary, Part II, Section 3, Sub-
section (i), vide number G.S.R 1272(E), dated the 13th
October, 2017 or notification No. 79/2017-Customs, dated
the 13th October, 2017, published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number
G.S.R 1299 (E), dated the 13th October, 2017.”

23. Section 16 of the IGST Act, 2017, referred to above

provides for zero rating of certain supplies, namely exports, and
supplies made to the Special Economic Zone Unit or Special
Economic Zone Developer and the manner of zero rating.

24. It is not in dispute that the goods in question are one of

zero rated supplies. A registered person making zero rated
supplies is eligible to claim refund under the options as provided
in sub-clauses (a) and (b) to clause (3) of Section 16 referred to
above.

25. Section 54 of the CGST Act, 2017, provides that any

person claiming refund of any tax and interest, if any, paid on
such tax or any other amount paid by him, shall make an
application before the expiry of two years from the relevant date
in such form and manner as may be prescribed. If, on receipt of
any such application, the proper officer is satisfied that the
whole or part of the amount claimed as refund is refundable, he
may make an order accordingly and the amount so determined
will have to be credited to the Fund referred to in Section 57 of
the CGST Act, 2017.

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26. Rule 96 of the CGST Rules provides for a deeming fiction.

The shipping bill that the exporter of goods may file is deemed to
be an application for refund of the integrated tax paid on the
goods exported out of India. Section 54 referred to above should
be read along with Rule 96 of the Rules. Rule 96(4) makes it
abundantly clear that the claim for refund can be withheld only
in two circumstances as provided in sub-clauses (a) and (b)
respectively of clause (4) of Rule 96 of the Rules, 2017.

27. In the aforesaid context, the respondents have fairly

conceded that the case of the writ-applicant is not falling within
sub-clauses (a) and (b) respectively of clause (4) of Rule 96 of the
Rules, 2017. The stance of the department is that, as the writ-
applicant had availed higher duty drawback and as there is no
provision for accepting the refund of such higher duty drawback,
the writ-applicant is not entitled to seek the refund of the IGST
paid in connection with the goods exported, i.e. 'zero rated
supplies'.

28. If the claim of the writ-applicant is to be rejected only on

the basis of the circular issued by the Government of India dated
9th October 2018 referred to above, then we are afraid the
submission canvassed on behalf of the respondents should fail
as the same is not sustainable in law.

29. We are not impressed by the stance of the respondents

that although the writ-applicant might have returned the
differential drawback amount, yet as there is no option available
in the system to consider the claim, the writ-applicant is not

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entitled to the refund of the IGST. First, the circular upon which
reliance has been placed, in our opinion, cannot be said to have
any legal force. The circular cannot run contrary to the statutory
rules, more particularly, Rule 96 referred to above.

30. Rule 96 is relevant for two purposes. The shipping bill that
the exporter may file is deemed to be an application for refund of
the integrated tax paid on the goods exported out of India and
the claim for refund can be withheld only in the following
contingencies :

(a) a request has been received from the jurisdictional

Commissioner of central tax, State tax or Union territory
tax to withhold the payment of refund due to the person
claiming refund in accordance with the provisions of sub-
section (10) or sub-section (11) of Section 54; or

(b) the proper officer of Customs determines that the

goods were exported in violation of the provisions of the
Customs Act, 1962.

31. Mr.Trivedi invited our attention to two decisions of the

Supreme Court as regards the binding nature of the circulars
and instructions issued by the Central Government.

32. In the case of Commissioner of Central Excise, Bolpur v.

Ratan Melting and Wire Industries, reported in 2008(12) S.T.R.
416 (S.C.), the Supreme Court observed as under :

“4. Learned counsel for the Union of India submitted that

the law declared by this Court is supreme law of the land

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under Article 141 of the Constitution of India, 1950 (in short

the ‘Constitution’). The Circulars cannot be given primacy
over the decisions.

5. Learned counsel for the assessee on the other hand

submitted that once the circular has been issued it is
binding on the revenue authorities and even if it runs
counter to the decision of this Court, the revenue authorities
cannot say that they are not bound by it. The circulars
issued by the Board are not binding on the assessee but are
binding on revenue authorities. It was submitted that once
the Board issues a circular, the revenue authorities cannot
take advantage of a decision of the Supreme Court. The
consequences of issuing a circular are that the authorities
cannot act contrary to the circular. Once the circular is
brought to the notice of the Court, the challenge by the
revenue should be turned out and the revenue cannot lodge
an appeal taking the ground which is contrary to the
circular.

6. Circulars and instructions issued by the Board are no

doubt binding in law on the authorities under the respective
statutes, but when the Supreme Court or the High Court
declares the law on the question arising for consideration, it
would not be appropriate for the Court to direct that the
circular should be given effect to and not the view expressed
in a decision of this Court or the High Court. So far as the
clarifications/circulars issued by the Central Government
and of the State Government are concerned they represent
merely their understanding of the statutory provisions. They

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are not binding upon the court. It is for the Court to declare
what the particular provision of statute says and it is not for
the Executive. Looked at from another angle, a circular
which is contrary to the statutory provisions has really no
existence in law.

7. As noted in the order of reference the correct position

vis-a-vis the observations in para 11 of Dhiren Chemical’s
case (supra) has been stated in Kalyani’s case (supra). If the
submissions of learned counsel for the assessee are
accepted, it would mean that there is no scope for filing an
appeal. In that case, there is no question of a decision of this
Court on the point being rendered. Obviously, the assessee
will not file an appeal questioning the view expressed vis-a-
vis the circular. It has to be the revenue authority who has
to question that. To lay content with the circular would mean
that the valuable right of challenge would be denied to him
and there would be no scope for adjudication by the High
Court or the Supreme Court. That would be against very
concept of majesty of law declared by this Court and the
binding effect in terms of Article 141 of the Constitution. ”

33. In the case of J.K.Lakshmi Cement Limited v. Commercial

Tax Officer, Pali, reported in 2018(14) G.S.T.L. 497 (S.C.), the
Supreme Court observed as under :

“25. The understanding by the assessee and the Revenue,

in the obtaining factual matrix, has its own limitation. It is
because the principle of res judicata would have no
application in spite of the understanding by the assessee

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and the Revenue, for the circular dated 15.04.1994, is not to

the specific effect as suggested and, further notification
dated 07.03.1994 was valid between 1st April, 1994 up to
31st March, 1997 (upto 31st March, 1997 vide notification
dated 12.03.1997) and not thereafter. The Commercial Tax
Department, by a circular, could have extended the benefit
under a notification and, therefore, principle of estoppel
would apply, though there are authorities which opine that a
circular could not have altered and restricted the notification
to the determent of the assessee. Circulars issued under tax
enactments can tone down the rigour of law, for an
authority which wields power for its own advantage is given
right to forego advantage when required and considered
necessary. This power to issue circulars is for just, proper
and efficient management of the work and in public interest.
It is a beneficial power for proper administration of fiscal
law, so that undue hardship may not be caused. Circulars
are binding on the authorities administering the enactment
but cannot alter the provision of the enactment, etc. to the
detriment of the assessee. Needless to emphasise that a
circular should not be adverse and cause prejudice to the
assessee. (See : UCO Bank, Calcutta v. Commissioner of
Income Tax, West Bengal – (1999)4 SCC 599.

26. In Commissioner of Central Excise, Bolpur v. Ratan

Melting and Wire Industries – (2008)13 SCC 1, it has been
held that circulars and instructions issued by the Board are
binding on the authorities under respective statute, but
when this Court or High Court lays down a principle, it
would be appropriate for the Court to direct that the circular

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should not be given effect to, for the circulars are not binding
on the Court. In the case at hand, once circular dated
15.04.1994 stands withdrawn vide circular dated
16.04.2001, the appellant-assessee cannot claim the benefit
of the withdrawn circular.

27. The controversy herein centres round the period from

1st April, 2001 to 31st March, 2002. The period in question
is mostly post the circular dated 16.04.2001. As we find, the
appellant-assessee has pleaded to take benefit of the
circular dated 15.04.1994, which stands withdrawn and
was only applicable to the notification dated 07.03.1994. It
was not specifically applicable to the notification dated
21.01.2000. The fact that the third paragraph of the
notification dated 21.01.2000 is identically worded to the
third paragraph of the notification dated 07.03.1994 but
that would not by itself justify the applicability of circular
dated 15.04.1994.

28. In this context, we may note another contention that

has been advanced before us. It is based upon the doctrine
of contemporanea exposition. In our considered opinion, the
said doctrine would not be applicable and cannot be
pressed into service. Usage or practice developed under a
statute is indicative of the meaning prescribed to its words
by contemporary opinion. In case of an ancient statute,
doctrine of contemporanea exposition is applied as an
admissible aid to its construction. The doctrine is based
upon the precept that the words used in a statutory

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provision must be understood in the same way in which

they are usually understood in ordinary common parlance
by the people in the area and business. (See : G.P. Singh’s
Principles of Statutory Interpretation, 13th Edition-2012 at
page 344). It has been held in Rohitash Kumar and others
v. Om Prakash Sharma and others – (2013)11 SCC 451 that
the said doctrine has to be applied with caution and the
Rule must give way when the language of the statute is
plain and unambiguous. On a careful scrutiny of the
language employed in paragraph 3 of the notification dated
21.01.2000, it is difficult to hold that the said notification is
ambiguous or susceptible to two views of interpretations.
The language being plain and clear, it does not admit of two
different interpretations.

29. In this regard, we may state that the circular dated

15.04.1994 was ambiguous and, therefore, as long as it
was in operation and applicable possibly doctrine of
contemporanea exposition could be taken aid of for its
applicability. It is absolutely clear that the benefit and
advantage was given under the circular and not under the
notification dated 07.03.1994, which was lucid and couched
in different terms. The circular having been withdrawn, the
contention of contemporanea exposition does not commend
acceptation and has to be repelled and we do so. We hold
that it would certainly not apply to the notification dated
21.01.2000.”

34. We take notice of two things so far as the circular is

concerned. Apart from being merely in the form of instructions

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or guidance to the concerned department, the circular is dated

9th October 2018, whereas the export took place on 27th July
2017. Over and above the same, the circular explains the
provisions of the drawback and it has nothing to do with the
IGST refund. Thus, the circular will not save the situation for the
respondents. We are of the view that Rule 96 of the Rules, 2017,
is very clear.

35. In view of the same, the writ-applicant is entitled to claim

the refund of the IGST.

36. In the result, this writ-application succeeds and is hereby

allowed. The respondents are directed to immediately sanction
the refund of the IGST paid in regard to the goods exported, i.e.
'zero rated supplies', with 7% simple interest from the date of the
shipping bills till the date of actual refund.

37. Rule made absolute.

(J. B. PARDIWALA,J.)

(A. C. RAO,J.)
/MOINUDDIN

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