Delhi High Court - Orders
Synopsis & List Of Dates) Emsig ... vs Union Of India & Ors on 31 May, 2023
Author: Yashwant Varma
Bench: Yashwant Varma, Dharmesh Sharma
$~17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7793/2023 & CM APPL. 30089/2023(Lengthy
Synopsis & List Of Dates)
EMSIG MANUFACTURING INDIA PRIVATE LIMITED
..... Petitioner
Through: Ms. Sakshi Singhal and Mr.
Lovely Singh, Advs.
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Raj Kumar Yadav and Ms.
Nitya Sharma, Advs. for R-1.
Mr. Aditya Singla, Sr. Standing
Counsel for R-2 and R-3.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE DHARMESH SHARMA
ORDER
% 31.05.2023
1. The instant petition has been preferred seeking the following prayers: -
"a) Declare that Paragraph 11( d) read with 12A(a)(ii) of the Notes and Conditions of the Notification No. 131/2016-Cus. (N.T.), dated 31.10.2016 (Annexure P-3) [as amended by Notification No. 59/2017-Cus. (NT) dated 29.06.2017 (Annexure P-4) and Notification No. 73/2017-Cus. (NT) dated 26.07.2017 (Annexure P-5)] are (i) ultra vires Section 16 of the IGST Act, 2017 read with Section 54 of CGST Act, 2017 and Rule 96 of CGST Rules, 2017, & (ii) unconstitutional and violative of Article 14, 19 and 21 of the Constitution of India & Quash the same;
b) Declare that Circular No. 37/2018-CUSTOMS dated 09.10.2018 (Annexure P-9) is (i) ultra vires Section 16 of the IGST Act, 2017 read with Section 54 of CGST Act, 2017 and Rule 96 of CGST Rules, 2017, and (ii) unconstitutional and violative of Article 14,19 and 21 of the Constitution of India & Quash the same;
c) Direct Respondent Authorities to grant refund of IGST, amounting to Rs.17,01,745/-, paid on goods exported by the Petitioner during the Transitional Period, along with appropriate interest on such refund from the date of the shipping bill till the date of actual refund.
(e) Pass such other order or orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."
2. According to the writ petitioner the issue stands concluded in its This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/10/2023 at 06:06:14 favour in light of the judgment rendered by the Division Bench of the Court in TMA International Pvt. Ltd. v. Union of India [2019 SCC OnLine Del 12397].
3. The Court notes that while dealing with an identical controversy the Division Bench in TMA International had observed thus: -
"14. Though, the challenge in the present petition is also to the vires of the circulars enumerated above, however, Petitioners are primarily concerned with the refund of IGST paid on goods exported by them during the transitional period. The Respondents' concern is well founded that the Petitioners should not take undue advantage of the drawback scheme. The purpose behind impugned circular is to ensure that the exporters do not claim AIRs of duty drawback and simultaneously avail tax neutralization under GST as this would amount to exporter availing double benefits of neutralization of taxes. However, the fact remains that at no point of time, the petitioners declared that they would forego the claim of IGST refund. During the transitional period, Petitioners have inadvertently claimed benefit under a wrong provision, since there was lack of clarity with respect to the refund of IGST. Should we deny the benefit simply for this mistake when the cardinal rule is that taxes should not be exported? The concept of zero-rated exports envisaged under GST is designed to achieve this objective. In the current scenario, exporters pay IGST and apply for refund. Thus, for wrong input given at the time of claiming drawback should not deprive them of this valuable right. We can't be immune to the fact that taxpayers have faced difficulties in understanding the complexity of GST procedures. Its implementation has not been smooth and the Government itself has faced huge challenges. The model of matching of invoices for purchase, as originally envisioned could not be implemented and a truncated version of returns had to be introduced. This also entailed frequent issuance of innumerable circulars and notifications in quick succession, extending deadlines, introduction of fresh procedures and such other measures. As a result taxpayers were reeling under confusion which continues until this day implying that much needs to be done despite the efforts and measures taken by the Government. The situation is not a happy one and has adverse impact on the taxpayers. There has been influx of cases relating to such issues. We are also witnessing many cases relating to transitional provisions. Revenue needs to realise the inefficient implementation of the law has had adverse fallout on the taxpayer. Government would have to embrace initiatives that would help the taxpayers in the transformation to the new regime. This would require understanding the difficulties faced by the industry which would be crucial step for success of GST law. Instant case is one such example where Petitioners have been victim of technical glitches on account of confusion during transitional phase. We are thus of This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/10/2023 at 06:06:14 the view that taxpayers like the Petitioners should not be denied the substantive benefit of the IGST paid by them on exports.
15. We find merit in the submission of Mr. Bansal that the exporters would not voluntarily opt for the claim of drawback under Column A at the cost of foregoing IGST paid on exports, where the duty drawback rates under Column A and B were same, the exporters would have received the same amount of drawback even if they would have mentioned "B" in their shipping bills instead of "A" for claiming drawback. Since the condition for not claiming IGST refund is not applicable to cases where duty drawback has been claimed under Column B, exporters would have received IGST refund also on mentioning "B". Therefore, exporters did not have any benefit in claiming drawback under Column A. It is not pointed out by the Respondents that the Petitioners derived any undue advantage by their aforesaid mistake. On the contrary, it would result in causing loss for the value of the IGST paid on exports. By way of illustration, we take note of one such instance as pointed out by Mr. Bansal that if Steel Strips (HSN- 7211) are exported then whether duty drawback is claimed under Column A or Column B, the rate is 2%. However, rate of IGST on the said export is 18%. In such a situation under no circumstances it can be assumed that the exporters intentionally decided to claim duty drawback should forego IGST refund. Besides, if the petitioners have claimed and received only the customs duty portion of the drawback and element of IGST (earlier Central Excise Duty and Service Tax) was not included in the drawback rate, granting of IGST refund would not result in double neutralisation of input taxes. Respondents have also, infact, never intended to deny refund of IGST paid on export in cases where only custom component was claimed as drawback."
4. In view of the aforesaid, the Court directs the respondents to either attend to the prayer made for refund of Integrated Goods and Services Tax or to produce a decision on the record of this petition in case it be their stand that other legal impediments exist. The aforesaid exercise be completed within a period of two weeks from today.
5. Let the matter be called again on 13.07.2023.
YASHWANT VARMA, J.
DHARMESH SHARMA, J.
MAY 31, 2023 bh This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/10/2023 at 06:06:14