Gujarat HC Allows IGST Refund to a Petitioner Who Mistakenly Paid Higher Tax Rate

The refund of the Integrated Goods and Service Tax (IGST) amount including a subjected interest to an applicant who mistakenly filed IGST on a higher rate compared to the concessional applicable rate, Gujarat High Court ruled.

The applicant, Tagros Chemicals India Pvt. Ltd., had been registered under GST as its introduction, and the case related to a purchase order obtain via Quality Biz Chem India Pvt. Ltd., Mumbai, towards the supply of goods planned for export.

The applicant, laid on notification No.41/2017 – Integrated Tax (Rate) on 23.10.2017, provides goods to the buyer at an IGST rate of 18% rather than the concessional rate of 0.1% as needed through this notification. Nextly the applicant realized the error and provides a credit note before the buyer for the excess amount of the tax filed. Even after duly stating the credit note in the pertinent GST returns, the applicant can not modify the turnover and GST liability because of the lack of external supplies in the following months.

On the date 03.09.2020, the applicant furnish a refund claim under the provisions of the Integrated Goods and Service Tax Rules, 2017, asking for a refund of Rs 23,09,100/- which was filed in excess of IGST. A show-cause notice (SCN) was been issued before the applicant by the respondent who rejected the refund claim without addressing the submissions that the applicant has made.

The court on analyzing the case and examining Notification No.41/2017 – Integrated Tax (Rate), which shows the conditions to claim the advantages revealed that the registered receiver needed to export the goods under 90 days from the date of the tax invoice. For the case, the invoice was on 30.06.2019, and the goods were absolutely exported through Quality Biz Chem India Pvt. Ltd. within the specified duration.

Read Also: Bombay HC Permits IGST Refund with Interest Rate of 7% on Zero-rated Supplies U/S 16(3)

The court cited Bonanzo Engineering & Chemical Pvt. Ltd. v. Commissioner of Central Excise (2012(4) SCC 771) and stated that the unintentional payment of duty on items exempt from payment does not turn the goods into obligated goods under the Act.

On the aforesaid grounds and the Apex Court’s decision, the Court granted the petitioner’s request. The respondent authorities’ ruling was quashed and set aside, and the respondents were ordered to repay the sum of Rs. 23,09,100/-, with applicable interest, within a reasonable period of receiving the judgment copy.