The Madras High Court bench of Justice C. Sarvanan has held that the refund of input tax credit (ITC) could not refuse even the duty drawback that has been claimed by the taxpayer.
The goods defined under Customs Heading No.8483-40-00 of the Customs Tariff Act 1975 have been exported by the petitioner and claimed the duty drawback beneath section 75 of the Customs Act, 1962. The ITC which was taken on the input and the input services used in the export goods has been claimed by the applicant.
Under Section 16 of the Integrated Goods and Services Tax Act, 2017, the applicant mentioned that the exports are entitled to zero-rated supply and hence the same comes under the refund of the unutilized input tax credit under Section 16(3)(a) of the Integrated Goods and Services Tax Act, 2017.
The council has refused the refund of the unused ITC beneath section 16(3) (a) of the integrated goods and services tax act of 2017 saying that the applicant’s claim towards the duty drawback on the identical export.
The problem asked was that if the exports were made without the IGST payment beneath the bond where the duty drawback was availed beneath the provision of the customs and Central Excise Duties and Service Tax Drawback Rules, 2017, will qualify an exporter to have the advantage of an input tax credit refund.
The court sees that the refund of the ITC would not be refused, as the duty drawback has been claimed by the applicant beneath the provision of the customs and central excise Duties and Service Tax Drawback Rules, 2017. The same points that the applicant is not qualified for a refund beneath Section 16(3) of the Integrated Goods and Services Tax Act, 2017 read with Section 54 of the Central Goods and Services Tax Act, 2017 and Rules 89 and 96 of the Central Goods and Services Tax Rules, 2017.
The court stated that there are two rates of duty drawback beneath Notification No.131/2016- Cus (N.T) dated 31.10.2016. Column No.4 in the Schedule to the Notification deals with the situation where the CENVAT facility has not been available. Column No.5 deals with the situation where the CENVAT facility has been made available.
Court mentioned that “As far as the goods falling under Customs Heading No. 8483-40-00 of the Customs Tariff Act 1975 are concerned, the rate of duty for goods both covered under these two columns is only at 2%. Thus, there is no variation as far as the rate of duty is concerned. In this case, admittedly, the petitioner is entitled to duty drawback at 2% irrespective of the fact that whether the petitioner has availed input tax credit under the provisions of the Central Goods and Services Tax Act, 2017 or under the provisions of the State Goods and Services Tax Act, 2017,”
The court while permitting the petition rendered the department to investigate the refund GST ITC claims which the applicant has filed beneath section 16(3) of the Integrated Goods and Services Tax Act, 2017 read with Section 54 of the Central Goods and Services Tax Act, 2017 and Rule 89 of the Central Goods and Services Tax Rules, 2017 along with additional subjected rules and refund the ITC together with the applicable interest beneath the law of the corresponding enactments, in the duration of 3 months from the receipt date of the copy of the same order.
