Gujarat High Court Orders Refund Of IGST With Interest In An Inadvertent Tax Payment Case

The Gujarat High Court has directed the refund of the Integrated Goods and Service Tax (IGST) amount, along with applicable interest, to a petitioner who inadvertently paid IGST at a higher rate than the concessional rate applicable.

The petitioner, Tagros Chemicals India Pvt. Ltd., had been registered under GST since its introduction, and the case pertained to a purchase order received from Quality Biz Chem India Pvt. Ltd., Mumbai, for the supply of goods intended for export.

The petitioner, relying on Notification No.41/2017 - Integrated Tax (Rate) dated 23.10.2017, supplied the goods to the buyer at an IGST rate of 18% instead of the concessional rate of 0.1%, as required by the notification. Subsequently, the petitioner realized the error and issued a credit note to the buyer for the excess amount of tax paid. Despite duly mentioning the credit note in the relevant GST returns, the petitioner could not adjust the turnover and GST liability due to the absence of outward supplies in subsequent months.

Consequently, the petitioner filed a refund claim on 03.09.2020 as per the provisions of the Integrated Goods and Service Tax Rules, 2017, seeking the refund of Rs.23,09,100/-, which was paid in excess as IGST. The respondent, however, issued a show cause notice to the petitioner and rejected the refund claim without adequately addressing the submissions made by the petitioner.

Upon reviewing the case and examining Notification No.41/2017 - Integrated Tax (Rate), which outlines the conditions for availing benefits, the court found that the registered recipient was required to export the goods within 90 days from the date of the tax invoice. In this case, the invoice was dated 30.06.2019, and the goods were indeed exported by Quality Biz Chem India Pvt. Ltd. within the stipulated time.

The court referred to the precedent set in Bonanzo Engineering & Chemical Pvt. Ltd. v. Commissioner of Central Excise (2012(4) SCC 771) and upheld that the inadvertent payment of duties on goods exempted from payment does not convert the goods into liable goods under the Act.

Based on the above considerations and following the view taken by the Apex Court, the Court allowed the petitioner's plea. The order passed by the respondent authorities was quashed and set aside, and the respondents were directed to refund the amount of Rs. 23,09,100/- along with applicable interest, within a reasonable time from the receipt of the judgment copy.

Case Title: Tagros Chemicals India Pvt. Ltd. Versus Union Of India

Case Citation: Case Citation: 2023 Livelaw (Guj) 128

Case No.: R/Special Civil Application No. 647 Of 2022

Date: 13.07.2023

Counsel For Petitioner: Mr Dhaval Shah for the Petitioner(s) No. 1

Counsel For Respondent: Priyank P Lodha for the Respondent(s) No. 2,3

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