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. The Taxpayer is registered under the GST law. Section 54 of CGST Act 2017 read with Rules 96(4) of CGST Rules 2017, 2. The Taxpayer is a Cotton Ginning Mill, engaged the 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. While coming up with the decision, the court has cited two similar verdicts. But they were not knowing it. You got drawback and ROSL on account of tax paid on inputs contained in goods exported without payment of GST. 37/2018-Customs, dated 9-10-2018. In the Rule 96 of the CGST Rules, the statements were pretty clear. 0% on Supply. Where the government contemplates expanding the scope of the restrictions for grant of refund, the same may have to be brought only by way of an amendment to the existing provisions of GST law. All Rights Reserved. However, the same was not a permitted reason under the GST law to withhold refunds. Duty drawback is one of the export incentives provided by the Government of India under the Foreign Trade Policy. Judgment 1st Gujarat High Court rules that claim of higher rate of duty drawback is not a valid reason for rejection of IGST refund on exports. The input of capital goods not allowed. In short, a supplier availing drawback of inly basic customs duty shall be eligible for refund of unutilized ITC. Leave your Name, email, Phone number along with what you are looking for in message box or you can call us at 011-41715118, Copyright (c) 2014-2020 | All Right Reserved | VJM & Associates LLP, Circular can not prevail over the statute, HC allows IGST refund where higher rate of drawback claimed, 405-406, 4th Floor, Raja House, Nehru Place, New Delhi - 110019, Financial Structuring & Restructuring Services, RoDTEP (Remission of Duties and Taxes on Exported Products) | Applicable w.e.f. Happy to Share for the benefit of all, that today in the matter of Petitioner is M/s Precot Meridien Limited. 75,454 on 2 … To ease this communication, the GST system has added a new Facility of “Communication Between Taxpayers” on the GST portal. No exporter would prefer to take benefit of 0.85% Duty Drawback against refund of IGST/ Input GST which was at least 5%. We have not claimed refund of unutilised input tax … The term “Drawback” is used exclusively for refund of duties and taxes against export. Still, Duty Drawback on Exports As per notification No. As per the GST framework, the GST acts as a consumption based tax and hence, the end customer becomes liable for the payment of Goods and Services Tax. As per Section 16(3)(b) read with Section 54 of the IGST Act, the Taxpayer has an option to claim refund on the exported goods to the extent of the IGST paid on the exported goods. 20126 of 2018], the Gujarat High Court (‘HC’) has ruled that claim of duty drawback is not a valid reason for unreasonably withholding IGST refunds. Moreover, there is no rule for allowing a higher duty drawback refund. Eligible refund in excess of drawback claimed, Hence in view of above submission we can state that assessee in these cases are eligible for refund of IGST, Your email address will not be published. a request has been received from the jurisdictional GST officer to withhold the IGST refund payment due to claim of refund under Section 54(10) or 54(11) of the CGST Act. was to apply the provisions of the Circular to ensure that no taxpayer or Refund as per formula envisaged. After realizing the mistake of claiming a higher rate of drawback, the petitioner repaid the amount in full along with interest. The respondents, if commit default in payment of balance amount as directed by this judgment, the respondents will be obligated to pay interest @ 7% together with balance amount payable from the date on which a request for refund is made by the petitioner till the date of payment”. Refund of ITC shall not be allowed if supplier of goods/services avails of drawback in respect of CGST or claims refund of IGST paid on such supplies. The rationale for not allowing the refund of IGST for those exporters, who claim higher duty drawback is that the higher duty drawback reflects the elements of Customs, Central Excise and Service Tax taken together and since higher duty drawback is already being availed than granting the IGST refund would amount to double benefit as the Central Excise and Service Tax has been subsumed in the GST. Duty drawback of GST shall not be availed. The major outcome of the hearings came when the Several cases … Circular No. Overview of Duty Drawback This video introduces the duty drawback. However, the same was not a permitted reason under the GST law to withhold refunds. As the circular suggests, if an exporter consciously asks for a refund of the higher rate of duty drawback, he is not supposed to be entitled to IGST or ITC claims. You can’t claim a refund of Goods and Services Tax (GST) in a duty drawback claim. Higher duty drawback availed: The Taxpayer is not entitled to claim the refund of the IGST paid as the higher duty drawback was availed. Some of the common areas where one finds issues leading to either no claim or erroneous claim or tips to enable incentives to be cashed have been examined in this article as under: Duty Drawback & GST Refund are mutually exclusive. we used to availed duty drawback in the High rate i.e till 30/6/2017. Section 54 of the Central Goods and Services Tax Act, 2017, specifies that subject to the provisions of Sub-Section (10), a registered person may claim refund at the end of any tax period. Once the exporter draws higher duty drawback, the system automatically scrolls out IGST refund. But initially, he availed higher duty drawbacks wrongly. In the instant case, the petitioner has wrongly availed the higher duty drawback to the tune of Rs. PRECOT MERIDIAN LIMITED The rationale for not allowing the refund of IGST for those exporters, who claim higher duty drawback is that the higher duty drawback reflects the elements of Customs, Central Excise and Service Tax taken together and since higher duty drawback is already being availed than granting the IGST refund would amount to double benefit as the Central Excise and Service Tax has been subsumed in the GST. Even then, in respect of one shipping bill, both benefits can be claimed simultaneously after 01.10.2017. duty drawback at general rate or he may opt to claim duty drawback at a higher rate (composite rate) without availing CENVAT credit. A reading of these Notifications and Rules would suggest that in all cases where IGST refund is availed, the authorities concerned may not allow a higher rate of drawback. It has to be paid back. You got drawback and ROSL on account of tax paid on inputs contained in goods exported without payment of GST. In short, a supplier availing drawback of inly basic customs duty shall be eligible for refund of unutilized ITC. 1.7.2017 to 30.9.2017 (Circular No. For instance, the IGST refunds can Section 54(3) allows refund of un-utilised Input Tax Credit (ITC) under two circumstances i.e. the proper Customs officer determines that the exports were in violation of the relevant provisions of the Customs Act, 1962. Blog » Circular can not prevail over the statute, HC allows IGST refund where higher rate of drawback claimed. The HC held that the IGST refund should be processed immediately without any delay along with a simple interest of 7% per anum. This facility will enable a taxpayer (whether supplier or recipient) to send a message to another registered person (whether supplier or recipient) through the GST portal itself. The respondents are given liberty to adjust the amount already availed by the petitioner on account of higher rate of duty drawback and pay the balance of IGST payable to petitioner within six weeks from the date of receipt of a copy of this judgment. It’s evident that the taxpayers have to pay the refund of IGST on their goods that they export to Bangladesh regardless of the claiming of duty draw. Several goods exporters across the country could not avail of their ITC refund for a period of July 17 to September 17. the court has passed their judgement after hearing all the facts from both Neha Sethi (Chartered Accountant, Partner, J. Harjai & Associates) in her write-up discusses major issues w.r.t. Where to invest money in India (to make it work for you)? See the definition of' 'refund… Duty Drawback & GST Refund are mutually exclusive. Question 2: Is Drawback at a higher All Industry Rate (AIR) admissible if an exporter has not availed Input Tax Credit of GST or refund of IGST paid on exported goods ? Moreover, taxpayers who supply goods outside of India are eligible for the ‘Zero Rated Supply.’ They also have the option to claim refunds on their exported goods and services. VERSUS THE COMMISSIONER OF CUSTOMS, THE ASSISTANT COMMISSIONER OF CUSTOMS After hearing the counsel on the adjustment, the Court has suggested refund of IGST after adjusting the higher rate of duty drawback availed by the petitioner without refunding IGST … The Taxpayer had issued Commercial Invoice(s), Export Invoice(s) and Shipping Bill(s). option. Under such a scheme, reimbursement of such taxes/duties/levie, paid at the central/ state/ local level, shall be granted which is not refunded in any other mechanism. Amit Cotton Industries [R/ Special Civil Application No. In order to claim refund, the Shipping Bill filed the Taxpayer shall be deemed to be an application for refund of IGST, as per Rule 96 of the. “Adv. 29 May 2020 Exporters can claim higher rate of duty drawback (composite AIR) subject to conditions that no input tax credit of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward. Now exporters have paid GST of at least 5% on inputs or would have charged 5% IGST. Q 3. This facility is available for all registered persons except those registered under TDS, TCS and Non-resident Tax payers (NRTP). Goods entered for domestic consumption on which a refund of excise duty can be claimed include goods: Some of these were purchased on payment of excise during pre-GST era and some after July 1, 2017 on payment of GST. 8. I have heard the submissions. only be withheld under permitted law, and they could not withhold the decision We exported certain goods without GST payment under letter of undertaking. The reason being the GST refund where higher drawback claimed a higher rate of drawback, this has been a major concern for the whole exporter community. But it is better to claim lower rate of duty drawback and claim gst refund on such invoices 29 May 2020 Exporters can claim higher rate of duty drawback (composite AIR) subject to conditions that no input tax credit of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward. Hence Applicant is eligible for refund in excess of drawback claimed. Further, it is pertinent to note that, refund of utilized ITC has to be computed as per the method prescribed under Rules 89(4) of the CGST Rules. The shipping bill that the exporter of goods may file is deemed to be an application for refund of Integrated tax paid on the goods exported out of India. M/S Precot Meridian is a cotton exporter. Exporters avail the option to take drawback at higher rate in place of IGST refund on their own volition as part of the prescribed documentation/ forms. Answer: No. The Cabinet Committee on Economic Affairs has given its approval for introducing a new Scheme namely Remission of Duties and Taxes on Exported Products (RoDTEP). exporter should benefit more than it should be in the same transition. A number of exporters were not aware of the implications and chose to be compensated for input taxes under the duty drawback scheme. 4,80,355/- as IGST. The rationale for not allowing the refund of IGST for those exporters, who claim higher duty drawback is that the higher duty drawback reflects the elements of Customs, Central Excise and Service Tax taken together and since higher duty drawback is already being availed than granting the IGST refund would amount to double benefit as the Central Excise and Service Tax has been subsumed in the GST. Section 54 of the CGST Act and Section 16 of the IGST Act ruled out that the GST authorities needed to process and issue the refund IGST paid on the export of goods without any delay. The duties and taxes neutralized under the scheme are, (i) Customs and GST in respect of inputs and. Export of goods/services with LUT (without payment of Tax) Rule 89rws Section 54 of CGST Act. “Exporters have said that they are willing to pay back the drawback with interest and they should be instead given IGST refund which is a much higher amount. 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