The Madurai Bench of Madras High Courtheld that registered person making zero rated supply shall be eligible to claim IGSTrefunds, irrespective of the circular on clarifications on exports related refund issues (Circular No.37/2018-Customs, dated 09.10.2018). The ruling was made by a single bench consisting of Justice M.Govindaraj, in the case of M/s.Precot Meridian Limited v. The Commissioner of Customs and Anr.



The Madurai Bench of Madras High Courtheld that registered person making zero rated supply shall be eligible to claim IGSTrefunds, irrespective of the circular on clarifications on exports related refund issues (Circular No.37/2018-Customs, dated 09.10.2018).
The ruling was made by a single bench consisting of Justice M.Govindaraj, in the case of M/s.Precot Meridian Limited v. The Commissioner of Customs and Anr.
The petitioner exported cotton by way of seven shipping bills and paid Rs. 4, 80,355/- towards IGST. The petitioner wrongly availed the higher duty drawback initially. Thereafter, he rectified the mistake by repaying it along with interest and sought a refund of IGST paid by him.
The petitioner claimed that he exported after paying the tax and he is entitled to refund of the input tax credit as per Section 16(3) of the IGST Act.
The respondents, however,  relied on the circular issued by the Government vide Circular No.37/2018-Customs, dated 09.10.2018, and contended that a person, who makes a conscious request for refund of duty drawback, is not entitled to IGST/ITC claims. In such circumstances it is treated as an exporter has consciously relinquished the same and is not entitled to refund. The Revenue also contended that the petitioner has wrongly claimed higher duty drawback and on his own volition, without any sanction from the department, has paid it back. The Revenue also pointed out that since the entire refund is system managed, once the exporter draws a higher duty drawback, the system automatically scrolls out IGST refund.
While Analysis the case, the Court pointed out that the only condition the statute provides for IGST refunds on the export of materials is that the export is made after payment of tax.
The Court cited the judgment of Division Bench of Gujarat High Court at Ahmedabad in M/s. Amit Cotton Industries Through Partner, Veljibhai Virjibhai Ranipa vs. Principal Commissioner of Customs, in R/Special Civil Application No.20126 of 2018, dated 27.06.2019, Wherein it was held that the Circular has nothing to do with the IGST refund and it is incumbent on the respondents to refund the IGST as claimed by the petitioner.
The Court further cited a Supreme Court Judgement of Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries [2008(12) S.T.R. 416 (S.C.)], and held that “circulars cannot prevail over the statute. Circulars are issued only to clarify the statutory provision and it cannot alter or prevail over the statutory provision”.
The Revenue was hence directed to refund the amount of IGST paid by the petitioner for the goods exported from India which are zero-rated supplies, within a period of six weeks from the date of receipt of a copy of the order.

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