Excess payment of GST paid by Manufacturer on third-party export- Refund not be denied

Background: 

In the case of TAGROS CHEMICALS INDIA PVT. LTD. VERSUS UNION OF INDIA, where Tagro chemicals being the manufacturer, Quality Biz Chem India Pvt. Ltd being the exporter, IGST of 18% charged erroneous without availing benefit under notficaiton Notification No. 41/2017 - Integrated Tax (Rate) dated 23.10.2017. In the said notification, only 0.1% IGST is to be payable for third party exports by the manufacturer, and the same can be claimed as refund under rule 89 (4B) by the receipent( exporter) if the burden is passed on. Also, the notifiation provides only bar that the export is to done within 90 days from the date of invoice form the manufacturer, and in the instant case it was fullfiled too. 

In the instant case, Tagros Chemicals charged 18% IGST on their supply to Quality Biz Chem, without availing the benefit of the noification cited above. Later on when they realised, the refund application as " excess IGST paid" under rule 89 was initiated. The officer( Respondent) has issued defienceny memo, and upon further submissions cited in defieciency memo, the refund application was still rejected without adequate reasons aganist the clarifications submitted by the peititioner.

Held:

The honorable high court of Gujarat held that the duty is cast upon the registered recipient to export the goods within a period of 90 days from the date of issue of tax invoice by the registered supplier. 

At this juncture, a reference of Bonanzo Engineering & Chemical Pvt. Ltd. v. Commissioner of Central Excise reported in 2012(4) SCC 771 is material and in the said decision, the Hon’ble Apex Court in paragraph Nos. 11 and 14 has observed as under:

“11. The sum and substance of the reasoning of the Tribunal appears to be that merely because the assessee has paid the excess duty on those items which he was not supposed to pay in view of the exemption notification dated 1.3.1988 and merely because the assessee has not claimed the refund of the excess duty paid, that amount paid by him under the Notification dated 1.3.1988 requires to be taken for the purpose of computing the aggregate value of the clearances under the notification No. 175/86-CE. In our view, merely because the assessee, maybe, by mistake pays duty on the goods which are exempted from such payment, does not mean that the goods would become goods liable for duty under the Act. Secondly, merely because the assessee has not claimed any refund on the duty paid by him would not come in the way of claiming benefit of the Notification No. 175/86-CE dated 1.3.86.”

14. In view of the above, we cannot sustain the judgment and order passed by the Tribunal in Appeal No. E/1352/2002-B, dated 25.10.2002.”

 Thus, the Hon’ble Apex Court has taken a view that merely because by mistake, the assessee paid duties on the goods which are exempted from payment does not mean that the goods would become goods liable for the duty under the Act.

In the case of Share Medical Care v. Union of India reported in 2007(4) SCC, 573, it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage

Thus, in view of the aforesaid view taken by the Hon’ble Apex Court, the petition deserves to be allowed and the same is allowed

- LDR