Refund of IGST on Zero Rated Supply


Dated: 07.07.23

Refund of IGST on Zero Rated Supply along with 7% Interest


In a recent ruling, the Bombay High Court has granted permission for the refund of Integrated Goods and Service Tax (IGST) on zero-rated supplies, along with 7% interest. Sunlight Cable Industries, the petitioner in this case, argued that they had inadvertently mentioned an incorrect Invoice No. and Port Code in their GST Return filed on 19th December 2017 for the month of August 2017. However, they rectified this error by filing an amended return in Form No. GSTR-1 for the month of January 2018, correcting the invoice number and Port Code for the export transaction with Tax Invoice No. SUN/03/2017-18.

Afterward, on 9th January 2019, the petitioner submitted an Annexure to Respondent No.2 in the prescribed format, which established the concordance between the Tax Invoice and Shipping Bill, in accordance with circulars issued by the Department of Revenue (Central Board of Excise and Customs). Following these compliance procedures, the petitioner applied to Respondent No.2 on 15th March 2019, requesting the release of the IGST refund.

To address their grievance regarding the IGST refund, the petitioner approached the Central Public Grievance Redress and Monitoring System (CPGRAMS), which acknowledged their grievance. On 7th October 2020, the petitioner received an email stating that their grievance had been resolved, citing the reason that they had already availed a higher duty drawback on their exports using the mentioned Export Invoice and corresponding Shipping Bill.

However, upon reviewing the documents, it became apparent that the export in question qualified as a zero-rated supply under Section 16(3) of the IGST Act. Consequently, the provisions of Section 54 of the Central Goods and Service Tax (CGST) Act and Rule 96 of the CGST Rules became applicable.

Section 54 of the CGST Act allows an assessee to claim a refund of tax, including interest or any other amount paid, by submitting an application within two years from the relevant date, as prescribed. Similarly, Rule 96 of the CGST Rules pertains to the refund of integrated tax paid on goods or services exported from India.

In their verdict, the division bench of Justice G.S. Kulkarni and Justice Jitendra Jain ordered the respondents to refund the IGST amount paid by the petitioner for the exported goods (zero-rated supply) under the relevant shipping bills. The refunded amount was determined to be Rs. 21,41,451/-, along with simple interest at a rate of 7% per annum, effective from 22nd February 2018.

Download Order Below:

Sunlight Cable Industries-Bombay High Court


Source: Bombay High Court


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The views expressed in the update are strictly personal, based on our understanding of the underlying law. We are not responsible for any injury, loss or cost arising to any person who refers this update and acts or refrains from any act accordingly. We would suggest that a detailed legal advice must be sought before relying on this update.

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