IGST refund can be granted to the exporter after deducting differential duty for opting higher duty drawback

Last updated: 11 September 2024

Quick Summary

The Bombay High Court has ruled that exporters can receive a refund of IGST paid on zero-rated supplies, even if they claimed a higher duty drawback. However, this refund will be subject to the deduction of the differential amount between the higher drawback claimed and the lower rate. The court reasoned that claiming a higher drawback already accounts for elements of previous customs and excise duties, and an IGST refund without deduction would lead to a double benefit.

Court :
Bombay High Court

Brief :
The Hon'ble High Court of Bombay in the case of M/s Kunal Housewares Private Limited v. Union of India and Ors. [Writ Petition No. 2215 of 2023 dated August 26, 2024] directed the Revenue to grant refund of the Integrated Goods and Services Tax ("IGST") paid on 'zero rated supplies' to exporter who has claimed drawback at higher rate, after deducting the differential amount of duty drawback, alongwith with interest at 7% p.a. on such refund from the date of the shipping bill till the date of actual refund and held that the higher duty drawback reflects the element of Customs/Central Excise and Service Tax taken together, and since higher duty drawback is already being availed, then granting the IGST refund would amount to double benefit as the Central Excise and Service Tax has been subsumed in the GST.

Citation :
Writ Petition No. 2215 of 2023 dated August 26, 2024

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