Circulars cannot prevail over Statute – HC
Case of Precot Meridian Vs CC
The assessee-company exports cotton. During the relevant period, the assessee exported cotton through seven shipping bills and paid an amount towards IGST. The assessee claimed to have paid such tax before making export, on account of which, it is liable to receive refund of input tax credit. The assessee wrongly availed higher duty drawback, but later rectified the mistake by repaying the same with interest and then sought refund of the IGST paid. The Revenue relied on Circular No.37/2018 -Customs and rejected the refund claim on grounds that the assessee wrongly claimed higher duty drawback and then suo motu reversed the same without sanction from the Department. Hence having relinquished the right to receive refund of IGST, the assessee was not entitled for it – The Revenue also claimed that the entire system is computerised and cannot be operated manually – Thereby, once an exporter drew higher duty drawback, the system automatically scrolls out IGST refund. Hence the present petition was filed, seeking that directions be issued to disburse the refund amount.
Decision of the Hon’ble High Court
Considering the findings of the Apex Court in Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries it is clear 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. In such circumstances, it is clear that the explanation of provisions of drawback has nothing to do with the IGST refund. Hence, Circular No.37/18-Customs , dated 09.10.2018 is not applicable in the present case. Hence the Revenue is directed to refund the amount of IGST paid by the assessee for the goods exported from India which are zero rated supplies, within a period of six weeks from receipt of a copy of order:
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