Page 36 - ELT_15th June 2020_VOL 372_Part 6th

A190 EXCISE LAW TIMES [ Vol. 372

pugned circular in which it clarified that the exporter, at his option,
may file refund claim for one calendar month/quarter or by club-
bing successive calendar months/quarters, the calendar
month(s)/quarter(s) for which refund claim has been filed, howev-
er, cannot spread across different financial years.
• The impugned circulars in so far as they restrict the refund claims
only on monthly basis are contrary to the rights conferred by the
Act.
• The aforesaid restriction is ultra vires the Act and the provisions
contained thereunder.
The Revenue submitted the following before the High Court -
• Under the scheme of the Act the tax period is on month to month
basis.
• Section 16(3) of the Act clearly stipulates that the refund is subject to
conditions, and therefore, the Government is well within the power
to impose conditions by way of the impugned circular.
• Section 2(106) provides that the tax period is a period for which a
return is required to be filed. The return is to be filed on a month to
month basis and therefore the petitioner does not have right to
claim refund for one financial year, in another.
• Though the Government has provided for clubbing of the months
and the quarters, however, under no circumstances can the refund
claims spillover from one year to another.
The High Court heard the submissions of both the parties. The High
Court was of the prima facie view that by way of impugned circulars, though the
respondents recognize the difficulties faced by the exporters and have permitted
them to file refund claim for one calendar month/quarter or by clubbing succes-
sive calendar months/quarters, yet the restriction pertaining to the spread of re-
fund claim across different financial year is arbitrary. There is no rationale or
justification for such a constraint. In the instant case where exports are not made
in the same financial year, question arises as to whether the Revenue can restrict
the filing of refund for tax periods spread across two financial years and deprive
the petitioner of its valuable right accrued in his favour.
The High Court rightly observed that in exports, the availability of rota-
tion of funds is essential for the business to thrive. Moreover, businesses do not
run according to the whims of the executive authorities. The business world can-
not be told when to place orders for exports; when to manufacture the goods for
export; and when to actually undertake the exports. Blocking the refund for in-
put tax credit the entire concept of refund of input tax credit relating to zero-
rated supply would be obliterated in case the Revenue is permitted to put any
limitation and conditions that take away the petitioner’s rights to claim refund of
all the taxes paid on the domestic purchases used for the purpose of zero-rated
supplies. The incentive given to the exporters would lose its meaning and this
would cause grave hardship to the exporters would lose its meaning and this
would cause grave hardship to the exporters who are earning valuable foreign
exchange for the country.
[Continued on page A201]

EXCISE LAW TIMES  15th June 2020  36