Page 33 - GSTL_16th July 2020_Vol. 38_Part 3

2020 ] A POSSIBLE REMEDY TO AMENDMENT OF RULE 96(10) J75
(d) Merchant exporters procuring the goods at concessional rate of 0.1%
vide Notification No. 40/2017-C.T. (R), dated 23-10-2017 and Notifi-
cation No. 41/2017-IGST (R), dated 23-10-2017.
Not being aware of the aforesaid restrictions, certain exporters availed the benefit
of above-mentioned notifications and simultaneously claimed refund under 2nd
option. This was questioned by the department and they demanded the payback of
the refunds/exemptions availed by them.
In many of the above mentioned cases, paying back the amount of ex-
emption would be advantageous due to various reasons. For example, the ex-
porters would have availed the IGST exemption of ` 1,00,000/- at the time of
procurements and has paid IGST and claimed refund of 2,50,000/- at the time of
exports. In this scenario, the paying back of exemption would be preferable to
losing the option of encasing the refund on output. However, it would not be so
if both IGST & BCD have to be repaid. In view of the authors, mere foregoing
IGST exemption would entitle the refund under 2nd option to the exporters but
it is possible the department officers may not accept this view and raise dispute
in appellate fora.
Recently, the Government vide Notification No. 16/2020-C.T., dated
23-3-2020 has made an amendment by inserting following explanation to Rule
96(10) of CGST Rules, 2017 as amended (with retrospective effect from
23-10-2017).
“Explanation. - For the purpose of this sub-rule, the benefit of the notifications
mentioned therein shall not be considered to have been availed only where
the registered person has paid Integrated Goods and Services Tax and Com-
pensation Cess on inputs and has availed exemption of only Basic Customs
Duty (BCD) under the said notifications.”
By virtue of the above amendment, the option of claiming refund under 2nd op-
tion is not restricted in case exporters avail only BCD exemption but pay IGST on
the raw materials. Since the amendment was made retrospectively it seems possi-
ble for exporters to repay IGST along with interest and claim refund under 2nd
option. They will be able to claim ITC of IGST so paid.
The aforesaid restriction was challenged before HC’s [Granuels India Lim-
ited (WP No. 24021/2019) before the High Court of Andhra Pradesh and Zaveri &
Co. (P.) Ltd. v. Union of India - SCA No. 15091 of 2018 before the High Court of
Gujarat] and is pending for final decision as on date. In this background, the
suggested course of action is tabulated below :

S. Status The suggested course of action
No.
1 Not claimed exemptions under There is no restriction on refund op-
any of the aforesaid notifications tions. The exporters are free to claim
refund under either of the options.
2 Claimed exemption of BCD only Now with retrospective amendment,
and paid IGST on the procure- there is no restriction on refund op-
ments tions. The exporters are free to claim
refund under either of the options.

GST LAW TIMES  16th July 2020  33