[Cites 19, Cited by 0]
Bombay High Court
Charan Singh Surjit Singh Gujral vs Union Of India And Ors on 15 April, 2026
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally
signed by
2026:BHC-AS:18952-DB
PRAJAKTA
PRAJAKTA SAGAR
17-WP 1330-25.DOC
SAGAR VARTAK
VARTAK Date:
2026.04.22
13:25:46
+0530
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 1330 OF 2025
Shri. Charan Singh Surjit Singh Gujral ...Petitioner
Vs.
Union of India & Ors. ...Respondents
_________
Mr. Brijesh Pathak with Ms. Anjali Joshi and Mr. Dulraj Jain for the Petitioner.
Mr. S. D. Deshpande for Respondents.
__________
CORAM: G. S. KULKARNI &
AARTI SATHE, JJ.
DATE: 15 APRIL 2026.
Judgment (Per G. S. Kulkarni, J.):-
1. Rule. Rule made returnable forthwith. By consent of the parties, heard
finally.
2. This petition under Article 226 of the Constitution of India is filed
praying for the following substantive reliefs:-
"(a) to issue Writ of Mandamus or any other appropriate writs,
orders or directions under Article 226 of the Constitution of India
ordering and directing the Respondent Nos.2 and 3 and their
subordinates, servants and agents to forthwith release and refund
the IGST amount in relation to zero rated supply/export of the
goods covered by Shipping Bills, along with applicable interest till
the date of refund, the details whereof is mentioned in Exhibit-A;
(b) to issue Writ of Mandamus or any other appropriate writs,
orders or directions under Article 226 of the Constitution of India
ordering and directing the Respondent Nos.2 and 3 and their
subordinates, servants and agents to forthwith pay interest in terms
of Section 54 of CGST Act read with Section 16 of the IGST Act,
from the date of filing the Shipping Bills to the date of actual
refund, in relation to zero rated supply/export of the goods
covered by Shipping Bills, the details whereof is mentioned in
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Exhibit-A."
3. The facts lie in a narrow compass:- It is the petitioner's case that he is
carrying business of trading and export of parts and accessories of the motor
vehicles and mobile accessories etc. in the name of his proprietary concern Guru
Nanak Motor House. During the period between 21 December 2018 to 14
January 2019 the petitioner exported SD Super-Fast Data Sync and Cable and
related items under the cover of 30 separate shipping bills. The petitioner
contends that he had paid and discharged the amount of IGST at the time of
procurement of such goods. All the goods were examined and finally assessed and
permitted to be exported.
4. It is the case of the petitioner that he was entitled to receive refund of the
IGST amount in terms of Section 54 of the Central Goods and Services Tax Act,
2017 (for short, "CGST Act"). Pursuant to the final assessment of the shipping
bills, the same was considered as an application for refund. However, on 22
January 2019, the goods were seized by the Special Intelligence and Investigation
Branch (SIIB) under Section 110 of the Customs Act, on the allegation that value
was mis-declared, which ultimately led to an adjudication order being passed
whereby the valuation as prayed by the petitioner was rejected in terms of the
following operative order passed in the Order-in-Original by which the goods
were inter alia confiscated. The extract of the said order as quoted in the orders
passed by the appellate authority read thus:
"M/s Gurunanak Motor House, Plot No.41, Sector-5 Koperkhairne,
Navi Mumbai, Maharashtra-400701 (hereinafter referred to as
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Appellant) filed an appeal dated 30.06.2020 against the Order in
Original no.868/2019-20/ADC/NS-II/CAc/JNCH dated 03.03.2020
passed by the Additional Commissioner of Customs, NS-II JNCH,
Nhava Sheva (hereinafter referred to as Respondent) wherein the
following was ordered-
a) rejected the declared FOB value of the goods of
Rs.8,01,13,.254/- covered in six Shipping Bills under provisions of Rule
8 of the Customs Valuation (Determination of Value of Export Goods)
Rule, 2007 and the same to be re-determined as Rs.2,18,40,000/- in
terms of rule 6 of CVR, 2007.
b) Rejected the claimed drawback of Rs.8,01,132/- made by the
appellant in the six Shipping bills filed for export and the same to be
restricted to Rs.2,18,400/- as per re-determined FOB value of
Rs.2,18,40,000/- under section 75 of Customs Act, 1962. Further re-
determined drawback is to be disbursed to exporter only on receipt of
BRC with respect to subject Shipping bill.
c) Rejected the MEIS claimed of Rs.16,02,265/- of Appellant in
respect of the six export shipments and the same to be restricted to
Rs.4,36,800/-as per re-determined FOB value of Rs.2,18,40,000/-
d) Ordered confiscation of goods covered under the six shipping
bills having declared FOB value of Rs. 8,01,13,254 under section 113(i)
of Customs Act, 1962 with an option to redeem the same on payment of
fine of Rs.5,00,000/- under section 125 of Customs Act, 1962 within
120 days from the receipt of the order.
e) Rejected declared FOB value of Rs.7,63,18,299.80 of same
goods i.e "Superfast Data Sync Charge Cable" in respect of past nine
export shipments under the provisions of Rule 8 of the Customs
Valuation(Determination of Value of Export Goods) Rule, 2007 and the
same to be re-determined as Rs.2,67,90,400/- in terms of rule 6 of CVR,
2007.
f) Rejected the claimed drawback of Rs.7,63.182.65/- in respect of
past nine export shipments made by the appellant and the same to be
restricted to Rs.2,67,864/- as per re-determined FOB value of
Rs.2,67,90,400/- under section 75 of Customs Act, 1962.
g) Rejected the MEIS claimed of Rs.19,86,366/- in respect of past
nine export shipments made by the appellant and the same to be
restricted to Rs.5,35,808/- as per re-determined FOB value of Rs.
2,67,90,400/-
h) Ordered confiscation of goods covered under past nine export
shipments made by the appellant under provisions of section 113(i) of
Customs Act, 1962 read with section 50(2) of Customs Act, 1962 and
refrained from imposing any redemption fine as the goods were not
physically available for confiscation.
i) Ordered recovery of excess Drawback of Rs.7,25,318.62 and
excess MEIS of Rs.14,50,558/- availed by the appellant on past export
shipments: Drawback under Rule 17 of Customs and central Excise
Drawback rules, 2017 along with interest and MEIS under Section
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28AAA of Customs Act, 1962.
j) Imposed penalty of Rs.1,00,000/- on M/s Guru Nanak Motor
House under section 114(iii) of the Customs Act, 1962.
k) Imposed penalty of Rs.1,00,000/- on Shri Charan Singh Gujral,
Proprietor of M/s Guru Nanak Motor House under Section 114AA of
the Customs Act, 1962."
5. The aforesaid Order-in-Original was carried in appeal by the petitioner
before the Commissioner of Customs (Appeals), Nhava Sheva, Mumbai-II. By
order dated 25 June 2021, the appellate authority allowed the appeal and made
serious observations regarding the manner in which the Order-in-Original was
passed. The operative portion of the appellate order is required to be noted,
which reads thus:-
"16. In view of the above discussions and findings, I find that the
investigations in this case has been carried out in a haphazard manner.
The impugned goods were seized on 22.1.2019 under section 110(1) of
the Customs Act, 1962, however Show Cause Notice was not issued to
the appellant as prescribed under section 1 10(2) of the Act within six
months of date of seizure nor any evidence of extension of the time
Period in this regard for another six months is on the record. Appellant
was not given an opportunity of personal hearing although appellant had
vide their letter dated 7 1.2020 requested for granting a personal hearing.
I observe that the appellant's request for finalizing the case in accordance
with law has been mis- construed has a waiver to show cause notice and
personal hearing and the case has been decided without following in
principles of natural justice. I further observe that now the lower
authority can not restore the lost Opportunities in resurrecting the edifice
of principles of natural justice as the matter has moved much ahead of
that stage. Since the matter already stands adjudicated, a show cause
notice cannot be given in this case as the same stands time barred by now.
Considering these factors the order in Original is completely bad in law
and can be set aside on the grounds of non-adherence of principles of
natural justice itself in terms of law being settled in this regard in terms of
various judicial pronouncements. Further, even on merits, the case does
not stand on its legs due to weak, haphazard investigation and botched
up evidences as has been detailed in the para above. Hence, I am of the
considered opinion that on both the counts i.e. legal as well as merits the
order passed by the lower authority is not sustainable.
17. I therefore, set aside the Order-in-Original No.
868/2019-20/ADC/NS-II/CAC/JNCH dt. 3.3.2020 passed by the
Adjudicating Authority and allow the appeal with consequential relief."
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6. The aforesaid order passed by the learned Commissioner (Appeals) was
assailed by the Department before the Customs, Excise and Service Tax Appellate
Tribunal ("the Tribunal"). However, the same came to be dismissed on 03
December 2021. The orders passed by the Tribunal were accepted by the
Department. Also the goods were subsequently released, is an admitted position.
No further steps were taken and/or no investigation is pending against the
consignment in question. This position was recorded by the office of the CGST in
a communication dated 11 December 2024, addressed to the Additional
Commissioner of Customs, (I/C) IGST Refund, by the Joint Commissioner (AE),
Belapur, CGST & Central Excise (page 53 of the paper-book). Thereafter, on 13
December 2024, the adjudicating authority passed an order confirming that the
petitioner had properly availed the IGST.
7. On such backdrop, on 11 December 2024, the petitioner filed an
representation/application before respondent no.2, requesting for the release of
the export incentives and removal of the alert. Similar representations were
thereafter made on 20 December 2024, 02 January 2025, 03 January 2025 and
07 January 2025. It is in these circumstances, the present petition came to be
filed on 23 January 2025, seeking the reliefs as noted by us hereinabove.
8. Mr. Pathak, learned counsel for the petitioner, at the outset, submits that
after filing of the present petition, the respondents have released the refund in
respect of all consignments except 3 consignments dated 14 January 2019. We
also find from the record that, in an interim order dated 14 July 2025 passed by a
coordinate Bench of this Court, a statement made on behalf of the petitioner was
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recorded that out of the total IGST refund of Rs.6,78,57,305/- due and payable
after the institution of the petition, the respondents had refunded
Rs.6,02,45,795/- to the petitioner, leaving a balance of approximately
Rs.76,00,000/-. Further by another order dated 21 July 2025, a co-ordinate
Bench of this Court observed that in the event instructions were not received by
the learned counsel for the respondents, the Court would be constrained to hear
the petitioner and dispose of the petition.
9. Insofar as the balance refund is concerned, by order dated 24 July 2025,
the co-ordinate Bench of this Court passed the following order :-
"1. Heard learned counsel for the parties.
2. On the last occasion, Mr. Pathak has stated that after the
institution of this petition, the respondents have refunded,
Rs.6,02,45,795/- and the amount of Rs.76,11,150/- was yet to be
refunded. He also submitted that no interest has been paid to the
petitioner.
3. Accordingly, we had posted the matter for learned counsel for
the respondent to obtain instructions. After some adjournment,
instructions have been obtained and even affidavit in reply has been filed.
4. Regarding the issue of refund of Rs.76,11,150/- Ms. Thakkar
pointed out that till date the petitioner has not exported the goods. Mr.
Pathak submitted that the goods are with the Custom Authorities and
because the Custom's Authorities have not permitted the exports, the
goods remained with the custom's authorities. He submitted that the
Customs Authority may be directed to permit exports and thereafter
process the refund. Ms.Thakkar, on instructions states that there are some
technical issues regarding permit of exports. She submitted that license of
the Custom's House Agent (CHA) or Custom's Broker who had
submitted shipping bills had been cancelled. She, therefore, points out
that the petitioner will now have to engage some other license custom's
broker or Custom House Agent to process the shipping bills and allow
the exports. Ms. Thakkar says that no sooner these issues are sorted out,
exports will be permitted and refunds processed.
5. Mr. Pathak states that the original bills are still with the custom's
authorities. In any event, petitioner will engage some other broker/
Custom House Agent and sort out the issues now pointed out at the
earliest.
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6. Accordingly, we post this matter for further consideration and
compliance on 18 September 2025. In the meanwhile, we expect that the
issues now raised regarding exports are sorted out."
10. We are informed by Mr. Pathak that the exports have already been made.
Thus, the petition is now confined only to the issue on the interest amounts, in
terms of what is mandated by Section 56 of the CGST Act. Mr. Pathak submits
that, considering the scheme of Section 54 read with Section 56 of the CGST Act,
it was obligatory on the part of the respondents to grant interest on the belated
refund to the petitioner and more importantly when the Department has accepted
the order passed by the State Tax authorities, and appropriate steps were taken to
refund the IGST amount, as also to permit the export. He further submits that
the petitioner's case is supported by the decision of this Court in Ms. Anita
Agarwal vs. Union of India 1, wherein, in similar circumstances, and considering
the provisions of Section 56, the Court held that the petitioner therein was
entitled to interest.
11. Section 56 provides for interest on delayed refunds. The said provision is
required to be noted, which reads thus:-
"Section 56. Interest on delayed refunds.
If any tax ordered to be refunded under sub-section (5) of
section 54 to any applicant is not refunded within sixty days from the
date of receipt of application under sub-section (1) of that section,
interest at such rate not exceeding six per cent. as may be specified in the
notification issued by the Government on the recommendations of the
Council shall be payable in respect of such refund 1[for the period of
delay beyond sixty days from the date of receipt of such application till
the date of refund of such tax, to be computed in such manner and
subject to such conditions and restrictions as may be prescribed]:
Provided that where any claim of refund arises from an order
1 2024 (11) TMI 785 Bombay High Court
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passed by an adjudicating authority or Appellate Authority or Appellate
Tribunal or court which has attained finality and the same is not
refunded within sixty days from the date of receipt of application filed
consequent to such order, interest at such rate not exceeding nine per
cent. as may be notified by the Government on the recommendations of
the Council shall be payable in respect of such refund from the date
immediately after the expiry of sixty days from the date of receipt of
application till the date of refund."
12. The purport of the provision is that if any tax ordered to be refunded
under sub-section (5) of section 54 to an applicant is not refunded within sixty
days from the date of receipt of application under sub-section (1) of the said
provision, interest at such rate not exceeding six per cent, as may be specified in
the notification issued by the Government on the recommendations of the
Council shall be payable in respect of such refund, for the period of delay beyond
sixty days from the date of receipt of such application till the date of refund of
such tax, to be computed as prescribed.
13. In the present case, it is clear that the petitioner had made a valid
application, as the law would require. The assessment of the shipping bills itself
was required to be treated as an application for refund. Ultimately, in the manner
as noted hereinabove, the process was required to attain finality before the
Customs, Excise and Service Tax Appellate Tribunal. Undoubtedly, the petitioner
was entitled to a refund of Rs.76,11,150/-, which was ultimately granted to the
petitioner during the pendency of this petition, as recorded by the co-ordinate
Bench of this Court in its order recorded hereinabove. Thus, this is a clear case
where the provisions of Section 56 are applicable, and the Department would be
under an obligation to grant interest to the petitioner in accordance with the said
provision. A co-ordinate Bench of this Court in Ms. Anita Agarwal (supra) has
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also referred to the circular dated 17 June 2019 and policy wing circular issued in
this regard being policy circular no.131/1/2020 dated 23 January 2020. The
relevant observations are required to be noted which read thus:-
"10. In the instant case on 25 June 2019, an alert was inserted in the
system of Respondents to keep the refund of IGST of the Petitioner in
abeyance. As per the Circular dated 17 June 2019 issued by the
Respondents, the Chief Commissioner of Central Tax shall get the
verification of IGST refund claims and other related aspects in
accordance with the standard operating procedure to be issued by the
CGST policy wing. A report shall be furnished within 30 days specifying
clearly whether the amount of IGST paid and claimed as a refund is in
accordance with the law or not, and after that, the Chief Commissioner
shall comply and forward the report within five working days after that
to the concerned Customs Port of Export.
11. The CGST Policy Wing, vide its Circular No.131/1/2020 dated
23 January 2020, has stated that the verification shall be completed by
jurisdictional CGST office within 14 working days of furnishing of
information in proforma by the exporter and if the verification is not
completed within 14 days, same shall be brought to the notice of the
jurisdictional Chief Commissioner and exporter may also bring the same
to the notice of the jurisdictional Principal Chief Commissioner. After
that, the jurisdictional Chief Commissioner / Chief Commissioner of
Central Tax should take appropriate action to complete the
verification within seven working days. If the exporter does not get the
refund within one month, then the exporter may register his grievance
on the Respondents' portal, giving all the details.
12. In our view, the objective of Circular No.16 of 2019 and Circular
No.131/1/2020 is to ensure that the investigation in case of a suspicious
refund claim is completed within the time frame provided therein so that
the exporters can get the refund within the time specified. It is also
important to note that the refund plays a very important role in the
working capital of an exporter, and therefore, any delay in the grant of
the refund would affect the day-to-day running of the business. The
objective of these Circulars is to make Indian businesses internationally
competitive; therefore, working capital management is very important. It
is keeping in mind this aspect and for ease of doing business that the
above-referred Circulars have been issued to complete the investigation
within the time frame specified therein."
14. In our opinion, on a conjoint reading of Sections 54 and 56 of the CGST
Act, there is a clear obligation on the Department to process the refund
application in a time bound manner as prescribed, and in respect of delayed
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refunds, a liability to pay interest in terms of Section 56 would stand attracted.
15. In the present case, considering the underlying facts on which there is no
dispute, in our opinion, the same would unequivocally obligate the designated
officer of the Department to comply with the provisions of Section 56.
16. We are however quite astonished at the stand taken on behalf of the
respondents in the reply affidavit of Shri. Shashikant M. Borkar, Deputy
Commissioner of Customs, inasmuch as, the Designated Officer mechanically
refuses to recognize and/or consider the orders passed by the appellate authority
as also by the tribunal setting aside the order-in-original. This is clear from the
following statements made in paragraphs 10 and 11 of the affidavit which reads
thus:-
"10. It is respectfully submitted that the Order-in-Original dated
13.12.2024 issued by the Joint Commissioner, CGST & Central Excise,
Belapur, itself confirms that the exporter had availed and utilised
ineligible IGST input tax credit amounting to Rs. 54,43,2001- in
contravention of Section 16(2) of the CGST Act, 2017, for which
demand, interest and penalty have been confirmed. These findings
clearly indicate that at the relevant time, the bona fides of the exporter
were not established, and therefore, the export incentives were rightly
kept on hold to safeguard Government revenue. The action of inserting
and maintaining the alert was thus a justified preventive measure in
accordance with law and the prevailing facts, and not an arbitrary
withholding of benefits.
11. It is submitted that interest is not payable when delay is caused
due to bonafide administrative processes or statutory compliance,
particularly when there is no malafide or willful withholding on part of
the Respondents.
12. In light of the above, the prayer for grant of interest is without
merit and deserves to be reject."
17. Considering the aforesaid averments as made in the reply affidavit, we are
of the opinion that the reply is absolutely mechanical to say the least, apart from
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the fact that it completely disregards the obligations under Section 56 of the
CGST Act. Moreover, we are surprised, as to how such a reply could have been
vetted and at all filed, which is not only oblivious to the record of the proceedings
and the binding orders passed by the appellate authority and the the Customs,
Excise and Service Tax Appellate Tribunal, but also to the relevant provisions of
law.
18. In the light of the aforesaid discussion, the writ petition needs to succeed.
Accordingly Rule is made absolute in terms of the prayer clause (b).
19. Let the order be complied within a period of four weeks from the date of
copy of this order is made available.
(AARTI SATHE, J.) (G. S. KULKARNI, J.)
15 April 2026
