2018 (4) TMI 1736 - HC - VAT and Sales Tax

Refund claim - mode of export - case of the petitioner is that some of the exports are made by the petitioner directly and in some cases, such exports are made through recognized courier services - validity of Circular dated 17.02.2007. Rejection of refund on the ground of export of goods - HELD THAT - Insofar as the petitioner's provisional refund claim in connection with the exports directly made is concern, clearly the authorities committed an error in rejecting such claim. This issue does not require any elaborate discussion. Refund claim - exports made through couriers - HELD THAT - Though we share anxiety of the department that the refund of taxes can be granted only after proper proof of the export of the goods, we cannot appreciate the insistence of the department to stick to procedure laid down way back in the year 2007. More than a decade has passed since then. In a fast moving world with new modes of communication, transportation, technology coming up every other day, it is expected that the department finds proper solutions to the new emerging situation. Even if we do not expect the department to clear the provisional refund in cases where the documents referred to in said circular dated 17.02.2007 are not produced since the export is made through courier service, such claim cannot be rejected while finally assessing the refund payable to the exporter only on this ground. In other words, as long as there is alternative proof of documentary nature available, the department must consider it, process it and pass suitable order in terms of law in such refund applications. As per rule 15(7) of the VAT Rules, the refund applications have to be finally processed in three months. The petitioner's refund claim in cases where the exports were made directly, may be decided without any further delay - impugned order dated 11.12.2017 is set aside - petition allowed.

Summary

Issues:
1. Rejection of provisional refund claim by the Deputy Commissioner of value-added tax.
2. Challenge to a circular dated 17.02.2007 mandating specific documents for claiming VAT refund.
3. Dispute over the acceptance of alternative proof of export in cases where exports were made through courier services.

Analysis:
1. The petitioner, a partnership firm engaged in manufacturing and selling printed canvas, faced difficulties in claiming tax exemptions under the Gujarat Value Added Tax Act, 2003 for exports made to a US-based company. The rejection of a provisional refund claim of ?4,65,000 for exports made through a courier agency due to inadequate proof of export was challenged.

2. The petitioner contested the rejection of the refund claim and also challenged a circular from 2007 mandating specific documents for claiming VAT refund, arguing that some exports were directly made and all required documents were provided, while exports through couriers posed challenges in obtaining certain documents like individual shipping bills.

3. The respondents argued in favor of the circular, stating that authenticated documents are necessary to verify actual exports. The court acknowledged the need for proof of export but criticized the insistence on outdated procedures, emphasizing the evolution of transportation and communication methods. The petitioner provided alternative evidence of export such as invoices, online orders, courier reports, and delivery status reports.

4. The court found that the rejection of the refund claim for exports made directly was an error, emphasizing the need for authorities to adapt to new modes of export facilitated by courier agencies. While acknowledging the importance of proper documentation, the court directed the department to consider alternative documentary proof in cases of export through courier services and process refund applications within the specified timeframe.

5. The judgment set aside the impugned order, directing expedited consideration of refund claims for both direct exports and exports through courier services. The court highlighted the importance of adapting procedures to modern realities and ensuring timely processing of refund applications as per VAT rules.