2022 (12) TMI 703 - HC - GST

Refund of IGST - Difficulty at GSTN level - export of goods - shipping bills are deemed to be refund applications - change in the name of petitioner - failure to sanction 90% of the amount claimed in Form RFD-04 within a period of not exceeding 07 days from the date of acknowledgment received. - provision of Sections 16 and 54 of the IGST Act and Rule 96 of the CGST Rules HELD THAT - Admittedly, in the present case, it appears to be the difficulty at the end of the GST network or some error in the software itself which would require a cure. When nothing is being disputed and for two of the tax invoices the refund has already been credited in the account of the petitioner, this appears to be a short coming of the software itself. Everything since is being done electronically and this automatically grant of refund after validating the shipping bill data available in ICS against the GST returns, data transmitted by GSTN, if there is any difficulty at the level of the mismatch or the processing of the claim of the refund, it becomes a duty of the GSTN to look into the same. Finding fault with the officer concerned also will not help as they are largely dependent on the network. It is good to be driven through the machines in this electronic age and this automatic grant of refund which is system driven rather then the officer driven at the same time unless there is a constant vigil on the part of the GSTN and also an endeavor to rectify the mismatch or the short comings of the software, the issues are bound to multiply. We are constrained to observe this as in many of the matters we notice that on one hand there is laudable objectives of making it all system driven and on the other hand the limitations of the system which are otherwise required to be addressed to at the level of the GSTN. There is some kind of apathy. We, would, therefore, also recommend that if the authority concerned deems it appropriate, let there be a direct communication also with the GSTN in the portal itself which could be also response based. Refund allowed with interest @6%.

Issues Involved:
1. Non-issuance of refund of Integrated Goods and Services Tax (IGST) along with interest.
2. Automatic processing and validation of refund claims by the Indian Customs EDI System (ICES).
3. Mismatch in petitioner's firm name causing refund processing issues.
4. Legal provisions under Sections 16 and 54 of the IGST Act and Rule 96 of the CGST Rules.
5. System-driven vs. officer-driven refund process.
6. Recommendations for system improvements and direct communication with GSTN.

Issue-wise Detailed Analysis:

1. Non-issuance of refund of Integrated Goods and Services Tax (IGST) along with interest:
The petitioner, a Limited Liability Partnership Firm, sought a refund of IGST paid on export invoice No. E54/2019-20 dated 06.02.2020 amounting to Rs. 19,94,994/-. Despite receiving refunds for other invoices, this particular refund was not processed. The petitioner approached the Department of Administrative Reforms and Public Grievance (CPGRAMS) but received no response for two months, leading to the filing of this petition.

2. Automatic processing and validation of refund claims by the Indian Customs EDI System (ICES):
The respondent explained that the processing of refund claims is an automatic process managed by ICES, which validates shipping bill data against GST returns data. Successful validation leads to electronic crediting of the refund amount to the petitioner's bank account as per Rule 96 of the CGST Rules, 2017. However, the refund for the shipping bill in question showed a status of "Permanent Cancellation by PAO for transaction" due to a mismatch in the petitioner's firm name, which caused the refund to be rejected by HDFC Bank.

3. Mismatch in petitioner's firm name causing refund processing issues:
The refund issue arose due to a mismatch in the petitioner's firm name, which had been updated from Azuvi International LLP to Aartos International LLP in April 2019. Despite updating all relevant departments, the refund for the specific invoice was not processed, although refunds for other invoices during the same period were successfully credited.

4. Legal provisions under Sections 16 and 54 of the IGST Act and Rule 96 of the CGST Rules:
The petitioner argued that under Sections 16 and 54 of the IGST Act and Rule 96 of the CGST Rules, the refund amount was due. Section 54(6) of the CGST Act mandates that 90% of the refund amount claimed in Form RFD-04 should be sanctioned within seven days from the date of acknowledgment. The shipping bills are deemed to be refund applications when goods are exported with payment of tax.

5. System-driven vs. officer-driven refund process:
The court observed that the system-driven process, while efficient, had limitations due to software issues. The automatic grant of refunds relies on the validation of shipping bill data against GST returns data. Any mismatch or error in the software needs to be addressed by the GST Network (GSTN). The court highlighted the need for vigilance and rectification of software shortcomings to prevent such issues from recurring.

6. Recommendations for system improvements and direct communication with GSTN:
The court recommended that the GSTN should have a direct communication feature on the portal, such as a "MAY I HELP YOU" or "Grievance Redressal Mechanism" to facilitate direct communication between the Assessee and GSTN. This would reduce the need for court intervention and address system limitations more effectively.

Conclusion:
The petition was allowed, and the court directed the respondent to refund the IGST amount of Rs. 19,94,994/- with interest at 6% per annum within two weeks from the date of receipt of the order. The court also permitted direct service through e-mode on the official email address.

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