2024 (12) TMI 212 - HC - GST

Rejection of refund application based on realization of export proceeds in Indian Rupees instead of freely convertible currency - HELD THAT - The respondents themselves have rendered a clarification that if export proceeds against specific exports have been realised in Indian Rupees albeit routed through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of the Asian Clearing Union or Nepal and Bhutan, the refund would not be liable to be denied - the respondents would contend that the Circular No. 88/07/2019-GST F.NO. CBEC-20/16/04/2018-GST , dated 1 February 2019 alludes to specific exports and therefore, it is presently unclear as to whether the same would apply to all exports or to certain commodities and species of exports. It was thus submitted that since the Circular is being pressed in aid for the first time before this Court, at least this aspect should be kept open for verification and examination of the respondents. The impugned orders dated 23 November 2022 and 25 October 2023 is quashed - petition allowed.

Summary

Issues:
Challenge to rejection of refund application based on realization of export proceeds in Indian Rupees instead of freely convertible currency.

Analysis:
The petitioner filed a writ petition challenging the rejection of its refund application for an amount of INR 16,10,541/- along with applicable statutory interest. The rejection was affirmed by the appellate authority. The petitioner had conducted three export transactions during the relevant year, out of which two were realized in US Dollars. The appellate authority rejected the refund claim on the grounds that the export value was realized in Indian Rupees instead of a freely convertible currency. The eBRCs submitted by the petitioner evidenced the realization of export proceeds in INR, leading to the rejection of the refund application.

The appellate authority held that since the eBRCs showed the realization of export proceeds in INR, the refund claim was rightly rejected. The petitioner argued that Circular No. 88/07/2019-GST allowed for the realization of export proceeds in INR if routed through a freely convertible Vostro account of a non-resident bank. The respondents contended that the Circular applied to "specific exports," and clarity was needed on its applicability to all exports or certain commodities. The Court acknowledged the Circular's relevance and set aside the orders rejecting the refund application, directing a fresh examination by the adjudicating authority in light of the Circular.

The Court quashed the impugned orders and instructed the adjudicating authority to reevaluate the refund application considering the Circular. The adjudicating authority was also directed to examine the aspect of specific exports raised during the proceedings. The determination was to be completed expeditiously within six weeks, and if the petitioner was found entitled to the refund, it was to be granted along with applicable statutory interest.