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2025 (4) TMI 427 - HC - GSTRefund claim - refund application of the petitioner was rejected on the ground of non-furnishing of documents/certificates - HELD THAT - It is observed that proof of payment is only required for export of services and not of goods (Refer Rule 89 (2) (b) and 89 (2) (c) of the CGST Rules). As a matter of fact for export of goods only a reconciliation statement of the Shipping Bill and Export Invoices is required which has already been annexed to the refund application (Refer-Annexure-9 to the Writ Application). Further paragraph-48 of the 2019 Circular (Annexure-10) clearly stipulates that insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon . Even otherwise the requirement of payment should be within 9 months of export as per clause A2 of RBI Circular being FED Master Direction No. 16/2015-16 dated 1.1.2016 as amended from time to time (Annexure-11); and the record suggests that all payments have been received by petitioner within 9 months as is evident from Annexure-9 to the writ application. Conclusion - The impugned order has no legs to stand in the eye of law as the same is based on extraneous grounds which are beyond the requirements of the CGST Act Rules and the binding Circulars issued thereunder. Petition allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment revolve around the rejection of a refund application under the Central Goods and Services Tax (CGST) framework. The issues include:
ISSUE-WISE DETAILED ANALYSIS Non-furnishing of receipt of payment within 180 days of export The relevant legal framework includes Rule 89 (2) (b) and 89 (2) (c) of the CGST Rules, which specify that proof of payment is required for the export of services, not goods. The Court noted that for the export of goods, a reconciliation statement of the Shipping Bill and Export Invoices suffices, which was provided by the petitioner. Furthermore, paragraph-48 of the 2019 Circular states that proof of realization of export proceeds should not be insisted upon for processing refund claims related to the export of goods. The Court found that the petitioner's payments were received within the stipulated nine months, as per the RBI Circular, rendering this ground of rejection legally unsustainable. Non-furnishing of proof of export within 90 days of invoice The Court referred to Rule 96A-3, which allows for recovery under Section 79 if goods are not exported within the prescribed time. However, paragraph-45 of the 2019 Circular and paragraph-4.6 of the 2023 Circular clarify that refunds should not be denied if goods are exported beyond the prescribed timeframe. The Court found that the petitioner had provided EGM details within the 90-day period, making this ground of rejection contrary to the binding Circulars. Non-furnishing of declaration of non-prosecution The Court observed that there is no statutory requirement under the Act for such a declaration. Paragraph-46 of the 2019 Circular explicitly states that self-declaration is not warranted for refunds under a Letter of Undertaking (LUT). The petitioner had nonetheless provided the declaration in response to the show cause notice, making this ground inconsistent with the Circular. Non-furnishing of undertaking under proviso to Section 11 (2) of the Cess Act The Court highlighted that the proviso to Section 11 (2) only applies when ITC of Cess is set off against Output Tax Liability of Cess. As the petitioner exported goods under LUT without tax payment, this provision was inapplicable. Paragraph-42 of the Impugned Circular further clarifies that this stipulation applies only to zero-rated supplies on payment of Integrated tax, invalidating this ground of rejection. Non-furnishing of statement as per Para 43 (C) of the 2019 Circular The Court noted that Para 43 (C) applies only when there has been a reversal of credit, which was not the case here. The petitioner had submitted a CA certificate confirming that the incidence of Compensation of Cess had not been passed on, fulfilling the requirement. Thus, this ground was also found to be without merit. SIGNIFICANT HOLDINGS The Court held that the impugned orders were based on grounds extraneous to the CGST Act, Rules, and binding Circulars. The rejection of the refund application was quashed, and the respondents were directed to refund the amount of Rs. 1,23,22,617 with interest under Section 56 of the CGST Act within 12 weeks. Key principles established include the non-requirement of proof of payment for goods export refunds, the irrelevance of a declaration of non-prosecution, and the inapplicability of certain provisions when exports occur under LUT without tax payment. The judgment reinforces adherence to statutory frameworks and binding Circulars in refund applications.
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