2022 (5) TMI 860 - HC - GST

Refund of tax - rejection of claim on the ground that such claim has been put forward manually and not by way of online - HELD THAT - Section 54 of the Act referred to above provides that any person claiming refund of any tax and interest, if any, paid on such tax or any amount paid by him, can make an application before the expiry of two years from the relevant date in any such form and manner as may be prescribed. There is a proviso to sub-section 1 which provides that a registered person claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section 6 of Section 49 may also claim such refund in the return furnished under Section 39 in the manner as may be prescribed. Rule 89. Rule 89 lays down the procedure for filing of an application for refund of tax, interest, penalty, fees or any other amount. Rule provides that any person except the person covered under the Notification issued under Section 55 claiming refund of tax, interest, penalty, fees or other amount paid by him other than the refund of integrated tax paid on goods exported out of India, may file an application electronically in the form GST RFD 01 through the common portal - it seems that the respondent No.4 has no idea about Rule 97A of the Rules which starts with the non-obstante clause. Rule 97A clarifies that notwithstanding anything contained in Chapter x of the Rules any reference to electronic filing of an application would include manual filing of the said application. The Deputy State Tax Commissioner, Circle-2, Ahmedabad are directed to treat the manual application dated 01.09.2020 as an application for refund. The respondents are further directed to permit the writ applicant to furnish it s stance to any objections, before the same is relied upon by the respondent authority, by providing sufficient opportunity to produce supporting documents and also to provide opportunity of hearing to the writ applicant - petition disposed off.

Summary

Issues Involved:
1. Eligibility for refund under Section 54 of the CGST Act, 2017.
2. Validity of manual filing of refund applications under Rule 97A of the CGST Rules, 2017.
3. Compliance with the principles of natural justice.
4. Classification of services as "Export of Services" under Section 2(6) of the IGST Act, 2017.

Detailed Analysis:

1. Eligibility for Refund under Section 54 of the CGST Act, 2017:
The writ applicant, a foreign company, claimed a refund under Section 54 of the CGST Act, 2017, for GST paid on services provided by an Indian CRO. The Deputy State Tax Commissioner rejected the claim on the basis that the application was filed manually rather than electronically. The respondents argued that only a registered person can claim a refund electronically and that the applicant, being a foreign entity without a PAN, was ineligible. The court found that the term "person" under Section 2(84) includes foreign bodies corporate, thus the writ applicant is entitled to claim a refund.

2. Validity of Manual Filing of Refund Applications under Rule 97A of the CGST Rules, 2017:
The court examined Rule 97A, which allows for manual filing of applications notwithstanding any electronic filing requirements. The respondents' rejection of the manual application was deemed erroneous as Rule 97A explicitly permits manual filing. The court cited the Bombay High Court's decision in Laxmi Organic Industries Ltd. v. Union of India, which clarified that Rule 97A overrides the electronic filing requirement, making manual applications valid.

3. Compliance with the Principles of Natural Justice:
The court noted that the rejection of the refund application was done without providing the writ applicant an opportunity to be heard, thus violating the principles of natural justice. The impugned order was a non-speaking order, lacking detailed reasons for rejection. The court emphasized that the respondent authority acted outside the basic principles of natural justice, warranting the quashing of the impugned order.

4. Classification of Services as "Export of Services" under Section 2(6) of the IGST Act, 2017:
The court considered whether the services provided by the Indian CRO to the foreign company qualified as "Export of Services." The definition under Section 2(6) includes conditions such as the supplier being in India, the recipient outside India, and the payment being received in convertible foreign exchange. The court found that the writ applicant met these conditions, as the services were provided to a foreign entity and paid for in foreign exchange. The respondents' argument that the services were not "export of services" because they were received within India was dismissed.

Conclusion:
The court quashed the impugned order dated 02.12.2020 and directed the Deputy State Tax Commissioner to treat the manual application as valid. The respondents were instructed to process the refund application, provide the writ applicant an opportunity to present their case, and issue a reasoned order. The court mandated that this exercise be completed within eight weeks from the receipt of the court's order.