2022 (5) TMI 1136 - HC - GST

Refund on the exports made by the petitioner - Prescribed procedure - Mistake in GSTR-3B returns - details itself have not been received from GSTN portal to the designated system of the customs - input tax credit - zero rated supply - It is the specific case of the petitioner that though the petitioner had correctly declared the details in the monthly returns in Form GSTR-1 regarding the exports made by the petitioner on payment of tax by debiting the input tax credit, a mistake was committed by the petitioner in GSTR-3B under Rule 61(5) of the CGST Rules, 2017 - HELD THAT - The refund of tax/duty paid on exports has been long recognized under the provisions of the Central Excise Act, 1944 r/w Central Excise Rules, 1944 and later under the provisions of the Central Excise Rules, 2002. These Rules have been incorporated under the GST regimes, except that under the GST regime, most of the proceedings are system driven as has been stated by the learned Senior Standing Counsel for the respondent. The export incentives have been given to encourage exports, so that there is inward remittance of foreign currency. The procedure prescribed under the aforesaid Rules is not intended to defeat such legitimate export incentives, if indeed on facts there is export on payment of integrated tax under the provisions of IGST Act, 2017 r/w CGST Act, 2017. The procedures under Rule 96 of CGST Rules, 2017 cannot be applied strictly to deny legitimate export incentives that are available to an exporters - the procedures prescribed under the aforesaid Rules should not be applied strictly so as to defeat the legitimate export incentives, which an exporter otherwise would have been entitled to but for the technicality involved in the system. This writ petition is disposed by directing the respondent to get the data directly from the petitioner and from their counterparts in the customs department. If indeed there was an export and a valid debit of tax by the petitioner on the exports made to foreign buyers, the refund shall be granted - petition disposed off.

Summary

Issues:
1. Refund of integrated tax on exports denied due to mistake in filing GSTR-3B.
2. Interpretation of circular regarding refund application for integrated tax paid on exports.
3. Discrepancy in information filing between petitioner and respondent.
4. Application of Rule 96 of CGST Rules, 2017 for sanctioning refunds.
5. Compliance with procedures for granting export incentives under GST regime.

Analysis:
1. The petitioner sought a Mandamus to direct the respondent to sanction a refund of Rs.24,72,018 for exports made in certain months. The petitioner admitted mistakenly declaring exports as taxable supplies in GSTR-3B, leading to the denial of the refund.

2. The petitioner argued that despite correct declarations in GSTR-1, the error in GSTR-3B caused the denial of the refund. Citing a circular, the petitioner contended that the mistake should not hinder refund eligibility, similar to cases involving supplies to Special Economic Zones (SEZs).

3. The respondent, represented by the Senior Standing Counsel, emphasized the necessity for accurate information in GSTR-1 and GSTR-3B for refund processing. Refund approval was contingent upon matching information and uploaded invoices, as per Rule 96 of CGST Rules, 2017.

4. The respondent highlighted the importance of data transmission from the GSTN portal to the customs system for refund processing. Without the requisite details reaching the customs system, the respondent argued that refund sanctioning under Rule 96 was neither permissible nor practically feasible.

5. The judge, considering the arguments, acknowledged the significance of export incentives and the need to prevent technicalities from impeding legitimate refunds. Referring to a Supreme Court decision, the judge emphasized that procedures should not obstruct rightful export incentives. Consequently, the judge directed the respondent to obtain data directly from the petitioner and customs, allowing for refund consideration if the petitioner meets eligibility criteria within 30 days.

6. The judgment concluded by disposing of the writ petition, emphasizing that procedural errors should not obstruct legitimate refund claims under the IGST Act, 2017 and CGST Act, 2017. No costs were awarded in the case.