GST Update No 197 on refund cannot be denied for mistake in filing GSTR-3B

GST era promoted the digitisation of various compliances in the GST Law including sanction of refunds. But as we all know that technology has its own disadvantages, there were various technical glitches faced by the assessees during the initial stage of GST implementation. The refund claims of IGST paid on exports were being withheld for non-transmission of data on account of errors committed while filing GST returns. Similar issue was raised recently before hon’ble MADRAS HIGH COURT in the case of M/S ABI TECHNOLOGIES V/S ASSISTANT COMMISSIONER OF CUSTOMS. The decision imparted in this respect is subject matter of discussion of our present update.

The petitioner filed a Writ Petition since refund of Rs. 24,72,018/- was not sanctioned on account of exports during July 2017, Sept, 2017 to Oct, 2017. In the present case, the details were reflected in GSTR-1 regarding the exports made. However, no reflection was made in GSTR-3B under Rule 61(5) of the CGST Rules, 2017. The petitioner submitted that outward supplies related to export would qualify as zero rated supply, details of which are to be filled in GSTR-3B under Column 3.1(b). However, by mistake, the details were furnished under column of outward supply (other than zero rated and exempted) for a consecutive period of 3 months. Consequently, refund of IGST was denied to the petitioner. Reference was made to CBIC Circular No. 45/19/2018-GST dated 30.05.2018 in this regard.

The Counsel of revenue argued that refund is granted subject to the condition that the petitioner furnishes correct information in GSTR-1 and GSTR-3B. Upon filing of the returns, GSTN portal shall transmit the details of export invoices to the system of Customs department and then upon verification, refund is granted. It was submitted that since no details were transmitted from GSTN portal, refund cannot be sanctioned.

The Court held that under although the process of refund is long recognised in erstwhile GST regime as well, still processing of refund under GST regime is a process driven task. It was stated that export incentives are given in order to encourage the exports resulting into inward remittance of foreign exchange. Therefore, it was held that this procedure should have liberal interpretation so that intent of law is not defeated. Reliance was placed on the decision of Apex Court in the case of COMMISSIONER OF SALES TAX, U.P. VS. AURIYA CHAMBER OF COMMERCE, ALLAHABAD 1986 (25) E.L.T.867 (S.C). It was therefore, directed to sanction the refund after due verification of all the details of the petitioner.

The above ruling is yet another example of the settled principle that the substantial benefits of refund should not be denied to the assessee on account of minor mistakes and defaults thereby resulting into adverse impact on the working capital requirement of business of the assessee. The above decision is in uniformity with the decision as that pronounced by Delhi CESTAT in the case of M/S VAIBHAV GLOBAL LIMITED V/S COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, CUSTOMS AND CENTRAL EXCISE, JAIPUR wherein it was held that refund cannot be denied due to procedural lapses. The revenue authorities should understand the basic ideology of legislation behind implementation of refund process failing which will increase the miseries faced by exporters.

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GST Update No 197 on refund cannot be denied for mistake in filing GSTR-3B

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