GST UPDATE ON SUBSTANTIAL BENEFIT OF REFUND SHOULD NOT BE DENIED FOR PROCEDURAL LAPSES 126/2020-21

We all know that claiming refund from the department is not an easy task and it is often observed that the refund claims are withheld for minor technical or procedural lapses. The refund claims should be processed as far as the bonafide nature of the transaction is established and minor procedural non-compliances should be ignored. This is supported by the recent decision rendered by the Appellate Authority of GST in the case of M/S BABA SUPER MINERALS PVT. LTD. V. THE ASSISTANT COMMISSIONER, CGST [2020-VIL-32-GSTAA]which is the subject matter of discussion in the present update.

The appellant is an exporter who filed a claim of refund of unutilized ITC balance. The Department has partially rejected the refund due to some missing details inpurchase invoicessuch as address of the appellant, GSTIN of the appellant, invoices not appearing in GSTR-2A, etc. However, the appellant has already submitted the said invoices after getting them rectified by the respective supplier to department in order to comply with the provisions of Rule 46 ofthe CGST Rules. The appellant has also argued that the refund cannot be denied forminor procedural lapses or non-substantive errors or omission in reference to circular no. 37/11/2018-GST. Reliance has also been placed on the decision of MANGALORE FERTILIZERS & CHEMICALS VS. DEPUTY COMMISSIONER [1991-VIL-06-SC]; CENTRAL EXCISE & SERVICE TAX, RAIPUR VS. SATYAM BALAJI RICE INDUSTRIES PVT. LTD. [2015-VIL-851-CESTAT-DEL-ST]; COMMISSIONER OF CENTRAL EXCISE PUNE-I AND VS. FUJITSU CONSULTING PVT LTD. [2015-VIL-852-CESTAT-MUM-ST].

The Appellate Authority referred to the proviso to Rule 36 of CGST Rules, 2017which stated that the even if the invoice does not contain all specified particulars but contains tax amount, description of goods/services, total value, GTIN of supplier and recipient and place of supply in case of interstate supply, then registered person can avail input tax credit. Therefore, it was held that the export related refunds shall not be rejected due to minor procedural lapse or non-substantive errors which can be rectified subsequently. Hence, the appeal was allowed by way of remand for verification of the invoices.

With the implementation of GST Law, refund claims should not be withheld for minor procedural irregularities in the invoice as far as the GSTIN of the recipient is correctly mentioned on the invoice. This is for the reason that if the invoice is duly reflected in GSTR-2A, the other details can be easily verified even if not mentioned on the invoice. As such, rejection of refund claim for minor omissions of particulars in the invoice is not justifiable.

This is solely for educational purpose.

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GST UPDATE ON SUBSTANTIAL BENEFIT OF REFUND SHOULD NOT BE DENIED FOR PROCEDURAL LAPSES 126/2020-21

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