Whether the appellant is eligible for refund claim amounting to Rs. 224805.60 as there was wrong payment of IGST?

PJ/CASE LAW/21-22/3654

*M/S D.N.A. GROUP v/s DEPUTY COMMISSIONER, STATE TAX*

Brief Facts: M/s The D.N.A. Group (herein referred to as the appellant) are engaged in making export supplies. The appellant have exported the goods on payment of IGST but CHA has filed the shipping bill under LUT. The appellant have filed GSTR-3B and GSTR-1 returns showing the export on payment of IGST. When he realized the mistake and it also came to notice that shipping bill cannot be amended then he has amended the transaction under LUT. But GSTR-3B cannot be revised and as such not option was left with him except to file refund.
The appellant have claimed refund of wrongly paid IGST amounting to Rs. 224805.6 and hence, a SCN was issued to them denying the refund claim on the ground that jurisdiction officer is not competent to grant refund of IGST paid on goods exported out of India. The appellant filed reply to the SCN for which thereafter, the impugned order was passed for wherein the submissions of the appellant were not adhered to and the refund claim was rejected. Aggrieved by the impugned order, the appellant filed appeal.

Issue: Whether the appellant is eligible for refund claim amounting to Rs. 224805.60 as there was wrong payment of IGST?

Grounds of Appeal: The impugned order in original rejecting the refund claim of Rs. 224805.6 is wholly erroneous and is liable to be set aside.

The refund claim has been rejected on the ground that the jurisdiction officer is not competent authority to grant refund of IGST paid on goods exported out of India. Custom authorities are authorized as proper officers to grant such type of refunds. In this regard, the appellant has not filed refund claim of IGST paid on account of exports before the adjudicating authority and so the contention is totally baseless.
The appellant submit that the refund claim was filed on account of clerical mistake in wrongly reporting export sales on payment of IGST as export sales under LUT while filing shipping bill by the CHA.
It is worth mentioning that since mistake was noticed after the local EGM report was filed, it was not possible to amend the shipping bill. Consequently, amendment was made in GSTR 1 filed by the appellant during March 2020 by specifying the export sales as under LUT. However, as it is not possible to amend GSTR 3B, there is excess payment of IGST to the extent of Rs. 224805.6 till date for which they have filed refund claim but the said refund claim.

Appellant Contention: The appellant submitted that:

The contention of State Officers that they are not empowered to grant refund of IGST paid on export of goods is totally erroneous as what is being claimed is the refund of IGST paid by them due to mistake of CHA.
The appellant submitted that if the shipping bill reflected the export sales on payment of IGST and they were unable to claim refund of IGST, then the proper authority is Customs as in such case. However, when the shipping bill was filed under LUT and the same is also evidence by rectified GSTR 1 of March 2020 filed by them, the IGST paid cannot be considered as that pertaining to exports.
If at all the refund is alleged to be pertaining to export, the details of shipping bill should be provided to the appellant which is not at all possible because the export is under LUT, and since there was merely any intention to export goods on payment of IGST but the same could not be done due to mistake of CHA cannot lead to denial of refund on the grounds that refund of IGST on exports cannot be granted by State GST departments.
Being aware that refund of IGST paid on exports is electronic process which requires least manual intervention of customs officer and when the shipping bill filed by CHA is under LUT, it is not possible to claim refund from Custom, merely on the grounds that the payment of IGST was made in GSTR 3B.
The assessee cannot be denied legitimate refund on technical grounds as it is practically impossible to claim refund of excess tax paid in GSTR 3B from the customs department. Consequently, they cannot be asked to do the impossible task and the refund claim of excess IGST paid by the appellant in GSTR 3B should be allowed and the impugned order should be set aside.
The appellant submits that their legitimate refund claim cannot be denied for technical grounds that since the refund of excess IGST paid was on account of exports, the proper officer to grant refund is that of Customs. The appellant submitted that the facts of the case clearly reflect that the excess IGST paid by them is refundable to them and so their refund claim should not be rejected for technical grounds. Hence, the impugned order in original rejecting their refund claim is not proper and deserves to be set aside.

Reasoning of the judgment: The adjudicating officer mentioned that – “On the recommendations of the Council, the Central Government hereby specifies that the officers appointed under the respective SGST or UTGST Act who are authorized to be the proper officers for the purposes of the said Acts, shall act as proper officers for the purpose of sanction of refund in respect of a registered person located in the territorial jurisdiction of the said officers who applies for the sanction of refund to the said officers. “and argued that state tax officer is not competent to grant the refund of IGST paid on goods exported out of India, hence, the rejection of application of refund was as per law.

It is found that the appellant has issued invoices showing the payment of IGST and correspondingly filing of GSTR 3B. The appellant has not filed the claim of IGST paid on account of exports before the adjudicating officer but the refund claim was filed on account of clerical mistake in wrongly reporting exports sales on payment of IGST as export sales under LUT while filing shipping bill by the CHA.
It further submitted that since this mistake was noticed after local EGM report was filed, it was not possible to amend the shipping bill, consequently, amendment was made in GSTR 1 filed by the appellant during March 2020 specifying the export sale as under LUT. The plea taken by the adjudicating officer that he is not competent to grant the refund of IGST paid on exports is not applicable in the instant case because the refund is being claimed of the excess IGST paid by the appellant due to mistake of CHA.
The stand taken by the adjudicating officer that he is not competent to grant the refund of IGST paid on export may look plausible, but as per the documents enclosed with the appeal, substantiate the fact that originally the appellant had intended to export the goods on the payment of IGST but due to the mistake of CHA the shipping bill was made of export against LUT.
As the return GSTR 3B and shipping bill cannot be changed, the appellant did the necessary amendment in GSTR 1. The contention that the appellant is claiming the refund of excess IGST paid, and not of IGST paid on export is lawful. Moreover, the appellant is not claiming the refund in cash but has requested to credit the said amount of IGST paid in his ECL.

Conclusion: Hence, in the light of above mentioned factual and legal matrix of the case, the appeal is accepted and the adjudicating officer is directed to re-direct the amount of excess IGST paid to the appellant’s credit ledger.

This is solely for educational purpose.

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PJ/CASE LAW/21-22/3654

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