Facts of the Case

The Petitioner, M/s Lupin Ltd., is engaged in the manufacture and export of pharmaceutical products. After the introduction of the Goods and Services Tax (GST) regime, the Petitioner migrated to GST and obtained registration under the Central Goods and Services Tax Act, 2017.

The Petitioner supplied goods to Special Economic Zone (SEZ) units on payment of Integrated GST (IGST). Since such supplies qualify as zero-rated supplies under the IGST Act, the Petitioner became entitled to claim a refund of the IGST paid under Section 54 of the CGST Act read with Rule 89 of the CGST Rules.

At the relevant time, due to the absence of a fully functional electronic refund module on the GST portal, refund applications were filed through the temporary mechanism by submitting Form GST RFD-01A online, followed by physical submission of supporting documents before the jurisdictional authorities.

Subsequently, after issuance of CBIC Circular No. 125/44/2019-GST dated 18.11.2019, the Department insisted that refund applications and supporting documents be filed electronically. Since the Petitioner's earlier applications were already reflected as "processed" on the GST portal, fresh electronic filing was not possible. Despite raising grievances through the GSTN Helpdesk, the refund claims were rejected for alleged non-submission of supporting documents, leading to the present writ petition.

Issues Involved

  1. Whether rejection of the GST refund claim for non-submission of supporting documents was justified when the refund application had already been filed under the earlier prescribed procedure.
  2. Whether the Petitioner should be permitted to submit a fresh refund application in accordance with the revised CBIC Circular.
  3. Whether the authorities were required to reconsider the refund claim on merits after compliance with the revised procedural requirements.

Petitioner's Arguments

  • The Petitioner contended that supplies made to SEZ units were admittedly zero-rated supplies, making the refund legally admissible.
  • Refund applications had already been filed in accordance with the procedure prevailing at the relevant time.
  • The GST portal did not permit filing of fresh refund applications because the earlier applications were shown as processed.
  • The Petitioner repeatedly approached the GSTN Helpdesk and corresponded with the Department but could not rectify the technical issue.
  • The rejection of the refund solely on procedural grounds was arbitrary and defeated the substantive benefit available under Section 54 of the CGST Act.

Respondent's Arguments

  • The Department submitted that refund claims cannot be processed without supporting documents.
  • As per the CBIC Circular, refund applications along with all supporting documents were required to be submitted electronically before the jurisdictional proper officer.
  • Without documentary evidence, the proper officer could neither verify nor sanction the refund claim.
  • Compliance with the prescribed procedural requirements was mandatory for processing refund applications.

Court Order / Findings

The Andhra Pradesh High Court noted that both parties agreed upon an appropriate course of action during the hearing.

Accordingly, the Court disposed of the writ petition by directing the Petitioner to submit a fresh refund application along with all necessary supporting documents strictly in accordance with CBIC Circular No. 125/44/2019-GST dated 18.11.2019 within the prescribed time.

The Court further directed the tax authorities to examine and dispose of the fresh refund application on merits and in accordance with law, preferably within three weeks from the date of filing.

Important Clarification

  • Zero-rated supplies to SEZ units remain eligible for refund under the GST law.
  • Procedural compliance under the revised refund mechanism is essential for processing refund claims.
  • Technical difficulties on the GST portal should not permanently deprive a taxpayer of a legitimate refund where an appropriate procedural remedy is available.
  • The Court adopted a practical approach by permitting the taxpayer to file a fresh refund application instead of denying the refund permanently.

Sections Involved

  • Section 54 of the Central Goods and Services Tax Act, 2017
  • Rule 89 of the Central Goods and Services Tax Rules, 2017
  • Section 16(1)(b) of the Integrated Goods and Services Tax Act, 2017
  • Section 7(5) of the Integrated Goods and Services Tax Act, 2017

Link to Download the Order  https://www.mytaxexpert.co.in/uploads/1785391587_2312compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.