Facts of the Case

The petitioner, M/S Apex International, an exporter, was flagged under the Risky Exporter DGARM Report No.21-U and 21-V, pursuant to Board Circular No.131/1/2020-GST dated 23.01.2020. Consequently, the petitioner was required to submit specified documents, including a duly filled Annexure-A, as set out in the department's letter dated 10.11.2020. The petitioner approached the Allahabad High Court under Article 226, seeking removal of the "risky exporter" system alert and issuance of a no-objection certificate for exports, refund of IGST of Rs.17,14,387/- with interest under Section 56 of the CGST Act, grant of drawback of Rs.67,69,690/- with interest under Section 75A of the Customs Act, 1962, provisional refund pending verification, and expeditious completion of the verification process.

Issues Involved

  1. Whether the writ court should direct removal of the risky-exporter alert and release of withheld IGST refund and drawback when the record did not establish that the petitioner had submitted the documents and duly filled Annexure-A required by the department's letter dated 10.11.2020.
  2. What relief, if any, is appropriate where the petitioner offers to now comply with the pending document requisition.

Petitioner's Arguments

  • The petitioner sought removal of the "risky exporter" alert and a no-objection certificate to resume exports.
  • The petitioner claimed entitlement to refund of IGST of Rs.17,14,387/- with statutory interest, and drawback of Rs.67,69,690/- with interest, along with provisional refund pending verification.
  • Learned counsel for the petitioner submitted that the petitioner would submit the entire set of documents required by the letter dated 10.11.2020, together with a duly filled Annexure-A, within one week.

Respondent's Arguments

  • From the record, it did not appear that the petitioner had submitted the duly filled Annexure-A or the other documents required by the letter dated 10.11.2020; a document styled as Annexure-A was filed, but it did not show when it was sent to the authority in compliance with that letter.
  • Learned counsel for the respondents stated that if the petitioner submitted the required documents, the authority concerned would expeditiously act in accordance with law.

Court Order/Findings

  • The Court found no good reason to interfere with the matter, as it did not appear, prima facie, that the petitioner had complied with the department's letter dated 10.11.2020 by submitting the required documents and Annexure-A.
  • The writ petition was disposed of without expressing any opinion on the merits of the petitioner's case, leaving it open for the petitioner to submit the required information and duly filled Annexure-A within one week.
  • If the petitioner submits the documents within a week, the concerned authority is directed to undertake appropriate action/verification in accordance with law, uninfluenced by any observations in the order, preferably within two months from the date of submission.

Important Clarification

  • A writ court will decline to interfere with a risky-exporter freeze on refund or drawback where the record does not demonstrate compliance with the department's document requisition; the remedy lies in completing that compliance rather than in seeking the writ court's intervention.
  • Even where the Court declines interference, it can still fix an outer time limit for the department's verification once the exporter's compliance is complete, ensuring the process does not remain open-ended.

Sections Involved

  • Section 56 of the CGST Act, 2017 — interest on delayed refunds.
  • Section 75A of the Customs Act, 1962 — interest on delayed payment of drawback.
  • Circular No.131/1/2020-GST dated 23.01.2020 — verification procedure for exporters flagged as "risky" under the DGARM mechanism.
  • Article 226 of the Constitution of India — writ jurisdiction invoked for mandamus.

Decision – In Favour of

The petition is disposed of with conditional directions and no finding on merits — this is not a clean win for either side. The Court declined to interfere with the risky-exporter alert and withheld refund/drawback at this stage (favouring the Department's position that compliance was not shown), while giving the petitioner a further week to comply and binding the Department to a two-month verification timeline thereafter.

Related Case Laws

No related case laws are available on this site at present.

Case Details

  • Court: Allahabad High Court (Court No. 3)
  • Case No.: Writ Tax No.444 of 2022
  • Coram: Hon'ble Surya Prakash Kesarwani, J. and Hon'ble Jayant Banerji, J.
  • Date of Order: 12.04.2022

Link to Download the Order

Download the full judgment (PDF)

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