Facts of the Case: The petitioner, M/S. Vansh International, an exporter, had filed shipping bills seeking sanction of its IGST refund along with duty drawback and other export entitlements. The refund remained unsanctioned for several months. A deficiency memo issued by the Office of the Chief Commissioner, Customs, New Delhi (in response to a CPGRAM grievance) indicated that while processing the shipping bills for IGST refund and drawback, "SB005" and "SB006" system errors were reflecting on the ICES portal, and the exporter was advised to get these errors rectified. The petitioner's case was that it promptly rectified the flagged system errors, and thereafter received no further deficiency memo or communication indicating any outstanding defect, as reflected by the "N.A." error message displayed on the portal. Despite this, the refund remained unsanctioned, leading to the filing of this writ petition under Article 226 of the Constitution seeking a mandamus for sanction of the IGST refund, duty drawback and other export entitlements.

Issues Involved

  1. Whether the respondent authorities were obligated to sanction the pending IGST refund, duty drawback and export entitlements once the petitioner had rectified the system errors flagged in the deficiency memo and no further deficiency was communicated.

Petitioner's Arguments

  • The petitioner had immediately responded to the deficiency memo and rectified the SB005 and SB006 system errors flagged by the Customs authority.
  • No subsequent deficiency memo or communication was received thereafter, and the portal itself displayed "N.A." against the error field, showing there was no continuing impediment.
  • There was accordingly nothing further for the petitioner to do to secure the eligible refund, and withholding it any further was unjustified.

Respondent's Arguments

  • The respondents did not dispute the factual position placed before the Court regarding rectification of the system errors and the absence of any fresh deficiency memo.

Court Order / Findings

  • The Division Bench noted that the deficiency memo itself confirmed that the refund was held up only on account of SB005 and SB006 system errors, which the petitioner had rectified.
  • Since no further deficiency memo or communication was issued after rectification, the Court held that there was nothing further for the exporter to do to obtain the refund, and the continued withholding of the claim was unwarranted.
  • The writ application was disposed of with a direction to the respondent to sanction the IGST refund along with the duty drawback and other export entitlements within a period of two weeks from the date of the order.

Important Clarification

  • Where an exporter rectifies the specific system/portal errors flagged in a deficiency memo and no subsequent deficiency is communicated, the authorities cannot continue to withhold a legitimate IGST refund, duty drawback or export entitlement on the ground of unresolved processing issues.
  • Courts will grant time-bound mandamus relief in narrow-compass refund matters where the factual position — rectification of the flagged defect and absence of any further deficiency notice — is undisputed.

Sections Involved

  • Section 16, IGST Act, 2017 — zero-rated supply and refund of integrated tax paid on export of goods.
  • Rule 96, CGST Rules, 2017 — procedure for refund of IGST paid on goods exported out of India.
  • Section 54, CGST Act, 2017 — refund of tax, applicable mutatis mutandis to IGST refunds.

Decision – In Favour of

In favour of the Assessee. The Gujarat High Court directed sanction of the pending IGST refund along with duty drawback and other export entitlements within two weeks.

Related Case Laws

Case Details

  • Court: High Court of Gujarat at Ahmedabad
  • Case No.: R/Special Civil Application No. 967 of 2022
  • CNR: Not indicated on the order
  • Coram: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Ms. Justice Nisha M. Thakore
  • Date of Order: 02.03.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787076809_4634compressed.pdf

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