Facts of the Case

  • The petitioner filed refund claims totaling ₹2,62,01,727/- for FY 2018–19 and 2019–20.
  • Refund was claimed on unutilized ITC for export of services (zero-rated supply).
  • The adjudicating authority rejected the refund claims alleging:
    • Services were intermediary services, not export of services
    • Non-submission of proper FIRC correlation
  • The petitioner filed appeals, which were allowed by the Appellate Authority.
  • Despite success in appeal, the department:
    • Issued deficiency memos and show cause notices
    • Failed to process refund

Issues Involved

  1. Whether refund of ITC on export of services can be denied after appellate authority allows the claim.
  2. Whether consolidated FIRC is sufficient proof for receipt of foreign currency.
  3. Whether Revenue can refuse to implement appellate orders on the ground of proposed appeal.
  4. Whether interest is payable on delayed refund.

Petitioner’s Arguments

  • Export of services qualifies as zero-rated supply, entitling refund under law.
  • Consolidated FIRC is sufficient in cases of voluminous transactions.
  • Appellate authority already allowed refund; hence department must comply.
  • Delay in refund entitles the petitioner to interest.

Respondent’s Arguments

  • Services were allegedly intermediary services, not export.
  • Proper correlation of invoices with FIRCs was not furnished.
  • Department intends to file appeal against appellate orders.
  • Refund not processed due to non-response to deficiency memos/SCNs.

Court’s Findings / Judgment

  • Export of services is zero-rated, and refund under Section 16 IGST Act is valid.
  • Appellate authority clearly held:
    • Services qualify as export under Section 2(6) IGST Act
    • Consolidated FIRC is acceptable in law
  • Revenue cannot ignore appellate orders merely because it proposes to appeal.
  • No stay order exists against appellate decisions.
  • Insistence on fresh refund applications is unjustified.
  • Delay in refund entitles petitioner to interest.

Court Order

  • Petition allowed.
  • Respondent directed to:
    • Disburse refund of ₹2,62,01,727/-
    • Pay applicable interest for delay
  • Clarification: Revenue may still pursue statutory appeal remedies.

Important Clarifications

  • Filing of appeal does not suspend enforceability of appellate order.
  • Consolidated FIRC is valid evidence in export cases involving multiple transactions.
  • Department cannot delay refund by issuing repetitive deficiency memos after appellate relief.
  • Interest liability arises automatically on delayed refund.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59508052023CW57222023_181734.pdf

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