IGST Refund on Export of Zero Rated Supplies: Madras HC allows Clubbing of unutilised GST ITC Refund Claims beyond Calendar Month, remands Matter [Read Order]

A Single Bench of the Madras High Court has allowed clubbing of Integrated Goods and Services Tax ( IGST ) refund claims on export of zero rated supplies, beyond a calendar month, while remanding the matter for reconsideration of the GST Input Tax Credit ( ITC ) refund claim.

M/s. Tulip Nilgiris Exports Pvt. Ltd, a Coonoor-based exporter of processed tea, had filed a Writ Petition under Article 226 of the Constitution of India challenging the rejection of their refund claim related to unutilized Input Tax Credit ( ITC ) by the tax authorities. The petitioner contended that the rejection of the refund was arbitrary, beyond jurisdiction, and in violation of constitutional provisions.

The petitioner, represented by Mr. G. Natarajan, argued that the rejection of the refund claim was against the provisions of Section 16(2) of the IGST Act and Section 54 of the CGST Act, as well as Articles 14, 19(1)(g), and 265 of the Constitution of India. The petitioner claimed entitlement to a higher refund amount, asserting that the initial calculation was based on ITC attributable only to the exports made in a specific month.

Justice Senthilkumar Ramamoorthy, in the detailed order, found merit in the petitioner’s arguments. The court observed that the rejection based on the claim being spread across different financial years was not in line with statutory provisions.

Referring to Circular No.37/11/2018-GST, Justice Senthilkumar Ramamoorthy emphasised that claims spanning more than one calendar month were permissible. The stipulation restricting claims to a single financial year, as struck down by the Delhi High Court in Pitambra Books Pvt. Ltd. v. Union of India, was highlighted.

While allowing the writ petition, the court ruled that the rejection of the refund claim was unsustainable and quashed the impugned order.

However, the judgement clarified that the entitlement to refund must be established by the petitioner based on relevant documents and applicable provisions. The matter was remanded to the 2nd respondent ( tax authority ) with directions to re-adjudicate the refund application, in line with the court’s observations.

The 2nd respondent was also instructed to provide a reasonable opportunity to the petitioner, and the entire process should be completed within a maximum period of two months from the date of the order.

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