Adjudicating and Appellate Authorities Issued Contradictory Findings on GST Refund Claims: Delhi HC Remands Matter [Read Order]

In a recent ruling, the Delhi High Court observed that contradictory findings by the Adjudicating and Appellate Authorities on refund claims under GST cannot be sustained, and directed the Appellate Authority to reconsider the matter afresh.

Chegg India Private Limited, the petitioner, filed multiple writ petitions challenging several Orders-in-Appeal that had either rejected or partially allowed its refund claims of unutilised Input Tax Credit (ITC) on account of export of services.

The petitioner, engaged in software development and content creation services for its foreign parent company, claimed that its services qualified as exports and were zero-rated under the GST law.

The refund claims were rejected by the Adjudicating Authority on the grounds that the petitioner’s services did not qualify as exports and that the company acted as an intermediary. In some periods, the Appellate Authority upheld the rejection, while in others, partial refunds were allowed, resulting in inconsistent findings for similar transactions.

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The petitioner’s counsel argued that the services were provided to a foreign entity on a principal-to-principal basis and did not amount to intermediary services. The counsel further argued that all required documents, including Foreign Inward Remittance Certificates (FIRCs), had been submitted and that the Appellate Authority had the power to consider them while deciding the appeal.

The petitioner pointed out that contradictory orders for identical services created confusion and violated the principle of consistency.

The CGST Department’s counsel argued that the rejection was justified as the petitioner failed to provide complete documents before the Adjudicating Authority. They further submitted that the Appellate Authority was not empowered to entertain new evidence or re-adjudicate the matter beyond the scope of appeal.

The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that under Section 107(11) of the Central Goods and Services Tax Act, 2017, the Appellate Authority has the power to confirm, modify, or annul the decision of the Adjudicating Authority but cannot remand the matter back.

The court explained that the purpose of appeal is to correct any errors and to ensure a comprehensive adjudication, not to create inconsistent results across different periods. It pointed out that staggered consideration of refund claims for similar transactions led to contradictory conclusions that required a unified review.

The court set aside the impugned Orders-in-Appeal and remanded the matter to the Appellate Authority for fresh consideration. It permitted the petitioner to file any additional documents within two months and directed that a personal hearing be granted before passing a reasoned order. The writ petitions were accordingly disposed of.

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