Refund of IGST could not be rejected stating the Data was not transmitted to ICEGATE.

SRC Chemicals (P.) Ltd. vs. Central Board of Indirect Taxes

High Court of Bombay

Civil Writ Petition No. 5160 of 2021

Category: Refund (IGST on Export)

Date of Judgment: 12 October 2021

Relevant Sections: Section 54 of CGST Act, 2017 r/w Section 16 of IGST Act, 2017

Facts of the Case

(Paras 1–5)

1. The petitioner exported goods on 28.06.2017. Due to the transition into GST, the shipping bill was printed only on 01.07.2017, i.e., the effective date of GST implementation, showing IGST charged and petitioner’s GSTIN despite export having occurred earlier.
2. Petitioner had no control over the printing delays as it was done by the port authorities based on submitted documents.
3. Since IGST was paid on a zero-rated supply (export), refund of ₹22,92,587 was claimed, in accordance with Circular No. 26/2017-Customs dated 01.07.2017.
4. Despite the payment being reflected in GST returns, refund was denied due to non-transmission of data from GSTN to ICEGATE, a process beyond the petitioner’s control.
5. An application was later allowed on the GST portal via Form RFD-01A, which the petitioner submitted. However, the refund application was rejected and upheld in appeal on the grounds that Customs had jurisdiction over export-related IGST refunds.

Questions in Consideration

(Para 6)

• Whether the petitioner is entitled to IGST refund on export despite the technical issue of data non-transmission from GSTN to ICEGATE?
• Whether the authorities can deny refund when statutory rights are established but compliance is stalled due to inter-departmental system issues?

Observation of Court

(Paras 6–8)

1. The court noted the consistent follow-up and efforts by the petitioner since 2018, including communications with Customs and CBIC.
2. The authorities failed to act upon the communication dated 10.02.2020 from the Customs Assistant Commissioner requesting assistance from GSTN.
3. Court remarked that the refund was withheld merely due to internal coordination failure between GSTN and ICEGATE, which was neither caused nor controllable by the petitioner.
4. Despite a clear entitlement and court directions, no reply was filed and the statutory duties were neglected by Respondent No. 6.

Judgment of the Court

(Paras 8–10)

• The petition was allowed, and the Court issued a Writ of Mandamus directing the respondents to refund ₹22,92,587 with 9% p.a. interest from 28.04.2021 (filing date of petition) within four weeks, regardless of data transmission.
• The respondents were also directed to pay ₹25,000 as costs.
• Certified copy was waived; all respondents to act on authenticated copy.

Between Fine Lines

This case reiterates that statutory refunds cannot be denied due to internal technical or systemic lapses between government departments. When the petitioner has done everything required and delay is due to system issues (like data not being pushed from GSTN to ICEGATE), refund must be issued with interest. Courts will not tolerate inaction even after clear entitlement and prior directions.

Summary of Referred Cases

Takeaway:

“Refund Denied, System at Fault – Court Steps In”

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