Refund of IGST on exports denied as Rajasthan High Court held it lacked territorial jurisdiction since cause of action arose at ports of export outside the State

Case: M/s Shri Prempurji Granimarbo Pvt. Ltd. v. Union of India & Ors.

Court: Rajasthan High Court, Jaipur Bench
Petition: D.B. Civil Writ Petition No. 2572/2022
Judgment Date: 28.11.2024 (Reserved: 14.11.2024)
Category of Dispute: Refund of IGST on export of goods
Relevant Section/Rules: Section 54 CGST Act, Rule 96 of CGST Rules, 2017

Facts (Paras 1–7, 13–15)

The petitioner, an exporter of natural stones registered under GST in Rajasthan, sought refund of IGST amounting to ₹17,90,279 for July–September 2017. The refund was denied on the ground that the petitioner had inadvertently claimed higher duty drawback on shipping bills. While the petitioner argued that the error was clerical and not a valid ground to deny refund, grievances filed before Customs authorities at Mundra, Tuticorin, Kattupalli, and Nhava Sheva ports did not yield relief. Relying on Circular No. 3/3/2017-GST (05.07.2017) and Gujarat High Court’s decision in Awadhkrupta Plastomech Pvt. Ltd. v. Union of India (2021) 89 GSTR 163 (SLP dismissed), the petitioner contended that the proper officer under Rule 96 is the Deputy/Assistant Commissioner of Central Tax. The respondents objected to territorial jurisdiction, submitting that refund applications are processed by Customs authorities at ports of export, not by Rajasthan GST authorities.

Questions before the Court

1. Whether Rajasthan High Court had territorial jurisdiction to entertain the writ petition for refund of IGST when exports were made through ports outside Rajasthan?

2. Whether refund could be denied solely due to inadvertent claim of higher duty drawback?

Observations (Paras 8–21)

• Rule 96 CGST Rules creates a deeming fiction where shipping bills themselves act as refund applications for IGST on exports. Processing is electronic, but if not, the proper officer of Customs at the port of export handles it (Para 9, 18).

• Goods were exported through Mundra, Tuticorin, Kattupalli, and Nhava Sheva ports, none of which fall within Rajasthan’s territorial jurisdiction (Para 14).

• Supreme Court in Adani Exports Ltd. v. Union of India (2002) 1 SCC 567 clarified that mere business presence or GST registration in one State does not create territorial jurisdiction if the cause of action arose elsewhere (Paras 15, 17).

• Supreme Court in State of Goa v. Summit Online Trade Solutions Pvt. Ltd. (2023) 7 SCC 791 emphasized that “cause of action” under Article 226(2) must arise wholly or partly in the territorial jurisdiction claimed, and facts not germane to the lis cannot confer jurisdiction (Para 16).

• The petitioner’s reliance on Circular 3/3/2017-GST was misplaced, since Rule 96(6) (regarding proper officer of Central/State tax) was deleted w.e.f. 01.07.2017 and was irrelevant to IGST refund claims (Para 21).

Judgment (Paras 22–24)

The Court held that since all exports and refund claims were connected to Customs authorities at ports outside Rajasthan, no cause of action or even part thereof arose within Rajasthan. Mere registration with Rajasthan GST authorities was insufficient to invoke jurisdiction. Consequently, the writ petition was dismissed for want of territorial jurisdiction. The Court, therefore, did not examine the merits of whether refund could still be granted despite higher drawback claim.

Cases Referred

Between Fine Lines

Exporters must file refund claims at the Customs authority of the port of export, as jurisdiction flows from the place of export, not from GST registration location. Businesses cannot rely on their registration State’s High Court if exports are made from ports outside its jurisdiction.

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