The courts recently quashed 4 out of 5 GST Refund circulars on zero rated supplies that Revenue Authorities use to hold refunds.

Quash # 1 ->

CBIC Circular No. 125/44/2019-GST dated 18.11.2019

Thus Allowed the Exporter to claim GST refund for tax periods across two financial years;

The Delhi High Court ruled in favor of an exporter, M/s. Pitambra Books (P.) Ltd., allowing them to claim a GST refund for tax periods spanning two financial years. The court quashed a circular issued by the Central Board of Indirect Taxes and Customs (CBIC) that restricted refund claims to a single financial year, calling the restriction arbitrary and contrary to the GST law. (Continue Reading Quash no 1)

Quash # 2 ->

Circular No. 37/2018-Customs dated 9.10.2018

Thereby entitled exporter to IGST refund despite availing higher drawback rate; circular can't override rules.

The case involved an exporter, M/s Amit Cotton Industries, who had exported goods and paid Integrated Goods and Services Tax (IGST). They claimed a refund of the IGST paid but were denied by the customs authorities because they had availed a higher drawback rate. The High Court of Gujarat ruled in favor of the exporter, stating that availing a higher drawback rate was not a valid ground to withhold the IGST refund, and a circular issued by the government could not override the statutory rules. (Continue Reading Quash No 2)

Quash # 3 ->

Board's Circular No. 88/07/2019-GST, dated 01-02-2019

Tax Authorities can't deny GST Refund on export of services even if you receive payment in Indian rupees through paypal (intermediary).

The petitioner, an exporter of services, received payments from foreign clients through an intermediary Paypal in Indian rupees after Paypal received the amounts in convertible foreign exchange. The tax authorities denied refund of GST paid on such export of services on the grounds that payment was not received in convertible foreign exchange by the petitioner directly as required under Section 2(6)(iv) of IGST Act. The High Court allowed the writ petition and granted refund, holding that receipt by the intermediary Paypal in convertible foreign exchange amounts to receipt by the petitioner as per Foreign Exchange regulations. Mere routing of payment through an intermediary who receives in foreign exchange cannot deny the benefit of refund on export of services. (Continue Reading Quash No 3)

Quash # 4 ->

Circular dated 15.11.2017

Officer Count 2-year limit for GST refund claim u/s 54 from the date assessee submitted the complete online application, not from when he submitted physical documents.

The Gujarat High Court allowed a GST refund claim filed by a company, overruling the tax department’s rejection of the claim as time-barred. The court held that the date of filing the refund application on the GST portal should be considered as the relevant date, not the later date of physical submission of documents as per a procedural circular. The circular cannot override statutory provisions to the detriment of the assessee. (Continue Reading Quash No 4)

Challanged # 5 ->

Circular 174/06/2022-GST

Exporters' Boon or Bane? Navigating Rule 96(10)'s Complexities

A pivotal rule governing IGST refunds for exporters, Rule 96(10) of the CGST Rules has undergone numerous amendments, creating a labyrinth of conditions and exceptions. This intricate rule aims to strike a balance between facilitating exports and preventing misuse of tax benefits. Exporters must tread carefully, as non-compliance can lead to refund denials, interest liabilities, and penalties. Understanding the rule's nuances is crucial for seamless export operations and tax compliance. (Continue Reading Challenged Circular)