Manual refund claim valid under Rule 97A; online-only rejection not permitted, claimant given chance to respond and produce documents

HC held that a manually submitted refund claim cannot be rejected solely for not being filed online, noting Rule 97A treats references to electronic filing as inclusive of manual filing. The manual application dated 01.09.2020 was to be treated as a refund application. The revenue authority was directed to allow the claimant opportunity to meet any objections, produce supporting documents and be heard before relying on those objections. The writ petition was disposed of with those directions.

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Issues Involved:
1. Eligibility for refund under Section 54 of the CGST Act, 2017.
2. Validity of manual filing of refund applications under Rule 97A of the CGST Rules, 2017.
3. Compliance with the principles of natural justice.
4. Classification of services as "Export of Services" under Section 2(6) of the IGST Act, 2017.

Detailed Analysis:

1. Eligibility for Refund under Section 54 of the CGST Act, 2017:
The writ applicant, a foreign company, claimed a refund under Section 54 of the CGST Act, 2017, for GST paid on services provided by an Indian CRO. The Deputy State Tax Commissioner rejected the claim on the basis that the application was filed manually rather than electronically. The respondents argued that only a registered person can claim a refund electronically and that the applicant, being a foreign entity without a PAN, was ineligible. The court found that the term "person" under Section 2(84) includes foreign bodies corporate, thus the writ applicant is entitled to claim a refund.

2. Validity of Manual Filing of Refund Applications under Rule 97A of the CGST Rules, 2017:
The court examined Rule 97A, which allows for manual filing of applications notwithstanding any electronic filing requirements. The respondents' rejection of the manual application was deemed erroneous as Rule 97A explicitly permits manual filing. The court cited the Bombay High Court's decision in Laxmi Organic Industries Ltd. v. Union of India, which clarified that Rule 97A overrides the electronic filing requirement, making manual applications valid.

3. Compliance with the Principles of Natural Justice:
The court noted that the rejection of the refund application was done without providing the writ applicant an opportunity to be heard, thus violating the principles of natural justice. The impugned order was a non-speaking order, lacking detailed reasons for rejection. The court emphasized that the respondent authority acted outside the basic principles of natural justice, warranting the quashing of the impugned order.

4. Classification of Services as "Export of Services" under Section 2(6) of the IGST Act, 2017:
The court considered whether the services provided by the Indian CRO to the foreign company qualified as "Export of Services." The definition under Section 2(6) includes conditions such as the supplier being in India, the recipient outside India, and the payment being received in convertible foreign exchange. The court found that the writ applicant met these conditions, as the services were provided to a foreign entity and paid for in foreign exchange. The respondents' argument that the services were not "export of services" because they were received within India was dismissed.

Conclusion:
The court quashed the impugned order dated 02.12.2020 and directed the Deputy State Tax Commissioner to treat the manual application as valid. The respondents were instructed to process the refund application, provide the writ applicant an opportunity to present their case, and issue a reasoned order. The court mandated that this exercise be completed within eight weeks from the receipt of the court's order.

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