Exporter wins refund case despite GSTR-3B errors when export details correctly declared in GSTR-1 under Rule 61(5)

The Madras HC ruled in favor of an exporter who made errors in GSTR-3B returns despite correctly declaring export details in GSTR-1. The petitioner had properly debited input tax credit for exports but committed procedural mistakes under Rule 61(5) of CGST Rules, 2017. The court held that strict application of Rule 96 procedures should not defeat legitimate export incentives. The court directed authorities to verify export data directly from the petitioner and customs department, ordering refund if valid exports and tax debits were confirmed. The petition was disposed of favorably.

---

---

Issues:
1. Refund of integrated tax on exports denied due to mistake in filing GSTR-3B.
2. Interpretation of circular regarding refund application for integrated tax paid on exports.
3. Discrepancy in information filing between petitioner and respondent.
4. Application of Rule 96 of CGST Rules, 2017 for sanctioning refunds.
5. Compliance with procedures for granting export incentives under GST regime.

Analysis:
1. The petitioner sought a Mandamus to direct the respondent to sanction a refund of Rs.24,72,018 for exports made in certain months. The petitioner admitted mistakenly declaring exports as taxable supplies in GSTR-3B, leading to the denial of the refund.

2. The petitioner argued that despite correct declarations in GSTR-1, the error in GSTR-3B caused the denial of the refund. Citing a circular, the petitioner contended that the mistake should not hinder refund eligibility, similar to cases involving supplies to Special Economic Zones (SEZs).

3. The respondent, represented by the Senior Standing Counsel, emphasized the necessity for accurate information in GSTR-1 and GSTR-3B for refund processing. Refund approval was contingent upon matching information and uploaded invoices, as per Rule 96 of CGST Rules, 2017.

4. The respondent highlighted the importance of data transmission from the GSTN portal to the customs system for refund processing. Without the requisite details reaching the customs system, the respondent argued that refund sanctioning under Rule 96 was neither permissible nor practically feasible.

5. The judge, considering the arguments, acknowledged the significance of export incentives and the need to prevent technicalities from impeding legitimate refunds. Referring to a Supreme Court decision, the judge emphasized that procedures should not obstruct rightful export incentives. Consequently, the judge directed the respondent to obtain data directly from the petitioner and customs, allowing for refund consideration if the petitioner meets eligibility criteria within 30 days.

6. The judgment concluded by disposing of the writ petition, emphasizing that procedural errors should not obstruct legitimate refund claims under the IGST Act, 2017 and CGST Act, 2017. No costs were awarded in the case.

---