GST refund rejection overturned as physical signatures not mandatory for digitally authenticated declarations under Rule 89

The Rajasthan HC allowed a petition challenging rejection of GST refund application. The Appellate Authority had rejected the refund solely because declarations were not physically signed before electronic submission. The HC held that Rule 89 of CGST Rules 2017 does not mandate physical signing of declarations, and Rule 26 permits digital authentication. While administrative circular dated 18.11.2019 required physical signatures, this was merely an irregularity, not illegality, when declarations were digitally authenticated as prescribed. The HC quashed the Appellate Authority's order and restored the refund sanction.

---

---

Issues involved:
The issues involved in the judgment are related to the refund application filed by the petitioner under the Central Goods and Services Tax Act, 2017 (CGST Act of 2017) for the period July, 2020. The dispute arises from the rejection of the refund claim by the Appellate Authority based on the contention that the declarations and undertakings attached to the application were not physically signed before being scanned and uploaded electronically.

Summary:

Issue 1: Refund application and sanctioning of refund
The petitioner filed a refund application under the CGST Act of 2017, which was initially sanctioned by the Adjudicating Authority. However, the Competent Authority later reviewed the refund order and found discrepancies in the signed declarations, leading to the claim being deemed improper.

Issue 2: Appeal by the respondent-department
Subsequently, the respondent-department filed an appeal under Section 107 of the CGST Act of 2017, arguing that the refund claim was erroneously sanctioned by the Adjudicating Authority.

Issue 3: Decision of the Appellate Authority
The Appellate Authority, in its order, declared the refund claim and the Adjudicating Authority's decision as improper and illegal due to the lack of physical signatures on the declarations attached to the refund application.

Issue 4: Judicial review and legal arguments
The petitioner challenged the Appellate Authority's decision before the High Court, arguing that while the declarations were digitally signed, there was no legal requirement for physical signatures before uploading them electronically. The respondents contended that physical signatures were necessary as per administrative instructions.

Judgment:
The High Court held that the Appellate Authority's decision to reject the refund claim was not legally sustainable. The Court emphasized that while non-submission of required documents may be illegal, the absence of physically signed declarations, when digitally authenticated, constituted an irregularity, not an illegality. The Court reinstated the Adjudicating Authority's refund order, allowing the petitioner to claim the refund rightfully due to them. The Court concluded that administrative instructions cannot override legal requirements for refund claims under the CGST Act of 2017.

---