Refund appeal remanded for fresh review after taxpayer's substantial compliance under GST Section 107(2) on documents

HC held that the applicant had substantially complied with documentary requirements for refund of accumulated ITC on zero-rated supplies, and the only error was uploading quadruplicate shipping bills instead of triplicate copies later furnished. The authorities failed to verify the corrected documents with Customs and wrongly appealed against the refund without proper scrutiny. The HC set aside the appellate order dated 12.12.2022 under Section 107(2) of the GST Act and remanded the matter to the proper authority for fresh consideration, directing a reasoned decision within four months and restraining coercive action meanwhile.

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Issues Involved:
1. Validity of the refund sanction order considering FOB values of shipping bills cleared by unauthorized officers.
2. Procedural errors in the clearance of shipping bills.
3. Entitlement to refund of accumulated Input Tax Credit (ITC).

Summary:

Issue 1: Validity of Refund Sanction Order
The petitioner filed a writ petition against the appellate authority's partial allowance of an appeal, which found the refund sanction order erroneous for considering FOB values of twelve shipping bills cleared by an unauthorized officer, contrary to Section 51 of the Customs Act, 1951, and Rule 89(4) of the CGST Rules, 2017. The appellate authority upheld the refund sanction order for three shipping bills dated 17.03.2021.

Issue 2: Procedural Errors in Clearance of Shipping Bills
The petitioner, a registered company under the GST Act, applied for a refund of accumulated ITC for the period January 2021-March 2021. The refund was sanctioned but later challenged by the respondents, who claimed that 12 shipping bills were cleared by an unauthorized Inspector of Customs and 3 by the Superintendent of Customs without the required approval from AC/DC of Customs. The petitioner argued that these procedural errors were not their fault and that they should not be penalized for the actions of Customs officers.

Issue 3: Entitlement to Refund of ITC
The petitioner contended that they had correctly exported goods and submitted the required documents, including triplicate copies of shipping bills signed by the Superintendent of Customs. They argued that the procedural irregularities were internal issues of the Customs Department and should not affect their entitlement to the refund. The court found that the petitioner had indeed exported the goods and that the procedural errors were not within their control.

Judgment:
The court set aside the appellate authority's order, directing respondent No. 4 to reconsider the issue after thorough scrutiny of documents and verification of shipping bills. The respondent must make a fresh decision within four months, giving the petitioner an opportunity to be heard and consulting relevant departments. No coercive action shall be taken against the petitioner until a final decision is made. The court emphasized that the final decision should be reasoned and on merit, uninfluenced by its observations.

The writ petition was disposed of with no order as to costs. Urgent certified copies of the judgment may be provided upon compliance with formalities, and all parties shall act on the server copy of the order downloaded from the court's official website.

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