2023 (12) TMI 68 - HC - GST

Tax Refund Dispute: Export Services Claim Upheld, Authorities Directed to Process Full Refund with Mandatory Interest Payment

The HC reviewed a case involving tax refund claims for export services. The Appellate Authority initially approved the petitioner's refund application, ... Refund of unutilised Input Tax Credit (ITC) - Petitioner’s application for refund was allowed in part - rejection of refund on the ground that the services rendered by the petitioner was as an intermediary and did not qualify for export of services - Initiation of contempt proceedings for wilful disobedience - HELD THAT:- The petitioner was constrained to file a writ petition - The respondents again raised an issue in relation to furnishing of FIRCs. It was further stated that the decision of the Appellate Authority is erroneous and the Revenue proposes to file an appeal against the said decision. The said petition was allowed by an order of this Court dated 08.05.2023 and this Court directed the respondent to forthwith disburse the petitioner’s claim for refund along with interest, in accordance with law. This Court also held that the deficiency memos issued shall be treated as non est and the Revenue cannot ignore the orders passed by the Appellate Authority on the ground that it proposes to file an appeal. To enable the respondent to give effect to the said order, the petitioner once again filed an application for refund. It appears that the Adjudicating Authority once again commenced the exercise for adjudicating the petitioner’s claim and has partly rejected the same. The concerned Adjudicating Authority (Deputy Commissioner, CGST, Uttam Nagar Division) has wilfully failed to implement the order dated 08.05.2023 passed by this Court, which in unambiguous terms directed the concerned authority to disburse the petitioner’s claim along with interest, as applicable - Issue notice to show cause as to why contempt proceedings not be initiated against the respondent for wilful disobedience of the order [dated 08.05.2023 in W.P.(C) No. 5722/2023] passed by this Court. List on 18.12.2023. Issues:The issues involved in the judgment are the rejection of refund claims by the Adjudicating Authority, the acceptance of the petitioner's contention by the Appellate Authority, the failure to process refund applications by the Adjudicating Authority, and the wilful disobedience of the court order by the concerned Adjudicating Authority.Rejection of Refund Claims by Adjudicating Authority:The petitioner filed a petition challenging an order where the refund application was partially allowed. The Adjudicating Authority rejected the refund claims citing that the petitioner's services as an intermediary did not qualify for export of services. Additionally, the Authority faulted the petitioner for not submitting Foreign Inward Remittance Certificates (FIRCs) in the correct format, as a consolidated FIRC was filed by the petitioner.Acceptance of Petitioner's Contention by Appellate Authority:Upon appeal, the Appellate Authority accepted the petitioner's argument that providing transaction-wise FIRCs for numerous export transactions was impractical. The Authority acknowledged that a consolidated FIRC from the bank served as conclusive evidence of foreign currency receipt, thus allowing the refund claim. The Appellate Authority's decision favored the petitioner, directing the Adjudicating Authority to disburse the refund.Failure to Process Refund Applications:Despite the favorable ruling by the Appellate Authority, the Adjudicating Authority did not process the refund applications, intending to appeal the decision. This led the petitioner to file a writ petition, which was granted by the Court, ordering immediate disbursement of the refund with interest and disregarding any deficiency memos issued by the Adjudicating Authority.Wilful Disobedience of Court Order:Following the Court's order for refund disbursement, the Adjudicating Authority partially rejected the petitioner's claim, indicating non-compliance with the Court's directive. The Court expressed dissatisfaction with the Authority's failure to implement the order and issued a show-cause notice for potential contempt proceedings against the Authority for wilful disobedience, directing the concerned officer to appear in court for the next hearing.