Authorities must reconsider IGST refund application for zero-rated supplies following CBIC Circular 197/09/2023-GST within twelve weeks

The Gujarat HC disposed of a petition regarding IGST refund on zero-rated supplies by remanding the matter to respondent authorities. The court directed authorities to reconsider the petitioner's refund application in accordance with CBIC Circular No. 197/09/2023-GST dated 17th July, 2023. The authorities must complete the recalculation and processing of the refund within twelve weeks from receipt of the order, after providing the petitioner an opportunity of hearing.

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Issues:
Petition for refund of IGST amount on zero-rated supply. Interpretation of Rule 89(4) of CGST Rules. Application of Circular No. 197/09/2023-GST for calculating adjusted total turnover. Remand for reconsideration of refund application by respondent-Authorities.

Analysis:
The petitioner, a proprietorship firm engaged in exporting fresh fruits and vegetables, filed a petition seeking a refund of IGST amounting to Rs. 20,20,803.80 on account of zero-rated supply made. The petitioner exports goods without payment of GST under LUT as per the provisions of the CGST Act. The petitioner claimed entitlement to the unutilized accumulated ITC as per Section 54(3) of the CGST Act read with Rule 89(4) of the CGST Rules. The petitioner's refund claim was partially granted and partially rejected by the respondent No.4 based on Notification No. 14/2022, specifically Explanation (c) inserted in Rule 89(4) of the CGST Rules, which altered the calculation of the value of goods exported out of India. The petitioner contended that a subsequent Circular issued by the CBIC clarified the calculation of adjusted total turnover under Rule 89(4) of the CGST Rules, making them eligible for the full refund amount. The petitioner sought a remand to the respondent-Authorities for recalculation of the refund as per the CBIC Clarification.

The respondent No.1 and No.2 had rejected the refund application based on Notification No. 14/2022 but acknowledged that if remanded, they would reconsider the application in light of the CBIC Clarification. The Court, after considering the submissions, remanded the matter back to the respondent-Authorities to reevaluate the refund application in accordance with Circular No. 197/09/2023-GST within twelve weeks from the date of the order, providing an opportunity of hearing to the petitioner. Consequently, the petition was disposed of, allowing for a fresh assessment of the refund claim based on the updated guidelines provided by the CBIC Circular.

This judgment highlights the importance of staying updated with circulars and notifications issued by relevant authorities to ensure accurate interpretation and application of tax laws. It underscores the significance of seeking redressal through legal channels when faced with discrepancies in refund claims, emphasizing the need for a fair and thorough reconsideration of such matters by the competent authorities.

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