2025 (9) TMI 1208 - HC - GST

Orders set aside; matters remanded for Appellate Authority to jointly re-adjudicate export refund claims under s.107(11)

Chegg India Private Limited Versus Assistant Commissioner CGST Mohan Cooperative Industrial Estate (Mcie) & Ors.

HC set aside the impugned orders and remanded the matters to the Appellate Authority for fresh adjudication. The Court held that under s.107(11) the ... Refund of unutilised Input Tax Credit (ITC) - Zero Rated Supply - sufficient documentary evidence been filed to support the claim for refunds - HELD THAT:- This Court in the decision of Sonu Monu Telecom Pvt. Ltd. Through Its Director Jitender Garg &Anr. v. The Union Of India Revenue Secretary, Ministry Of Finance, &Anr. [2025 (7) TMI 1395 - DELHI HIGH COURT] has held that Section 107(11) of the Central Goods and Service Tax Act, 2017 is clear to the extent that the Appellate Authority has the power to either confirm, modify or annul the decision or order. The refunds which have been granted or not granted to the Petitioner, are on the ground of existence of documentary evidence and secondly, on the basis of the nature of the services exported. On both these issues, the Adjudicating Authority had allowed some refunds and rejected some. Accordingly, the Appellate Authority would have to take a fresh look at the matter, considering all the refund applications at one go instead of in a staggered manner. The staggered consideration has in fact resulted in irreconcilable consequences resulting in partial refunds. The impugned orders are set aside. The matters are remanded back to the concerned Appellate Authority - petition allowed by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether the petitioner is entitled to refund of unutilised Input Tax Credit (ITC) in respect of supplies characterised as 'export of services' (zero rated supply). 2. Whether the documentary evidence submitted by the petitioner (including agreements and FIRC) was sufficient to establish export of services and entitlement to ITC refund, and whether additional documents may be admitted at the appellate stage. 3. Whether the Appellate Authority, under Section 107(11) of the Central Goods and Services Tax Act, 2017, has the power to re-examine evidence, consider documents and pass fresh orders (confirm/modify/annul) rather than being confined to the factual findings of the Adjudicating Authority, and whether remand to the Adjudicating Authority is permissible. 4. Whether multiple refund claims arising from the same nature of transactions must be adjudicated consistently in a comprehensive manner to avoid irreconcilable and staggered outcomes. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to refund of ITC for supplies characterized as 'export of services' Legal framework: The statutory regime recognises 'export of services' as zero rated supply entitling an exporter to refund of unutilised ITC subject to satisfaction of conditions and documentary proof under the CGST law and rules governing refunds. Precedent Treatment: The Court follows its earlier decision affirming that the Appellate Authority's remit is plenary under Section 107(11) to confirm, modify or annul orders, thereby enabling fresh adjudication of entitlement where warranted. Interpretation and reasoning: The Court observed that the Adjudicating Authority in some periods allowed refunds and in other periods rejected them on the ground that services were not exports. Given the identical nature of services across periods, such divergent findings are inconsistent. A coherent, holistic adjudication is required to determine whether the supplies qualify as export of services on the totality of documentary and other evidence. Ratio vs. Obiter: Ratio - Where materially identical transactions across periods are treated inconsistently, a fresh, consolidated adjudication is necessary to ensure consistent application of the statutory concept of 'export of services'. Obiter - Specific substantive criteria for qualifying each service as export were not exhaustively restated; the decision focuses on procedural consolidation and reconsideration. Conclusion: Entitlement to refund cannot be finally adjudicated on the basis of the impugned fragmented orders; the appeals must be examined afresh on merits with a comprehensive view of the nature of services and available documentary proof. Issue 2 - Sufficiency and admission of documentary evidence (agreements, FIRC, corroborative documents) Legal framework: Refund claims under the CGST regime require documentary proof to establish zero rated supply and receipt of payment in convertible foreign exchange (e.g., FIRC), with authorities empowered to verify and call for corroborative evidence within process limits. Precedent Treatment: The Court applied governing principles that appellate fora may consider evidence where the first adjudication may not have adequately considered it; the decision aligns with prior authority recognizing the full scope of first appeal under Section 107(11). Interpretation and reasoning: The Court noted that some documents were reportedly filed before the Adjudicating Authority and, in instances where FIRC was not earlier available, produced at the appellate stage. Given the appellate power to consider the matter afresh, the Appellate Authority cannot mechanically reject consideration of additional documentary evidence; instead it must evaluate sufficiency and corroboration in a fresh adjudication. Granting or rejecting refunds solely for non-production of certain documents without fresh appraisal, particularly when partial refunds have been allowed for similar periods, risks arbitrariness. Ratio vs. Obiter: Ratio - The Appellate Authority is empowered to consider additional documentary evidence and perform a fresh adjudication on sufficiency of evidence to determine refund entitlement. Obiter - The Court did not prescribe an exhaustive list of admissible documents or standards of sufficiency beyond requiring a reasoned appraisal. Conclusion: The petitioner is permitted to place further documents before the Appellate Authority within a specified period; the Appellate Authority must assess documentary sufficiency afresh rather than rely on prior limited factual findings. Issue 3 - Powers of the Appellate Authority under Section 107(11) and prohibition on remand Legal framework: Section 107(11) confers upon the Appellate Authority the power to confirm, modify or annul the decision or order under appeal; legislative intent includes an embargo against remanding the matter back to the Adjudicating Authority for rehearing, to ensure finality and avoid repetitive reconsideration. Precedent Treatment: The Court explicitly follows its earlier pronouncement that the first appeal is a full-fledged appeal permitting fresh consideration of evidence, replies and documents, subject only to the prohibition on remand to the original Adjudicating Authority. Interpretation and reasoning: The Court reasoned that the Appellate Authority may take all measures and pass all orders permissible in a first appeal, including fresh appraisal of evidence and replies. The sole limitation is that the Appellate Authority should not remand the matter back for fresh adjudication by the original authority; however, given the present need for consistency and comprehensive consideration across multiple refund claims, the Court remanded the matters to the Appellate Authority itself (not to the Adjudicating Authority) for fresh adjudication. The Court also clarified that the Appellate Authority should not be treated as a mere rubber stamp and may admit additional documents filed at the appellate stage. Ratio vs. Obiter: Ratio - The Appellate Authority has plenary powers under Section 107(11) to consider the matter afresh, including admission of documentary evidence, and must not remand back to the Adjudicating Authority; remand to the Appellate Authority for consolidated fresh adjudication is appropriate where inconsistent outcomes have occurred. Obiter - Observations about legislative intent promoting finality are explanatory. Conclusion: The Appellate Authority is empowered and obliged to undertake a fresh, comprehensive adjudication of the refund appeals without remanding to the Adjudicating Authority; the Court has set aside the impugned appellate orders and remitted the matters to the Appellate Authority for such fresh adjudication. Issue 4 - Necessity of consolidated adjudication to avoid contradictory findings Legal framework: Administrative adjudications must be consistent and reasoned; where multiple claims arise from identical or similar transactions, authorities should adjudicate in a manner that avoids irreconcilable and staggered outcomes. Precedent Treatment: The Court relied on its previous analysis that appellate review can rectify errors and must ensure coherence in outcomes where identical issues recur across periods. Interpretation and reasoning: The Court identified that partial grants and rejections across contiguous periods created contradictory findings as to the nature of services and documentary sufficiency. Such staggered consideration undermines consistency and fairness. A consolidated view across all orders-in-original is necessary so the Appellate Authority can render uniform, reasoned orders avoiding piecemeal outcomes. Ratio vs. Obiter: Ratio - Where identical transactions are the subject matter of multiple refund claims, the Appellate Authority should adjudicate them collectively to prevent inconsistent findings. Obiter - Administrative convenience or staggering of appeals is not a valid justification for irreconcilable outcomes. Conclusion: The matters are remanded to the Appellate Authority to undertake a comprehensive adjudication of all refund claims together, allowing the petitioner an opportunity to file further documents within a prescribed period and to be heard before reasoned orders are passed. Final Disposition (procedural conclusions) The impugned appellate orders are set aside and the matters are remanded to the Appellate Authority for fresh adjudication. The petitioner is permitted to file additional documents within two months; a personal hearing is to be granted and the Appellate Authority must adjudicate all refund claims comprehensively to avoid contradictory findings, then pass reasoned orders in all appeals. All pending applications stand disposed of accordingly.