IGST export refund claims denied for late bond/LUT u/r 96A: rejection set aside, claim reconsidered

Rejection of refund of IGST on exports solely for non-furnishing of bond/LUT before export under Rule 96A/Rule 19(A) of the CGST Rules was examined. The HC held that, in light of the Circular dated 15.03.2018, non-submission of LUT/bond is not an incurable defect and is not mandatory where the administration permits post-export filing on an ex post facto basis, depending on the facts and the refund purpose. As the refund authority failed to consider this binding clarification and mechanically rejected the claim, the impugned rejection order was set aside and the refund application for 2022-23 was remitted for fresh consideration in accordance with law.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether rejection of an export-related refund claim solely on the ground that the exporter did not furnish a Bond/LUT prior to export, as required under Rule 96-A of the CGST Rules, is sustainable when the Circular dated 15.03.2018 permits condonation of delay and ex post facto acceptance of LUT/Bond.

(ii) Whether the refund rejection order is vitiated for failure to consider and apply the Circular dated 15.03.2018 while deciding the refund application.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Effect of non-furnishing of Bond/LUT prior to export on eligibility for refund

Legal framework (as discussed by the Court): The Court examined Rule 96-A of the CGST Rules concerning exports without payment of integrated tax upon furnishing a Bond/LUT, and considered the Circular dated 15.03.2018, particularly paragraphs 4 and 4.1, dealing with "Exports without LUT" and condonation of delay in furnishing LUT.

Interpretation and reasoning: The Court read the Circular as clarifying that where exports have been established as made in terms of the relevant provisions, the "substantive benefits of zero rating" should not be denied merely because the LUT was not furnished before export. The Court treated non-furnishing/non-submission of LUT/Bond as "not an incurable defect" and not mandatory in the sense that it cannot defeat refund entitlement when the Circular itself allows delay to be condoned and export under LUT to be allowed on an ex post facto basis, depending on the facts and circumstances of the case.

Conclusion: Rejection of refund solely on the ground of non-furnishing of Bond/LUT prior to export, without considering the possibility of condonation and ex post facto acceptance as contemplated in the Circular, was held unsustainable.

Issue (ii): Non-consideration of the Circular dated 15.03.2018 while rejecting refund

Legal framework (as discussed by the Court): The Court expressly relied upon the Circular dated 15.03.2018 (paragraphs 4 and 4.1) as governing the approach to cases where exports occurred before filing of LUT and refund claims are made.

Interpretation and reasoning: The Court found that the refund rejection order was based on a single ground-absence of prior Bond/LUT-yet the deciding authority "neither considered nor appreciated" the Circular that directly addressed this situation and permitted condonation and ex post facto facility. This omission warranted interference because the authority did not decide the refund claim "afresh in accordance with law" while bearing in mind the Circular and the Court's observations.

Conclusion: The refund rejection order was set aside, and the matter was remitted for reconsideration of the refund application in accordance with law, specifically taking into account the Circular dated 15.03.2018 and the Court's observations, including permitting the exporter to furnish LUT/Bond with an application for condonation of delay.

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