Refund on export of goods: rebate only if tax paid; remand for fresh adjudication subject to deposit of disputed amounts

Challenge to refund on export of goods: tax refund as rebate is available only where tax was paid at export, whereas exports without payment of tax permit recovery of input tax credit only; the impugned refund orders appear prima facie irregular and amounts refunded should be recovered. The rectification application was rejected after non-response to a show cause notice; the matter is remitted for fresh adjudication on merits, subject to the taxpayer depositing the disputed tax amount and the refunded sums into the electronic cash register within thirty days.

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Issues: (i) Whether the impugned assessment order dated 16.11.2023 and the rectification rejection dated 03.06.2024 are liable to be quashed and the matter remitted for fresh decision where the assessee failed to reply to the show-cause notice but refunds were earlier granted for exports.

Analysis: The Court examined the sequence of proceedings including the show-cause notice in DRC-01 dated 08.09.2023, the assessee's non-response, the assessment order dated 16.11.2023, the rectification application under Section 161 and its rejection dated 03.06.2024, and the refund orders issued in respect of exports. The Court observed a prima facie irregularity in the refund orders since refunds of tax could not have been legitimately issued where tax for zero-rated exports without payment was claimed as rebate; at best input tax credit would have been available. In view of these facts and the assessee's failure to have earlier replied to the show-cause notice, the Court considered it appropriate to set aside the impugned order and remit the matter for fresh adjudication subject to stipulated conditions including deposit of disputed tax and the refunded amounts and filing of a reply to the show-cause notice.

Conclusion: Issue (i): Partly in favour of the Assessee; the impugned assessment order dated 16.11.2023 and the rectification rejection dated 03.06.2024 are quashed and the matter is remitted for fresh adjudication on merits subject to the assessee depositing the disputed tax and refund amounts and filing a reply to the show-cause notice.

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