HIGH COURT OF MADRAS – ORDER DATED MARCH 18, 2021 - W.P.(MD) NOS.22996, 22999 & 23001 OF 2019 AND W.M.P.(MD) NOS.19733, 19736 & 19739 OF 2019
Background: Petitioner (exporter) applied for refund of un-utilised Input Tax Credit (ITC) pertaining to the year 2017-18. Petitioners alleged: (a) they were entitled to refund of IGST, CGST and SGST; (b) however, while applying for refund, the entire amount was consolidated under SGST due to technical glitch in the GSTN portal.
The respondent(s) restricted the refund claim, to the extent of petitioner’s SGST liability during the relevant period. Thereby, the portion of refund claim (pertaining to IGST and CGST but made under the head of SGST) was rejected. The respondent(s) argued that petitioner did not submit any documentary proof in support of their claim of technical glitch.
Issue: Can the refund (of IGST and CGST) be denied on the ground that the claim was consolidated under the head of SGST owing to technical glitch in the GSTN portal?
Decision: If the claim of refund was erroneously consolidated under the head of SGST owing to technical glitch in the GSTN portal, petitioner cannot be expected to produce any proof. Hence, the refund rejection orders were set aside. Respondent(s) should assess if the petitioner is otherwise eligible for refund within eight weeks; if so, refund should be granted.
Comments: It is a welcome move that the Hon’ble Court has categorically stated that petitioner is not expected to provide any proof of the technical glitch. In a similar situation, it may be recalled that several cases were filed owing to technical glitch at the time of filing Form GST TRAN-1.
Further, in case of refund of un-utilised ITC, the order of debit from the electronic credit ledger is specified under paragraph 37 of Circular No.125/44/2019-GST dated November 18, 2019 issued by the Central Board of Indirect Taxes and Customs (CBIC). Paragraph 38 thereto provides relief that for applications where such order is not adhered to, no adverse view may be taken by the tax authorities. This is applicable even in instances where no technical glitch was encountered. Eligible taxpayers (applying for refund) may avail this relief.
