GSTAT Trivandrum Allows Cashew Exporter's Refund Claim For IGST Paid Twice Due To Return Filing Error

On 16 October, the Thiruvananthapuram Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) allowed a cashew exporter Associated Cashews to recover approximately Rs. 19.79 lakh in Integrated Goods and Services Tax (IGST) paid twice, holding that a clerical error in GST returns cannot justify denying a refund of tax paid in excess,

A Bench comprising Vice-President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram observed that the GST Department cannot retain tax collected twice when the taxpayer was not legally required to make the additional payment. It held:

“The clerical mistake which is on the face of record is a minor one and properly explained for which the appellant cannot be penalised by not refunding the amount paid in excess of what was due to be paid. There is no warrant for the Revenue authority concerned to retain the amounts found to have been deposited twice and reject the application for refund claimed by the appellant.”

The case arose after Associated Cashews exported cashew kernels and paid IGST at 5%. However, while filing its GSTR-3B returns, the exporter mistakenly entered its export details in the column meant for domestic sales instead of the column meant for exports.

The error prevented the Customs system from automatically processing the tax refund. To resolve the issue, Associated Cashews paid the same IGST again and correctly entered the export details in a subsequent return. The authorities processed the refund relating to the second payment, but retained the original tax payment.

Associated Cashews subsequently sought a refund of approximately Rs. 19.79 lakh, claiming that it had paid the tax twice. The tax authorities rejected the claim on the ground that the exporter had already received a refund.

The Tribunal found that the authorities had failed to distinguish between the two payments. It clarified that the refund already granted related only to the second payment, while the original amount remained with the Department.

It also found that the exporter had adequately explained the clerical error through supporting documents and reconciliation statements. It emphasised that tax cannot be collected without the authority of law and that a procedural mistake cannot justify withholding money paid in excess.

Further, the Bench relied on the Orissa High Court's decision in Rajendra Narayan Mohanty v. Joint Commissioner of State Tax and the Karnataka High Court's decision in Merck Life Science Private Limited v. Union of India, which dealt with refunds of taxes paid by mistake or in excess.

Accordingly, the GSTAT set aside the orders rejecting the refund claim and allowed all three appeals filed by Associated Cashews, granting consequential relief.

For the Appellant (Associated Cashews): Advocate K.R. Balachandran.

For the Respondent (CGST Department): Suresh S., Authorised Representative (AR), Revenue (Centre).