Supreme Court Dismisses Centre's SLP Against Gujarat HC Order Granting IGST Refund Despite GST Return Error

The Supreme Court has recently dismissed a Special Leave Petition filed by the Union of India challenging a Gujarat High Court judgment that directed the grant of an IGST refund to an exporter despite errors in GST returns.

A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe, while hearing the matter, refused to interfere with the High Court's decision but kept open the question regarding the applicability of the proviso to Rule 96 of the CGST Rules for consideration in an appropriate case.

Rule 96 of the GST Rules provides for automatic refund of IGST paid on exports but allows withholding of refund in under certain circumstances

The Court stated, “While we are not inclined to interfere with the impugned judgment and order passed by the High Court, the submission made by learned ASG on the basis of proviso to Rule 96 of the Central/State Goods and Service Tax Rules, 2017, is kept open for being considered in an appropriate case.”

Accordingly, the SLP stood dismissed.

The case arose from a judgment of the Gujarat High Court where the petitioner, Ruhi Siraj Makda, an exporter, sought a refund of IGST paid on the export of goods.

The exporter had paid IGST amounting to Rs 9,48,549 on export shipments made between April and September 2018. However, due to a typographical error in GSTR-1, the IGST amount was shown as “zero” under Table 6A, resulting in the system generating a “nil refund” scroll.

Despite representations and submission of supporting documents, the refund was not granted by the authorities.

The High Court held that it was undisputed that goods were exported and IGST was actually paid; the refund could not be denied merely due to a clerical error in return filing. Under Rule 96 of the CGST Rules, the refund of IGST on exports is a statutory entitlement and can be withheld only in limited circumstances.

The High Court observed, "The respondent customs department could not have withheld the refund of IGST only on the ground of difference between the GST data as per GST return and customs data ignoring the representation made by the petitioner along with the relevant documents to show that the petitioner has exported the goods being zero rated supply as per provisions of section 16 of the Integrated Goods and Service Tax Act, 2017 read with Rule 96 of the GST Rules, 2017."

The High Court further directed the authorities to grant a refund along with statutory interest from the date of shipping bills till actual payment.

The Union of India challenged this ruling before the Supreme Court. However, the Court declined to interfere with the High Court's directions.

While dismissing the SLP, the Court clarified that the issue relating to the proviso to Rule 96 of the GST Rules remains open for consideration in future cases.

For Petitioner: A.S.G. Raghavendra P. Shankar, Advocate Gurmeet Singh Makker, AOR, Advocates Rajan Kumar Chourasia, Karan Lahiri, Nasadiya Singh, Mrigna Shekhar