HC Allows Export Refund Without FIRC, Based on CA Certificate and RBI-Approved Mechanism

The assessee company, engaged in logistics and warehousing, filed a GST refund claim of Rs. 1.82 crore for April-June 2021, citing unutilized ITC on zero-rated export services. The company operates under an RBI-approved netting mechanism and submitted supporting documents like a Chartered Accountant certificate, EEFC bank statements, and proof of foreign exchange receipt.

However, the refund was rejected solely due to the absence of a Foreign Inward Remittance Certificate (FIRC), as required under CBIC Circular No. 125/44/2019. The appellate authority upheld the rejection despite RBI’s approval for netting and monthly reconciliations, leading the petitioner to approach the High Court under Article 227.

Issue Raised: Whether a refund of unutilized ITC can be denied solely for non-submission of FIRCs despite the submission of CA-certified evidence of foreign exchange receipt under an RBI-approved mechanism.

HC Held: The High Court quashed the rejection order dated June 10, 2024, holding that the petitioner had sufficiently established receipt of convertible foreign exchange through valid CA certificates and an RBI-approved net-off clearing mechanism. The Court noted that procedural non-compliance, such as the absence of FIRCs, cannot override substantive compliance demonstrated by credible and corroborated documents.

The Court further relied on the Supreme Court’s decision in Union of India v. Mangal Textile Mills Pvt. Ltd., which upheld the evidentiary value of CA certificates in such matters. It directed the authorities to process the refund application dated 16.02.2023 within 12 weeks, without insisting on FIRCs, and instead to accept the CA-certified foreign exchange realization.

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