GST Refund cannot be rejected outright merely on technicality when substantive conditions are satisfied

The Gujarat High Court in the matter of MESSRS SHREE RENUKA SUGARS LTD. Vs. STATE OF GUJARAT has pointed out that GST Refund cannot be rejected outright merely on a technicality when substantive conditions are satisfied.

The “refund amount” means the maximum refund that is admissible. In the present case, the respondents have not disputed that the maximum refund that is admissible is Rs.1,00,47,38,439 and not the amount of Rs.1,10,67,67,172/-. However, the stand of the respondent is that the petitioner is responsible for the error committed by the employee of the petitioner in claiming the refund of a lower amount than the maximum admissible amount.

From the record, it appears that out of Rs.1,10,67,67,172/-, the respondent has already granted a refund for an amount of Rs.1,00,47,38,439/-, and therefore, the dispute is with regard to a refund of an amount of Rs.10,20,28,733/-. When the petitioner realized the arithmetical error committed while submitting the applications for a refund for particular months, supplementary applications have been made for getting the refund of the aforesaid amount of Rs.10,20,28,733/- within the statutory period laid down under Section 54(1) of the CGST Act. It is the case of the petitioner that while showing the category of refund application, the petitioner has shown “any other” as the category because refund applications for these 11 months had already been made under Clause 7(c) i.e. accumulated ITC category for export of goods without payment of tax and the same had been sanctioned and paid by CGST officers. It is also relevant to note that as the petitioner already filed a refund application under Clause 7(c) i.e. accumulated ITC category at the first point of time, for the same month and same period, another/supplementary application for the refund of the differential amount of refund (not claimed by the petitioner on account of an arithmetical error on the part of the petitioner) cannot be filed on the portal and therefore there was no option for the petitioner to submit the application under the category “any other”. Thus, we are of the view that this is nothing but a technical error, and for such a technical error, the claim of the petitioner cannot be rejected without examining the same by the respondent authority on its own merits and in accordance with the law.

Keeping in view the aforesaid decisions, it is settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system. As discussed hereinabove, the petitioner has no option but to upload the supplementary application under “any other” category for the refund of the left out amount, which was due to an arithmetical error committed by the employee of the petitioner. We are of the view that the said claim of the petitioner for refund of the left out amount of Rs.10,20,28,733/- cannot be rejected outright merely on technicality and that too when the substantive conditions are satisfied without scrutiny by the respondent in accordance with law. Thus, the petition deserves to be allowed.

The petition is allowed. The impugned order Nos.ZD240822013296L and ZD240822013287K dated 26.08.2022 are hereby quashed and set aside. The respondents are directed to allow the petitioner to furnish manually the refund applications for refund of the left out amount of Rs.10,20,28,733/-. However, it is open for the respondents authority to scrutiny the claim of the petitioner for refund of the aforesaid amount in accordance with law and to take appropriate decision on the applications which may be made by the petitioner. Let this exercise be undertaken by the respondents within a period of six weeks from the date of receipt of the applications from the petitioner. Rule is made absolute.

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