Facts of the Case:

In this case, the petitioner filed a writ petition challenging the refund rejection order dated 25.06.2025 and sought a direction to the GST authorities to sanction the refund claimed in respect of tax paid on procurement of capital goods under the Export Promotion Capital Goods (EPCG) Scheme. 

The petitioner held a valid EPCG licence, under which imports of capital goods are exempt from tax. The petitioner contended that where capital goods are procured domestically instead of being imported, such transactions qualify as deemed exports, entitling the claimant to refund of the tax paid, subject to reversal of any input tax credit availed. However, while reporting the transaction, the supplier erroneously disclosed the supply under the general taxable turnover instead of classifying it as a deemed export.

Owing to this inadvertent classification error, the GST common portal did not permit processing of the petitioner’s refund application, leading to its rejection. The petitioner argued that the denial of refund resulted solely from the supplier’s mistake and that it should not be deprived of a substantive statutory benefit for an error beyond its control.

The petitioner further undertook to reverse any input tax credit, if required, and expressed willingness to furnish a Chartered Accountant’s certificate along with supporting documents to establish the genuineness of its claim. The Revenue, while defending the rejection, submitted that the claim had failed because of deficiencies in the documents and particulars furnished but fairly stated that the refund claim could be reconsidered if the petitioner produced the necessary supporting documents, including a Chartered Accountant’s certificate.

Issue:

Whether a refund claim relating to deemed exports under the EPCG Scheme can be rejected solely because the supplier erroneously classified the supply under the general turnover instead of reporting it as a deemed export, and whether the petitioner should be afforded an opportunity to substantiate its claim by producing supporting documents.

Held That:

The High Court observed that the petitioner’s inability to obtain the refund appeared to have arisen primarily due to a classification error committed by the supplier rather than any ineligibility on the part of the petitioner. The Court held that such circumstances warranted an opportunity for the refund claim to be examined on its merits instead of being rejected on technical grounds.

Accordingly, it set aside the refund rejection order dated 25.06.2025 and remanded the matter to the proper officer for fresh adjudication. The petitioner was directed to submit a fresh representation within two weeks along with a Chartered Accountant’s certificate and all relevant supporting documents. The respondent authority was directed to reconsider the refund claim in accordance with law, after granting an opportunity of hearing, and complete the entire exercise within two months. The writ petition was thus disposed of by restoring the petitioner’s opportunity to establish its entitlement to the refund.

Case Name:  TP Solar Limited, Represented by its Authorised Signatory, R. Sarath Kumar Versus The Assistant Commissioner (ST), Tirunelveli dated 08.06.2026

To read the complete judgement 2026 Taxo.online 1670