ITC To Be Re-Credited – If Erroneous Refund Claimed Is Voluntarily Paid – Gujarat High Court

The Hon’ble High Court of Gujarat vide its order dated 7th April 2022 in the matter of I-Tech Plast India Pvt. Ltd. Vs. State of Gujarat in R/Special Civil Application No. 3653 of 2021 held that the amount of ITC utilized for payment of IGST on exports shall be re-credited to the electronic credit ledger when the refund claimed mistakenly is paid back with interest in Form DRC-03.

The writ-applicant preferred the present writ application before the Hon’ble High Court praying for re-crediting/restoring the ITC amounting to Rs. 1,39,49,810/- in the electronic credit ledger along with interest, of the writ -applicant.


  • The writ-applicant is engaged in the manufacturing of various types of toys and is registered under the provision of Companies Act, 1956 and also duly registered under the provisions of Goods and Service Tax Act, 2017.
  • The writ applicant having a ‘advance license’ is permitted to import raw-material without payment of any import duty and is availing the benefit of Notification No. 79/2017 – Customs dated 13.10.2017 for importing its raw-material.
  • That inadvertently during the relevant period i.e., Financial Year 2017 to 2021, the writ applicant exported its finished goods with payment of IGST (utilizing ITC) instead of exporting under ‘Letter of Undertaking’ (LoU) and received auto refund of IGST paid at the time of exports.
  • That upon realizing the mistake the writ-applicant paid the requisite IGST along with interest (Rs.1,39,49,810/- along with interest of Rs. 30,87,551/-) and intimated the same to the GST department vide its letter dated 13.08.2020.
  • That later vide letter dated 24.08.2020 informed the respondent authorities, ‘the writ- applicant is availing the benefit of Notification No. 79/2017 – Customs dated 13.10.2017 and hold advance license for free importation of raw-materials. Further due to lack of knowledge of Notification No. 53/2018– C.T. dated 09.10.2018, the writ-applicant exported its finished goods produced from imported raw-material with payment of IGST by utilizing the accumulated ITC. However, when the writ-applicant realized that ITC cannot be utilized for payment of IGST on export of Goods as per Rule 96(10) of the CGST rules, the writ-applicant as an honest tax payer voluntarily paid the amount of said IGST with interest (Rs. 1,39,49,810/- along with interest of Rs. 30,87,551/-) in FORM DRC – 03’.
  • That in view of the above the writ-applicant requested the GST department to restore/re-credit the ITC amounting to Rs. 1,39,49,810/- to the electronic credit ledger. The writ-applicant in this regard met various officers of GST Department, through its later dated 16.10.2020 brough the facts to the knowledge of Chief Commissioner, SGST and also sent an e-mail dated 23.10.2020 to Commissioner of State Tax, but the ITC was not restored.  Thus, the present writ-application being moved by the writ-applicant.

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