Facts of the Case:

In this case, the petitioner is engaged in exported services to customers located outside India. Such supplies constituted “export of services” under Section 2(6) of the IGST Act, 2017, as the Reserve Bank of India (RBI) had permitted the petitioner to operate under a gearing account mechanism, allowing netting off of receivables and payables in foreign currency. Since exports were made without payment of GST, the Input Tax Credit (ITC) accumulated and remained unutilized. Accordingly, the petitioner filed refund applications under Section 54 of the CGST Act read with Rule 89 of the CGST Rules for two periods July 2021 – September 2021 and October 2021 – December 2021. 

Both refund claims were rejected on the ground that the petitioner failed to furnish Foreign Inward Remittance Certificates (FIRCs) and had instead submitted Foreign Inward Remittance Advices (FIRAs). Further, the authorities rejected the Chartered Accountant’s Certificate, stating that it reflected amounts in Euros whereas FIRAs were in USD.

The petitioner’s appeals under Section 107 of the CGST Act were also rejected. Aggrieved, the petitioner filed the present writ petition. The petitioner relied heavily on the Gujarat High Court judgment in its own earlier case SCA No. 13427 of 2024, which involved an identical issue, and on the Supreme Court ruling in Union of India v. Mangal Textile Mills Pvt. Ltd.,  holding that CA certificates are credible and must be given due weight.

Issue:

Whether refund of unutilized ITC on export of services can be denied for non-submission of FIRC when the petitioner has furnished a Chartered Accountant’s Certificate certifying receipt of foreign exchange under a valid RBI approval and accompanied by FIRAs and other documentary evidence?

Held that:

The Court relied upon Supreme Court’s decision in Union of India v. Mangal Textile Mills Pvt. Ltd.,  the Court reiterated that a Chartered Accountant’s Certificate is an authenticated document that the authorities are bound to consider. The certificate in the present case was based on examination of books of accounts and relevant records. It certified the actual receipt of net convertible foreign exchange after netting off payable amounts under the RBI-approved gearing arrangement. It established compliance with the RBI approval permitting realisation of export proceeds through net settlement.

The High Court held that FIRC is not the only mode of proving foreign exchange realisation, particularly in cases where the exporter operates under a valid RBI permission allowing netting-off or gearing account mechanisms. The Court held that administrative circulars cannot override substantive evidence or impose conditions beyond the statutory scheme when the receipt of foreign exchange is not in dispute. Since the petitioner produced a legally valid, CA-certified proof of foreign remittances supported by FIRAs and business records, denial of refund for non-submission of FIRC was held unjustified and hyper-technical.

Based on the CA certificate and documents on record, the Court accepted that the petitioner had received payment in convertible foreign exchange, the supply qualified as export of services, and the petitioner was eligible for refund of unutilized ITC under Section 54 of the CGST Act read with Rule 89. There was no dispute regarding the nature of services, place of supply, or eligibility criteria.

The Court emphasized that technical or procedural defects cannot defeat substantive benefits available to exporters under the GST regime, which treats exports as zero-rated supplies. When the core condition, receipt of foreign exchange is proved, denying refund merely due to non-submission of FIRC would amount to an unwarranted denial of statutory benefit.

The Gujarat High Court allowed the writ petition and set aside the orders rejecting the refund. 

Case Name: KUEHNE PLUS NAGEL PRIVATE LIMITED v. UNION OF INDIA & ORS. dated 06.11.2025

To read the complete judgement 2025 Taxo.online 3160