The Hon’ble High Court of Gujarat vide its order dated 02.12.2022 in the matter of Aartos International LLP (Formerly Azuvi International LLP) Vs. Deputy Commissioner (Customs) in R/Special Civil Application No. 14649 of 2022, ordered for remitting the amount of refund to the assessee when the same was lying pending due to shortcomings or limitations of the Software.  The Hon’ble Court also advised the department to create a feature like ‘May I Help You’ on the portal, so that the assesees can directly communicate with GSTN.

The Petitioner filed the writ petition before the Hon’ble High Court challenging the action of the respondent authority for non-issuance of refund of IGST along with interest.  It was prayed to direct the respondent to issue the refund of IGST amounting to Rs. 19,94,994/- along with interest under Section 56 of the CGST Act, 2017 @ 6% till payment of refund amount on export of goods having Shipping Bill number 1218425 dated 06.02.2020. 

Facts of the Case: –

• The petitioner is a Limited Liability Partnership Firm having LLP No.AAM-1202 and is engaged in trading of Ceramics and Tiles. Assessee was formerly known as Azuvi International LLP and has changed its name to Aartos International LLP from 08.04.2019, and the same was intimated to the bank and all the relevant government departments including GST, Income Tax, ROC and Customs.
• That the petitioner during the course of its business, exported the goods in the month of February and March 2020 and shipping bills along with GSTR – 3B and GSTR -1 were provided. It has been informed by the petitioner that out of three export invoices, the petitioner did not receive the refund amounting to Rs. 19,94,994/- for IGST paid on export invoice No. E54/2019-20 dated 06.02.2020.  Further, on the said three invoices being invoice Nos.E54/2019-20, E67/2019-20 and E68/2019-20 dated 08.03.2020, the duty drawback of all the three invoices also had been received on 27.02.2020 and 04.04.2020.
• The petitioner approached the department as there is portal of Department of Administrative Reforms and Public Grievance (CPGRAMS) on 14.02.2022. However, there was no response for two months.  Thereafter, the matter was disposed of on 13.05.2022 and regarding that a communication was received by CPGRAMS, stating that ‘In view of the direction received from PFMS, Customs Mundra has forwarded various emails requesting ICEGATE (System) to push the said shipping bills in Scroll PC menu so that same can be processed as per ICES advisory 18/2020(IGST Refunds). Further, Customs Mundra is in touch with the NIC team and requesting them to look into the matter and resolve the matter at the earliest.’

Petitioner’s Submissions: –

• It was submitted on the behalf of the petitioner that in terms of Section 16 of the IGST Act & Section 54 of the CGST Act read with Rule 96 of the CGST Rules, the amount claimed as refund would become due to the petitioner and an order need to be passed by the respondent sanctioning 90% of the amount claimed in Form RFD-04 within a period of not exceeding 07 days from the date of acknowledgment received.
• Further, in case of goods exported with payment of tax, the shipping bills and payment of tax are considered as refund applications in terms of Rule 96 of the CGST Rules, 2017. However, no such order as stated in the provisions, has been issued by the Respondent.

Respondent’s Submissions: –

• It was submitted on the behalf of the respondent that the processing of refund is an automatic process. Indian Customs EDI System (‘the ICES’ hereinafter) has an in-built mechanism to automatically grant refund after validating the shipping bill data available in ICES against the GST Returns data transmitted by the GSTN. If the necessary matching is successful, then ICES shall process the claim for refund and relevant amount of IGST paid with respect to each shipping bill or bill of export shall be electronically credited to the petitioner’s Bank account registered with the customs authority in accordance with Rule 96 of the CGST Rules, 2017.
• That the shipping bill in question was processed and the INMUNI for payment of IGST and IGST refund was scrolled out vide IGST Scroll No. 22323 of 2020 dated 11.04.2020. However, the said shipping bill was showing as “Permanent Cancellation by PAO for transaction” as per ICEGATE Scroll status. The same appears to have not been paid by HDFC Bank on account of mismatch in the name of the petitioner’s firm.
• Further the procedure for sanction of such refund has been made electronic as per the ICES advisory 18/20 (IGST refunds) wherein it is stated that certain payments of IGST refunds, while having scrolled out by the customs officer and successfully transmitted to Bank by PFMS (Public Financial Management System) may get rejected at the Bank, these are called ‘Failed after Success’ cases. Such cases are transmitted back by PFMS as permanently cancelled should be available in ‘SCROLL_PC’ menu for reprocessing. The same shipping bill was reprocessed as per ICES advisory on 01.07.2020 and PC Scroll No.24693/2020 dated 01.07.2020 was generated for the account No.259898092843. However, the petitioner still had not received the IGST Refund Scroll in the said Bank Account.
• It was submitted that since the process of sanction of refund claim is automatic and system driven, as and when the Shipping Bill will be available again in Scroll PC; the same will be taken up for processing for refund and the relevant amount of IGST paid with respect to each Shipping Bill or Bill of Export shall be electronically credited to the petitioner’s Bank account.

Held: –

• The Hon’ble Court after considering the submissions and facts of the case, found that out of three export invoice Nos. E54/2019-20, E67/2019- 20 and E68/2019-20, the refund of IGST paid on the export invoice for the two of them had been received already for the month of February and March 2020.
• It was found by the Hon’ble Court that there is no dispute that the petitioner had exported the goods, and copy of invoices, shipping bills along with GSTR-3B & GSTR-1 have been provided. Further the petitioner has received the refund for E67/2019-20 and E68/2019-20 in his official Bank whereas the refund of IGST paid on export invoice E54/2019-20 dated 06.02.2020 amounting to Rs.19.94 Lakh (rounded of) has not been received.
• That there is no dispute to anything, except the fact that there could be a possibility of time change in the name however, when the other two refunds have been received in the very bank account of the petitioner, there is no reason as to why because of the change in the name which had been communicated to the department in the month of April 2019, this particular refund is missed out.
• It was found by the Hon’ble Court that it is quite evident from the reply filed by the respondent that t there is an in-built mechanism to automatically grant refund after validating the shipping bill data available in ICES against the GST returns data transmitted by GSTN. According to the respondent, the ICES is being processed after the necessary matching is found successful and the relevant amount of IGST paid with respect to each shipping bill or the bill of export is electronically credited to the petitioner’s Bank account registered with the customs authority in accordance with Rule 96 of the CGST Rules.
• Thereafter, the Hon’ble Court taking reference of provisions of Section 15 and Section 16 of the IGST Act, 2017 read with Rule 96 of the CGST rules, found that when Section 54(6) of the CGST read with Section 91(2) of the CGST Rules, the amount is required to be refunded and it is the respondent’s obligation to make an order sanctioning 90% of the amount claimed in Form RFD-04 within a period of seven days from the date of acknowledgment received. Moreover, there are no separate applications for the refund. The shipping bills are deemed to be refund applications when the goods are exported with payment of tax.
• Further, in the present case, it appears to be a shortcoming of the software itself, when nothing is being disputed for the other two tax invoices for which the refund has already been credited in the account of the petitioner. Everything since is being done electronically and this automatically grant of refund after validating the shipping bill data available in ICS against the GST returns, data transmitted by GSTN, if there is any difficulty at the level of the mismatch or the processing of the claim of the refund, it becomes a duty of the GSTN to look into the same. Finding fault with the officer concerned also will not help as they are largely dependent on the network.
• In the above circumstance, it was observed by the Hon’ble High Court that on one hand there is laudable objectives of making it all system driven and on the other hand the limitations of the system which are otherwise required to be addressed to at the level of the GSTN. And there seems to be lack of concern at the level of GSTN. 
• Therefore, it was recommended by the Hon’ble High Court to the concerned authority to create a feature like ‘MAY I HELP YOU’ on the portal through the ‘Grievance Redressal Mechanism’, enabling the assessees, counsels and others also to communicate directly with GSTN on the portal which could be also response based, instead of the individual department pleading through their senior through the GSTN. Essentially, this is for the purpose of lessening the Court work also as per such details the Assessees are not to be dragged to the Court when in fact there is nothing for the Court to adjudicate except pointing out to the limitation of the software of the respondent department.

The Hon’ble High Court with the above findings, allowed the writ petition with the directions to remit the amount of Rs. 19,94,994/-, claimed as refund along with interest at the rate of 6% and with all consequential benefits within a period of two weeks from the date of receipt of a copy of this order.

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