Facts of the Case:

In this case, the petitioner challenged an appellate order passed under Section 107 of the CGST Act whereby the Appellate Authority set aside a refund sanction order dated 24 February 2023. The refund had been granted pursuant to an application in Form GST RFD-01 dated 29 December 2022 seeking refund of ₹61,06,134/- towards Integrated GST paid on the ocean freight component relating to imports made during December 2018. 

The refund claim was founded on the law declared by the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd., which held the levy of IGST on ocean freight under reverse charge in CIF import contracts to be unconstitutional.

The Refund Sanctioning Authority allowed the claim. However, the department preferred an appeal under Section 107. The Appellate Authority allowed the departmental appeal primarily on the ground that the Refund Sanctioning Authority had not examined whether the shipping lines involved were foreign shipping lines or Indian shipping lines. The petitioner had asserted that foreign shipping lines were engaged by the foreign supplier and relied upon the Bill of Lading as evidence. However, the Appellate Authority recorded that the copy of the Bill of Lading placed on record was illegible and insufficient to substantiate the claim.

Before the High Court, the petitioner submitted readiness to produce a clear and legible copy of the Bill of Lading and any supporting documents.

Issue:

Whether the refund granted on IGST paid on ocean freight could be denied at the appellate stage solely due to illegibility of a crucial document, without affording the assessee an opportunity to cure the evidentiary defect.

Held that:

The Court held that in the interest of justice and fair adjudication, the petitioner ought to be granted an opportunity to produce a legible copy of the Bill of Lading and any other relevant supporting documents. Since the rejection of the refund claim at the appellate stage stemmed from a curable evidentiary deficiency rather than a conclusive finding on merits, denial of such an opportunity would be unjust.

Accordingly, the Court directed the Appellate Authority to reconsider the matter afresh after granting the petitioner an opportunity to furnish a readable copy of the Bill of Lading and any additional documents required for proper adjudication. The Appellate Authority was directed to conclude the proceedings within one month. The writ petition was disposed of with these directions.

Case Name:  M/s INDORAMA INDIA PVT. LTD. (FORMERLY, IRC AGROCHEMICAL PRIVATE LIMITED) v. THE STATE OF WEST BENGAL & ORS. dated 18.03.2026

To read the complete judgement 2026 Taxo.online 676