21.06.2022: Procedures Under Rule 96 Of CGST Cannot Be Applied To Deny The Legitimate Export Incentive – Madras High Court

MadrasThe Hon’ble High Court of Madras vide its order dated 28.04.2022 in the matter of M/s Abi Technologies Vs. The Assistant Commissioner of Customs, IGST refunds in W.P. (MD) No. 4562 of 2022 held that if in actual there is an export on payment of integrated tax, the procedure prescribed under Rule 96 of the CGST rules is not intended to defeat such legitimate export incentives.

The Petitioner preferred the writ petition seeking directions to respondent to sanction its refund claim amounting to Rs. 24,72,018/- for exports made by the petitioner during July 2017, September 2017 and October 2017.


  • The case of the petitioner is that it has correctly declared the details of exports made on payment of tax through ITC in GSTR – 1 however, a mistake was committed while filing the GSTR – 3B under rule 61(5) of the CGST Rules, 2017.

Petitioner’s Submissions:

  • It was contended on the behalf of the petitioner that the outward supply made by it, would qualify as a Zero-rated supply and should have been shown in Column 3.1 (b) in GSTR – 3B but inadvertently details of the exports has been given as outward taxable supply.
  • It was submitted that similar mistake has been committed for all the three months, due to which the refund of integrated-tax, arising from exports made on payment of tax, has been denied to the petitioner.
  • Further, reliance was placed on Circular 45/19/2018-GST, dated 30.05.2018, wherein it was clarified: –

4.1. It has been represented that while filing the return in FORM GSTR-3B for a given tax period, certain registered persons committed errors in declaring the export of services on payment of integrated tax or zero-rated supplies made to a Special Economic Zone developer or a Special Economic Zone unit on payment of integrated tax. They have shown such supplies in the Table under column 3.1(a) instead of showing them in column 3.1(b) of FORM GSTR-3B whilst they have shown the correct details in Table 6A or 6B of FORM GSTR-1 for the relevant tax period and duly discharged their tax liabilities……….

4.2 In this regard, it is clarified that for the tax periods commencing from 01.07.2017 to 31.03.2018, such registered persons shall be allowed to file the refund application in FORM GST RFD-01A on the common portal subject to the condition that the amount of refund of integrated tax/cess claimed shall not be more than the aggregate amount of integrated tax/cess mentioned in the Table under columns 3.1(a), 3.1(b) and 3.1(c) of FORM GSTR-3B filed for the corresponding tax period.”

  • It was submitted that though the said circular pertains to ‘supplies made to SEZ and supply by SEZ, the clarification provided would also apply to direct exports by Unit, like Petitioner, in the domestic tariff.

Respondent Submissions:

  • Referring to Rule 96 of the CGST Rules, it was submitted on the behalf of the respondent that the refund would be admissible to the petitioner, if the correct information has been given in GSTR-1 and GSTR-3B. Further filing the valid returns is the responsibility of the petitioner.
  • That after filing of valid returns, data regarding export invoices will be transmitted from GSTN portal to designated system of custom department and, the same has not taken place in the present case. Thus, the question of granting refund to the petitioner does not arise.
  • That referring to the rule 96 of the CGST rules, it was submitted that as the details from GSTN portal has not been transmitted to system of custom department, sanction the refund of IGST is neither practically possible nor, as per the said rule, permissible.


  • The Hon’ble Court after considering the submissions from the both sides, facts of the case observed that refund of tax paid on exports has been long recognized under Central Excise Act, 1944, then under Central Excise rules, 2002, and thereafter, under GST regime, where most of the proceedings are system driven.
  • The Hon’ble High Court referring to the decision of Commissioner of Sales Tax, U.P. Vs. Auriya Chamber of Commerce, Allahabad reported in 1986(25) E.L.T.867 (S.C) wherein, it was held that ‘procedures are nothing but handmaids of justice and not mistress of law’, held that the export incentives have been given to encourage exports, for inward remittance of foreign currency. Further, if in actual there is an export with payment of integrated tax, the prescribed procedure under the aforesaid rules is not intended to defeat such legitimate export incentives. Thus, the procedure under Rule 96 of the CGST rules, 2017 cannot be applied strictly to deny legitimate export incentives available to an exporter.


The Hon’ble Court with the above finding disposed of the Writ petition with directions to the respondent to get the data directly from the petitioner and their counterparts in the custom department.  The petitioner was directed to provide the details in 30 days from the receipt of the copy of this order and the respondent after verifying the same, if the petitioner is entitled to refund, would proceed to sanction the refund. It was made clear that procedural infraction shall not come in the legitimate way of grant of refund under the IGST Act, 2017 r/w CGST Act, 2017 and the Rules made thereunder.

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