Refund on account of export cannot be withheld merely on the ground that Revenue intends to file appeal

The Hon'ble Delhi High Courtin Alex Tour and Travel Pvt. Ltd. v. Assistant Commissioner, CGST [W.P.(C) NO. 5722 OF 2023 dated May 8, 2023] directed the Revenue department to disburse the assessee's refund claim along with interest as payable and held that, the Revenue cannot withheld assessee's refund merely on account that it intends to file appeal before the GST tribunal that to when the Tribunal is not constituted.

Facts

M/s Alex Tour and Travel (P) Ltd. ("the Petitioner") is a n exporter of services. 

The Petitioner filed refund application for claiming refund of unutilized Input Tax Credit ("ITC") for the financial year 2018-19 amounting to INR 46,38,276/- on April 13, 2021.

Further, filed another refund application for the financial year 2019-20 amounting to INR 2,15,63,451/- on April 14, 2021. 

The Petitioner's claim was rejected by the Adjudicating Authority vide an order dated June 14, 2021 ("the Refund Rejection Order") on the grounds that the services provided by the Petitioner were intermediary services and not export of service and the Petitioner has not  furnished the Foreign Inward Remittance Certificate ("FIRC"). 

Aggrieved by the Refund Rejection Order the Petitioner filed an appeal before the Appellate Authority who vide three separate orders ("the Order in Appeal")accepted the appeal of the Petitioner and made stated that transaction-wise FIRC was not feasible therefore, FIRC from any bank is a conclusive evidence that the Petitioner had received  foreign currency and ruled that the services rendered by the Petitioner would  qualify as export services in accordance with Section 2(6) of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act").

Subsequently, The Petitioner filed the FORM GST RFD-01 for seeking refund of unutilised ITC. The Refund claim was not processed by the Revenue Department even after 1 year of submitting refund application. Moreover, the Revenue Department issued deficiency memos and issued show cause notices on such refund application. 

Aggrieved by such the Petitioner filed the writ before the Hon'ble Delhi High Court.

The Revenue Department contended that observation made by the Appellate Authority were erroneous and the Revenue Department proposes to file appeal against the decision of Appellate authority as and when the tribunal is constructed.

Issue

Whether the refund of ITC on account export of service can be withhold on the ground the Revenue intend to file appeal against the refund sanctioning order before GST tribunal which is not operative yet?

Held

The Hon'ble Delhi High Court in W.P.(C) NO. 5722 OF 2023 held as under:

• Noted that, the Revenue Department is entitled to file an appeal under Section 112 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") however, the said appeal is required to be filed within a period of three months. The said period has been extended as the Appellate Tribunal has not been constituted as yet.
• Further noted that, it was important to note that more than one year had passed since the Order in Appeal had been pending for over a year while another Order in Appeal had been pending for nearly for ten months and as result the Petitioner is entitled to receive interest in accordance with the law.
• Stated that, the Revenue Department cannot ignore the order passed by the Appellate authority mainly on the ground that it proposes to file an appeal.
• Allowed the Appeal of the Petitioner.