The Goods and Services Tax Appellate Tribunal (GSTAT), Thiruvananthapuram Bench, has held that a clerical error in reporting export turnover in the wrong table of GSTR-3B cannot be used to deny refund of IGST that was paid twice.
The bench of Subramanya Rayaprol (Vice-President) and Ramamoorthi Sriram (Technical Member) observed that the Revenue cannot retain an amount that was paid in excess of the taxpayer’s actual tax liability and allowed the appeals filed by M/s. Choice Cashew Industries.
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The appellant/assessee was engaged in the export of cashew kernels. During November 2018, December 2018 and February 2019, the exporter made exports on payment of IGST at 5%.
The taxpayer had correctly reported the export transactions in its GSTR-1 returns. However, while filing the corresponding GSTR-3B returns, the export turnover and the IGST paid were inadvertently reported in Table 3.1(a), which relates to outward taxable supplies other than zero-rated supplies, instead of Table 3.1(b), which is meant for zero-rated supplies.
Because of the mismatch between the shipping bills, GSTR-1 and GSTR-3B, the Customs Electronic Data Interchange (EDI) system did not automatically process the IGST refund attached to the exports.
The IGST amounts involved were: November 2018 – ₹9,41,390, December 2018 – ₹4,55,293 and February 2019 – ₹4,30,587. The aggregate amount was ₹18,27,270.
The appellant contended that since the original IGST payments did not result in automatic refund due to the reporting error, the taxpayer subsequently paid the same IGST amounts again through its August 2019 GSTR-3B return.
This time, the export turnover and corresponding IGST were correctly reported under the zero-rated supplies column. The Customs automated system consequently processed the refund of ₹18,27,272 relating to the second payment.
The dispute before the Tribunal, therefore, was not regarding the refund already received through the Customs automated mechanism. Instead, the taxpayer sought refund of the original IGST amounts paid during November 2018, December 2018 and February 2019, which had remained with the Government after the same liability was effectively paid again in August 2019.
The taxpayer filed refund claims for the original IGST payments. These claims were rejected through three orders dated December 18, 2020.
The refund amounts were ₹9,41,390 for November 2018, ₹4,55,293 for December 2018 and ₹4,30,587 for February 2019. The taxpayer subsequently challenged the rejection before the appellate authority.
The Joint Commissioner (Appeals) rejected the appeals, essentially proceeding on the basis that the taxpayer had already received the IGST refund.
The Tribunal noted that this approach failed to distinguish between the refund of the second IGST payment made in August 2019 and the refund being claimed for the original IGST payments made during the relevant export months.
The department contended that the taxpayer had reported the export supplies in the incorrect column of GSTR-3B. Since the export supplies were entered in Table 3.1(a) instead of Table 3.1(b), the Customs system could not automatically match the data and process the refund.
The Department argued that the taxpayer was required to establish through sufficient documentary evidence, including reconciliation and computation statements, that the amounts reported in Table 3.1(a) represented IGST paid on export supplies in addition to tax payable on domestic supplies.
The department also pointed out discrepancies between GSTR-1 and GSTR-3B and maintained that the taxpayer needed to establish the excess payment through appropriate evidence.
The GSTAT examined the case records, annexures, reconciliation statements and written submissions.
The Tribunal found that the authorities below had not properly examined which amount was being claimed as a refund and which amount had already been refunded through the automated Customs system.
The appellant had originally paid IGST on the exports, but because of a clerical error in GSTR-3B, the Customs system did not recognise the payment for automatic refund purposes. As there was no manual intervention in the Customs refund system for such exports, the appellant had to make the payment again in August 2019, after which the refund was processed automatically.
The Tribunal further noted that the export figures and IGST payable were correctly reflected in GSTR-1. The error was essentially in the placement of the figures in GSTR-3B.
The Tribunal specifically explained the relevant GSTR-3B reporting structure.
Table 3.1(a) covers outward taxable supplies other than zero-rated, nil-rated and exempt supplies, whereas Table 3.1(b)covers outward taxable supplies that are zero-rated.
The Tribunal found that the taxpayer had wrongly reported the export turnover in the column meant for non-zero-rated supplies, even though IGST had actually been paid on the exports.
The Tribunal observed that the taxpayer subsequently paid the entire amount again in August 2019 and obtained the export refund through the Customs system.
Thus, the original payments remained as excess payments.
The Tribunal found that the total IGST of ₹18,27,272 paid during November 2018, December 2018 and February 2019 remained as excess tax after the same amount was paid again in August 2019 and refunded through the Customs automated process.
The department did not produce evidence demonstrating why the original amount could not be treated as excess IGST, particularly when the same amount had subsequently been paid again.
The Tribunal accordingly concluded that the taxpayer had effectively paid IGST twice for the same export transactions, while the refund received through Customs related to the second payment.
A key observation of the Tribunal was that tax cannot be collected without the authority of law.
Since the amount paid during the original export months had subsequently been paid again and the second payment was refunded through the automated export refund mechanism, the original payment represented excess tax.
The Tribunal held that such excess payment could not be retained by the Revenue and was liable to be refunded.
The GSTAT treated the incorrect reporting in GSTR-3B as a clerical mistake, rather than a substantive violation.
The Tribunal noted that the taxpayer had subsequently explained the error through a reconciliation statement and that the mistake was apparent from the record.
It held that the taxpayer could not be penalised by denial of refund merely because correct figures had been entered in the wrong place in the return. Where an amount had been deposited twice, there was no justification for the Revenue to retain it.
In that case, the High Court dealt with an excess tax payment where tax had effectively been deposited twice. The Court observed that retention by the State of an amount paid in excess of tax liability would be contrary to Article 265 of the Constitution.
The High Court had also held that refund of tax paid erroneously or under a mistaken notion could not be denied solely on the basis of the limitation period prescribed under Section 54 of the CGST Act in the circumstances before it.
The GSTAT further referred to the Karnataka High Court’s decision in Merck Life Science Private Limited v. Union of India, cited as 2025 (11) TMI 1419.
The Karnataka High Court had considered provisions concerning refund of tax paid erroneously and observed that a taxpayer who pays tax to the Central authority by oversight, inadvertence or mistake can be entitled to refund subject to the statutory conditions.
The decision also discussed the interaction of Section 77 of the CGST Act, Section 19 of the IGST Act, Rule 89(1A) of the CGST Rules and Section 54 concerning refund claims.
The Tribunal referred to the High Court’s reasoning that where excess payment was not disputed and the Government had received an amount to which it was not entitled, the principles of restitution and Article 265 supported return of the excess amount.
The Bench ultimately held that the appellant was entitled to refund of the excess IGST.
The Tribunal specifically observed that wrong entries in GST returns, when subsequently corrected and resulting in excess payment of IGST that was otherwise not due, do not constitute a substantive infraction warranting denial of the refund.
According to the Tribunal, the excess payment arose because of a reporting error and the evidence on record established the fact of double payment.
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