The Goods and Services Tax Appellate Tribunal (GSTAT), Chandigarh, has held that export invoices issued during the period covered by a refund claim must be included in zero-rated turnover even where the corresponding goods are exported subsequently, provided actual export is established.

The bench of Jatinder Pal Singh (Judicial Member) and Pradeep Kumar Goel (Technical Member) has observed that invoices for goods cleared for export under bond or letter of undertaking would be included in zero-rated turnover for the period in which they were issued, even if the goods were actually exported afterwards.

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The issue raised was whether shipping bills dated after the refund period justify excluding the corresponding export invoices from the refund calculation under Rule 89(4) of the CGST Rules.

The exporter filed a refund application on April 20, 2022, seeking ₹44,76,900 towards accumulated input tax credit on exports without payment of tax for June–September 2020.

The refund-sanctioning authority, through an order dated July 4, 2022, sanctioned ₹44,14,988 and rejected the balance.

The department challenged the sanction before the Additional Commissioner, CGST (Appeals), Chandigarh. After the appellate authority rejected its appeal on October 19, 2023, the department approached GSTAT.

The dispute concerned three of the seven shipping bills declared in the refund application. These three shipping bills were dated October 2, 3 and 4, 2020, and covered goods with an aggregate free-on-board value of ₹1.16 crore.

The department argued that these consignments fell outside the June–September 2020 refund period and their value should therefore be excluded from the refund computation.

Relying on Rule 89(4), the department proposed reducing the turnover of zero-rated supplies from ₹2,66,35,000 to ₹1,50,35,000 by excluding the disputed consignments.

It also proposed reducing adjusted total turnover from ₹36,10,74,247 to ₹34,94,74,247.

Taking net ITC of ₹5,98,51,263, the appeal grounds calculated the maximum admissible refund at ₹25,74,907, against the sanctioned amount of ₹44,14,988. On that calculation, the department alleged an excess refund of ₹18,40,081.

The order’s background separately records that the earlier departmental appeal challenged an alleged excess refund of ₹19,67,885. These different figures appear at the respective stages recorded in the order; the tribunal resolved the appeal on the legal treatment of the export invoices.

The bench found that the issue was covered by its earlier decision in Shruti Bansal v. Solitaire Pharmacia Pvt. Ltd.. Drawing on that ruling, the tribunal explained that the refund calculation under Rule 89(4) involves net ITC, turnover of zero-rated supplies and adjusted total turnover, with the relevant figures relating to the same period.

The question was whether zero-rated turnover could include invoices issued during the refund period when the corresponding goods were physically exported later.

The reasoning reproduced in the order linked turnover to invoices issued for supplies during the relevant period and examined Sections 12 and 31 of the CGST Act, concerning time of supply and issuance of tax invoices.

For supplies involving movement of goods, Section 31 requires the invoice to be issued before or at the time of removal. Applying this framework to exports under bond or letter of undertaking, the tribunal treated issuance of the invoice and removal for export as relevant to identifying the period of supply.

A subsequent shipping-bill date, therefore, did not by itself justify excluding the invoice value from the earlier period’s zero-rated turnover.

The bench expressly preserved the requirement that the exporter establish actual export before receiving the refund.

The ruling thus distinguishes between the period to which export turnover belongs and the evidence needed to establish that export has been completed.

In the present case, two decisive facts were undisputed: the invoices relating to the three shipping bills had been issued during the relevant refund period, and the goods covered by those shipping bills had actually been exported.

On these facts, the tribunal found the department’s objection untenable and held that the refund was admissible.

The tribunal also addressed an error in the cause title displayed on the GSTAT portal, which showed the officer who filed the appeal, as the appellant.

Referring to Section 112(3) of the CGST Act and Rule 33(2) of the GST Appellate Tribunal (Procedure) Rules, 2025, the bench clarified that the Commissioner is the appellant in an appeal filed by the CGST Department.

The tribunal dismissed the department’s appeal and upheld the appellate authority’s October 19, 2023 order, leaving the refund sanction undisturbed.

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