The Goods and Services Tax Appellate Tribunal (GSTAT), Thiruvananthapuram Bench, has held that a refund of excess IGST cannot be denied merely because an exporter entered details in the wrong column of GSTR-3B and subsequently paid the same tax again to facilitate processing of its export refund.

The bench of Subramanya Rayaprol (Vice-President) and Ramamoorthi Sriram (Technical Member) has observed that the original IGST payment of ₹19,79,405 remained an excess payment, even though the exporter had received an automated Customs refund against the second payment. The department could not retain the original payment by treating the refund of the second payment as settlement of the exporter’s separate excess-tax claim.

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The Bench quashed the appellate order rejecting the refund claims and allowed the appeals with consequential relief. Associated Cashews.pdf

The appellant/assessee is an exporter of cashew kernels, exported goods on payment of IGST at 5% during November 2018, December 2018 and February 2019.

According to the exporter, the shipping bills and export invoices were correctly disclosed in GSTR-1. However, while filing GSTR-3B for the corresponding months, the export turnover and tax were inadvertently reported in Table 3.1(a), meant for outward taxable supplies other than zero-rated supplies, instead of Table 3.1(b), which covers zero-rated outward taxable supplies.

This reporting error created a mismatch between the shipping bills and the GST return data, preventing the Customs electronic system from processing the automatic refund of IGST paid on exports.

To resolve the mismatch, the exporter reported the export turnover in the correct column of its August 2019 GSTR-3B and paid the corresponding IGST again. The Customs automated system then processed the export refund against this second payment.

The exporter subsequently sought a refund of the original payments, comprising ₹5,26,330 for November 2018, ₹9,19,176 for December 2018 and ₹5,33,899 for February 2019, aggregating to ₹19,79,405.

The original authority rejected the three refund applications through orders dated December 18, 2020.

The Joint Commissioner (Appeals) upheld the rejection, proceeding on the basis that the exporter had already claimed and received an IGST refund on the exports in question. The appellate order also referred to a show-cause notice seeking recovery of the export refund on grounds relating to Rule 96(10) of the CGST Rules.

Before the Tribunal, however, the exporter emphasised that the refund already received was related to the second payment made in August 2019. The present claims concerned the original payments made during the three export months, which remained unrefunded.

The distinction between these two sets of payments formed the central issue before the Tribunal.

The Revenue submitted that the original refund applications had been rejected primarily because of discrepancies between GSTR-1 and GSTR-3B and because the documents furnished did not establish excess payment.

It argued that the exporter needed to produce sufficient evidence, including reconciliation or computation statements, demonstrating that the tax reported in Table 3.1(a) for the relevant months included IGST on exports in addition to any tax payable on domestic supplies.

The exporter also needed to establish that the same export-related IGST was subsequently reported and paid again through Table 3.1(b) of the August 2019 return.

After examining the returns, case records, reconciliation statements and written submissions, the Tribunal found that the authorities had failed to identify which payment was being claimed as a refund and which payment had already been refunded through the Customs system.

It held that the records established payment of IGST during the original export months, followed by payment of the same amount again in August 2019. While the August 2019 payment had been refunded through the automated export-refund mechanism, the original payments remained excess tax.

The Tribunal criticised the first appellate authority for mechanically rejecting the appeals without examining the return details.

It also noted that the Revenue had not brought evidence on record to displace the exporter’s explanation that the original payments constituted excess IGST after the same amount was paid again.

The Tribunal characterised the reporting error as a clerical mistake involving correct entries being made at the wrong places in the return. It found that the exporter had properly explained the mistake through its reconciliation statement.

Such an error, the Bench held, could not justify denying a refund of tax paid beyond the amount actually due.

The Tribunal observed that there was no justification for the Revenue to retain amounts established to have been deposited twice. It reiterated the principle that tax cannot be collected without authority of law and held that the excess amount was liable to be returned.

The Bench further held that incorrect return entries, subsequently corrected in a manner resulting in excess payment of IGST, did not constitute a substantive infraction warranting rejection of the refund claim.

The Tribunal relied on the Orissa High Court’s decision in Rajendra Narayan Mohanty v. Joint Commissioner of State Tax, Cuttack, which addressed retention of tax paid twice and the constitutional restriction under Article 265 against retaining amounts beyond the lawful tax liability.

It also referred to the Karnataka High Court’s decision in Merck Life Science Private Limited v. Union of India, concerning refund of IGST paid erroneously and the obligation to restore amounts the authorities were not entitled to retain.

The Bench additionally followed its earlier decision in Choice Cashew Traders v. Commissioner of SGST, Keralam State, where it had held that procedural difficulties could not authorise the department to withhold excess GST without authority of law.

These decisions supported the Tribunal’s conclusion that clerical mistakes and procedural infractions could not defeat the refund of the excess payment established in the present case.

The Tribunal set aside Order-in-Appeal and allowed all three appeals with consequential relief.

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