The Goods and Service Tax Appellate Tribunal (GSTAT), Chandigarh Bench has upheld an exporter’s input tax credit (ITC) refund of ₹18,28,146, ruling that goods invoiced during the relevant refund period can be included in the turnover of zero-rated supplies even if they physically leave India in a later period.
The bench of Jatinder Pal Singh (Judicial Member) and Pradeep Kumar Goel (Technical Member) dismissed the CGST Department’s appeal seeking to reduce the refund by ₹5,69,958.
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The appellant/assessee filed a refund claim under Rule 89(4) of the CGST Rules for the period October 1 to December 31, 2021. It sought a refund of ₹18,28,146 in relation to exports made without payment of GST. The Deputy Commissioner sanctioned the claim on May 2, 2023.
The Department challenged the sanction, arguing that goods covered by four shipping bills had actually been exported in January 2022, after the quarter for which the refund was claimed. It maintained that the value of those goods should therefore be excluded from the quarter’s zero-rated turnover. On its calculation, only ₹12,58,188 was refundable, leaving an alleged excess sanction of ₹5,69,958.
The Additional Commissioner (Appeals) rejected the Department’s challenge. The Department then approached the GSTAT.
The central question before the Tribunal was whether the four consignments could count towards zero-rated turnover for October–December 2021 when their invoices were issued in that quarter but the goods left India in January 2022.
The Bench examined the refund formula in Rule 89(4), along with the CGST Act’s provisions on turnover, time of supply and tax invoices. It observed that, where a supply of goods involves movement, Section 31 requires an invoice to be issued before or at the time the goods are removed. A taxpayer records the value of invoices issued during a period in its turnover for that period.
On that basis, the Tribunal held that invoices issued during the relevant period for goods cleared for export under a bond or letter of undertaking form part of that period’s zero-rated turnover. The later date on which the goods leave India does not, by itself, require their exclusion from the refund calculation.
The Bench made clear that the exporter must still establish that the goods were actually exported before receiving the refund. In this case, neither the dates of the four invoices nor the fact of export was disputed.
The Department also argued that ₹23,560 of ITC was inadmissible and should be removed from the “Net ITC” used in the refund formula.
The Tribunal referred to the first appellate authority’s finding that the proposed reduction would not materially affect the outcome: the maximum refund admissible under the formula would remain higher than the amount the exporter had claimed.
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