Facts

The petitioner is involved in the manufacturing, trading, and supply of sugar and related products. They have been importing raw sugar and processing it in their refineries to produce refined sugar, which is sold both in the domestic market and exported to foreign countries under the Letter of Undertaking (LUT).

During the Financial Years 2020-2021 and 2021-2022, the petitioner made zero-rated supplies of goods and accordingly claimed a refund of unutilized Input Tax Credit (ITC). The total entitled refund amount for the said period was INR 1,10,67,67,172/-. However, due to an inadvertent arithmetical error made by one of the petitioner’s employees, the initial refund claims were lodged for a lower amount of Rs. 1,00,47,38,439/-. Subsequently, the respondents approved and paid the refund of Rs. 1,00,47,38,439/-.

Upon realizing the error, the petitioner filed supplementary refund claims for the remaining amount of Rs. 10,20,28,733/- under the “any other category.” However, the respondents rejected the said refund application without providing the petitioner with an opportunity to be heard on the grounds that the “any other” category allows taxpayers to file refund claims for categories not listed in the portal, and the refund application made by the petitioner did not fall under the valid criteria for the “any other” category.

Also Read: Madras High Court Ruling on Refund of Unused Input Tax Credit Due to Inverted Duty Structure.

Issues

Whether the applicant can file a subsequent refund application for the same period with a differential amount under the GST law.

Petitioner’s argument

The petitioner provided a clarification regarding the nature of the supplementary refund applications and stated that such applications solely aim to rectify clerical and arithmetical errors that occurred in previous refund submissions. The petitioner emphasized that there are no legal restrictions against filing supplementary refund claims for the same period, specifically for a differential amount.

Observation

The Hon’ble High Court held that it is solely a matter of technical error, and due to such a technicality, the petitioner’s claim cannot be dismissed without a thorough examination by the respondent authority based on its own merits and in accordance with the law

Also Read: Appellate Authority can’t pass Order beyond allegations made in SCN

Judgment

The Hon’ble Gujarat High Court held that it is an established law that once the substantive conditions for entitlement are met, a person cannot be denied the benefits they are rightfully entitled to, even if there is a technical error or gap in the electronic system. It was also stated by the Hon’ble Court that the petitioner had no alternative other than submitting a supplementary application under the category of “any other” to claim a refund for the amount.

The Hon’ble Court further held that it is believed that the petitioner’s claim for a refund of the remaining amount, which totals INR 10,20,28,733/-, should not be rejected based on mere technicalities, especially when all the substantive conditions have been satisfied without any discrepancies and in accordance with the applicable law. The respondent has been direct to conduct a thorough scrutiny of the case, adhering to the established legal procedures before reaching a decision.

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