Background: The petitioner, a company engaged in exporting FMCG products, sought a refund of IGST paid on 14 export consignments to Dubai for the period June to December 2024. The GST Department withheld these refunds based on an alert from the Directorate General of Analytics and Risk Management (DGARM). For six consignments, auto-generated refund applications under Rule 96(5A) of the GST Rules were transmitted to the jurisdictional proper officer (the 3rd respondent) for verification of the exporter’s genuineness.
The 3rd respondent rejected the refund applications, citing lack of jurisdiction, on the ground that such applications under Section 54 of the CGST Act read with Rule 89 should not be filed before him. The petitioner, unaware of this rejection, later filed an appeal, which was dismissed as time-barred. The petitioner then approached the High Court seeking quashing of the rejection orders and a direction for reconsideration of the refund claim.
Court’s Reasoning: The Court examined whether the rejection of the refund application by the 3rd respondent was sustainable. It noted that the rejection was based solely on a technical ground—a mistaken belief that the 3rd respondent lacked jurisdiction. The Court referred to the instructions issued by the Central Board of Indirect Taxes and Customs (CBIC), which clarify that when DGARM flags a transaction as risky, the refund application must be referred to the jurisdictional proper officer for examination of genuineness. In such cases, it is the duty of the jurisdictional proper officer to consider and process the claim on its merits.
The Court found that the 3rd respondent failed to fulfill this obligation due to a misconception about jurisdiction. The Court also observed that similar refund applications had been considered on merits in other cases. It held that the mere fact of a short delay in challenging the rejection could not, by itself, justify denying relief under Article 226 of the Constitution, especially where the claim appeared prima facie genuine.
Decision: The Kerala High Court quashed the impugned orders rejecting the refund application and the subsequent appellate order. It directed the 3rd respondent to reconsider the petitioner’s auto-generated refund application on its merits, in accordance with the relevant CBIC circular, and to process the claim if found genuine. The Court emphasized that technicalities should not obstruct the adjudication of a bona fide claim.
This decision reinforces the obligation of jurisdictional proper officers to adjudicate IGST refund claims flagged by DGARM on their merits, rather than rejecting them on technical or jurisdictional grounds, thereby ensuring that genuine exporters are not denied relief due to procedural misconceptions.
Case Reported at:
Case Name: Silver Exim v. Union of India and Ors.
Case Citation: (2026) taxcode.in 861 HC
