Case Law Details
NUVTEQ Solutions Private Limited Vs Joint Commissioner of Commercial Taxes (Karnataka High Court)
The Karnataka High Court considered a challenge to an adjudication order passed under Section 73(9) of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017, and an appellate order rejecting the appeal on the ground of limitation. The petitioner contended that a demand of Rs.72,08,960 had been recovered solely due to a procedural lapse and sought refund of the amount. It was submitted that the transactions qualified as “export services” under Section 2(6) of the Act and were zero-rated supplies, but the demand for CGST/KGST had been confirmed only on the ground that the petitioner had not furnished a Letter of Undertaking (LUT) in the prescribed form.
The High Court observed that the adjudicating authority had failed to examine the nature of the transactions in light of the relevant statutory provisions. Referring to its earlier decision based on the Circular dated 15.03.2018, the Court reiterated that non-furnishing of an LUT or bond under Rule 96A of the CGST Rules is not an incurable defect and cannot be regarded as mandatory when ex post facto filing is permissible depending on the facts and circumstances of the case.
The Court further noted that the authorities had not considered either the Circular or the petitioner’s entitlement to refund based on the LUT. Accordingly, it quashed both the adjudication order dated 28.08.2024 and the appellate order dated 12.06.2025 and restored the proceedings to the adjudicating authority for fresh consideration on the issue of jurisdiction and the petitioner’s entitlement to refund after permitting the petitioner to place the Letter of Undertaking. The adjudicating authority was directed to pass a reasoned order within eight weeks from receipt of the certified copy of the judgment.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has filed its appeal in GST Appeal No.560/25-26 being aggrieved by the Adjudication Order dated 28.08.2024 [Annexure-B] under Section 73[9] of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017 [for short, ‘the Act’] and the relevant provisions thereof. The appeal is rejected by the Order dated 12.06.2025 [Annexure-A] on the ground of limitation. The petitioner contends that the respondents have recovered a sum of Rs.72,08,960/- because of a procedural lapse, the petitioner seeks a refund of this amount.
2. Sri Dhruv M Patwari, the learned counsel for the petitioner, submits that this Court must intervene on the ground of jurisdiction and also in view of the orders of this Court in the writ petition in W.P. No.11076/2024. In elaboration, the learned counsel submits that the petitioner’s transaction qualifies as ‘export services’ under Section 2[6] of the Act and is therefore a ‘zero rate’ supplies but the second respondent has confirmed a Demand for CGST/KGST only on the ground that the petitioner has not furnished a Letter of Undertaking in the prescribed form. Sri K Hemakumar, the learned Additional Government Advocate, is heard in the light of these grounds and the records are perused.
3. It remains indisputable that the second respondent had to consider the nature of the transaction in the light of the relevant provisions, and that there is a failure on this score. Further, this Court, in very similar circumstances, considering the terms of the Circular dated 15.03.2018, has opined thus.
“As can be seen from the aforesaid Circular, non-furnishing/non-submission of LUT/Bond in terms of Rule 96-A of the CGST Rules is not an incurable defect nor can the same be said to be mandatory especially when the respondents themselves have permitted the petitioner to file such LUTs/bonds even subsequent to export and the same is permitted to be allowed on ex post facto basis taking into account facts and circumstances of each case including the purpose for availing refund as sought for by the petitioner. However, the respondent No.1 while rejecting refund claim of the petitioner has neither considered nor appreciated the said Circular dated 15.03.2018 and consequently, I deem it just and appropriate to set aside the impugned refund rejection order dated at Anenxure-Z5 and remit the matter back to the first respondent for reconsideration afresh in accordance with law.”
4. It follows from this exposition that a request for refund must be based on a Letter of Undertaking furnished to justify a claim for refund. As neither of these two aspects is considered, this Court is of the view that there must be interference quashing both the impugned Order of Adjudication dated 28.08.2024 and the Order in Appeal in GST. Appeal No.560/2025-26 [Annexures – A and B], restoring the proceedings to the second respondent for reconsideration on the ground of jurisdiction as also the petitioner’s entitlement to refund based on the Letter of Undertaking and the second respondent must decide expeditiously, and in any event within eight [8] weeks from the date of receipt of a certified copy of this order. Hence the following:
ORDER
[a] The petition is allowed in part quashing the impugned Adjudication Order dated 28.08.2024 and the Order in Appeal in GST. Appeal No.560/2025-26 [Annexures – A and B] restoring the proceedings to the second respondent with liberty to the petitioner to file a certified copy of this order within a week from the date of receipt thereof.
[b] The second respondent is directed to dispose of the proceedings within eight [8] weeks from the date of receipt of a certified copy of this order by a reasoned order permitting the petitioner to place the Letter of Undertaking.
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