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The Hon’ble Gujarat High Court in Aartos International LLP v. Deputy Commissioner (Customs) [R/Special Civil Application No. 14649 of 2022, dated December 2, 2022] has held that the Assessees are not to be dragged to the Court when in fact there is nothing for the Court to adjudicate except pointing out to the limitation of the software of the Revenue Department, in a matter challenging the non-issuance of the refund. Further held that, refund claim should not be rejected due to the deficiency of Goods and Service Tax Network (“GSTN”) and thus allowed the refund claim of the Integrated Goods and Services Tax (“IGST”) with interest at the rate of 6 percent.


Aartos International LLP (“the Petitioner”) is engaged in the business of Ceramics and Tiles and was formerly known as Azuvi International LLP and has changed its name to Aartos International LLP from April 8, 2019. The name updation was intimated to the Bank and all the relevant government departments including Goods and Service Tax (“GST”), Income Tax, Registrar of Companies and Customs.

The Petitioner exported the goods in the month of February and March 2020 and shipping bills along with Form GSTR-3B and Form GSTR-1 were tendered. The Petitioner submitted that out of three export invoices, the refund has been received of IGST paid at the time of export of around INR 20.45 Lakh and the duty drawback of all the three invoices also had been received on February 27, 2020 and April 4, 2020. The Petitioner however did not receive refund on one export invoice dated February 6, 2020 (“the Impugned Invoice”) of INR 19,94,994/- and had attempted to approach the Revenue department (“the Respondent”) for the same. The Petitioner wrote on the portal of Department of Administrative Reforms and Public Grievance on February 14, 2022 but no response was received for 2 months and the matter was then disposed on May 13, 2022.

The Respondent submitted that, Indian Customs EDI System (“ICES”) has an in built mechanism to automatically grant refund after validating the shipping bill data available in ICES against the GST Returns data transmitted by the GSTN. The Respondent further submitted that refund invoice has not been paid by HDFC Bank on account of mismatch in the name of the Petitioner’s firm. Further, it was stated by the Respondent that since the process of sanction of refund claim is automatic and system driven, as and when the Shipping Bill will be available again in Scroll PC; the same will be taken up for processing for refund and the relevant amount of IGST paid with respect to each Shipping Bill or Bill of Export shall be electronically credited to the Petitioner’s Bank account.

Hence, this Petition has been filed.


Whether the Petitioner is entitled of refund claim of the IGST and interest thereon?


The Hon’ble Gujarat High Court in R/Special Civil Application No. 14649 of 2022 held as under:

  • Noted that, as per Section 54(6) of the Central Goods and Services Tax Act, 2017 (“CGST Act”) read with Rule 91(2) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”), the amount is required to be refunded and it is the Respondent’s obligation to make an order sanctioning 90% of the amount claimed in Form RFD-04 within a period of seven days from the date of acknowledgment received.
  • Opined that, when nothing is being disputed w.r.t. the two of the tax invoices wherein, the refund has already been credited in the account of the Petitioner, this appears to be a difficulty at the end of the GST network or some error in the software itself, which would require a cure.
  • Stated that, since everything is being done electronically and this automatically grant of refund after validating the shipping bill data available in ICS against the GST returns, data transmitted by GSTN, if there is any difficulty at the level of the mismatch or the processing of the claim of the refund, it becomes a duty of the GSTN to look into the same.
  • Recommended that, if the authority concerned deems it appropriate, let there be a direct communication with the GSTN, in the portal itself which could be also response based, for the purpose of lessening the Court work.
  • Held that, the Petitioner is not to be dragged to the Court when in fact there is nothing for the Court to adjudicate except pointing out to the limitation of the software of the Respondent.
  • Directed to refund the amount of INR 19,94,994/- with interest at the rate of 6% and with all consequential benefits within a period of two weeks.

Relevant Provisions:

Section 54(6) of the CGST Act:

“Refund of tax-

(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.” 

Rule 91 of the CGST Rules:

“Grant of provisional refund-

(1) The provisional refund in accordance with the provisions of sub-section (6) of section 54 shall be granted subject to the condition that the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees.

(2) The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on being prima facie satisfied that the amount claimed as refund under sub-rule (1) is due to the applicant in accordance with the provisions of sub-section (6) of section 54, shall make an order in FORM GST RFD-04, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of the acknowledgement under sub-rule (1) or sub-rule (2) of rule 90.”

Provided that the order issued in FORM GST RFD-04 shall not be required to be revalidated by the proper officer.

(3) The proper officer shall issue a payment order in FORM GST RFD-05 for the amount sanctioned under sub-rule (2) and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund on the basis of a consolidated payment advice:.

Provided that the payment order in FORM GST RFD-05 shall be required to be revalidated where the refund has not been disbursed within the same financial year in which the said payment order was issued.

(4) The Central Government shall disburse the refund based on the consolidated payment advice issued under sub-rule (3).”


 (Author can be reached at

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May 2024