IGST Refund Allowed Despite PAN Mismatch in Shipping Bill and GST Returns Due to Technical Glitch

Issue: Whether an exporter is entitled to an IGST refund when the refund is denied due to a technical glitch in the ICEGATE system, which failed to reflect a correction in the shipping bill despite an amendment made under Section 149 of the Customs Act.

Facts:

The petitioner, a manufacturer and exporter, applied for an IGST refund, which was denied due to a PAN mismatch between the shipping bill and GST returns.
The mismatch occurred because the petitioner’s Custom House Agent (CHA) mistakenly used GST details of a defunct firm.
The petitioner amended the shipping bill under Section 149 of the Customs Act, but the correction was not reflected in the ICEGATE system, preventing automatic refund processing.
Despite multiple attempts to resolve the issue, the refund remained blocked due to a technical limitation in ICEGATE.

Decision:

The court acknowledged that the refund was denied due to a technical glitch in the ICEGATE system.
The court directed the respondent authorities to update the system to reflect the amendment made by the petitioner in the shipping bill.
The court further directed the authorities to sanction the IGST refund within a specified time.

Key Takeaways:

This case highlights the challenges faced by taxpayers due to technical glitches in government systems and the importance of rectifying such errors to ensure fair and efficient tax administration.
The court’s decision emphasizes that taxpayers should not be denied legitimate refunds due to technical limitations or errors in government systems.
The ruling underscores the responsibility of authorities to ensure that their systems are updated and functioning correctly to avoid unnecessary delays and complications for taxpayers.

HIGH COURT OF GUJARAT

Tulip Turnomatic

Commissioner of Customs

BHARGAV D. KARIA and D.N. Ray, JJ.

R/SPECIAL CIVIL APPLICATION NO. 21663 of 2023

DECEMBER 20, 2024

Hiren J Trivedi for the Petitioner. PY Divyeshvar for the Respondent.

JUDGMENT

Bhargav D. Karia, J. – Heard Mr. H.J. Trivedi, learned advocate for the petitioner and Mr. P.Y. Divyeshvar, learned advocate for the respondents.

2. Rule returnable forthwith. Learned advocate Mr. P.Y. Divyeshvar waives service of notice of Rule for the respondents.

3. Having heard learned advocates for the respective parties and considering the controversy arising in this petition which is in narrow compass, with the consent of the learned advocates for both the sides, the matter is taken up for hearing.

4. The petitioner is a partnership firm engaged in the business of manufacture and export of wide range of Brass Parts and ferrous and non-ferrous components and is duly registered under the provisions of the Central/State Goods and Service Tax Act, 2017 (For short “The G.S.T.Act”). The petitioner is also having the Import-Export Code under the relevant provisions of the Foreign Trade Policy for the export of the goods.

5. It is the case of the petitioner that during February-2023, the petitioner has exported certain goods being zero rated supply under Section 16 of the Integrated Goods and Service Tax Act, 2017 (for short ‘the IGST’) having total invoice value of Rs.1,15,21,802/- and the taxable value of the such export was Rs.97,64,239/-including IGST amount of Rs.17,57,563/- by shipping bill no.8106393, dtd.27^th February, 2023. The petitioner therefore was entitled to the refund as per the provision of Section 16 (3) (b) of the IGST Act. The petitioner also filed Export General Manifest (EGM) corresponding to the shipping bill on 30^th March, 2023, which is also updated on the website of the Customs Department i.e. ICEGATE. The petitioner waited for the refund of the amount of IGST. In view of the provision of Rule 96 of the Central Goods and Service Tax Act,2017 (CGST Rule), the shipping bill filed by the exporter of the goods shall be deemed to be an application for refund for the IGST paid on the goods exported by the petitioner. However no such refund was paid to the petitioner, in-spite of the fact that the petitioner filed valid return in Form GSRT-3B and corresponding Form GSTR-1 disclosing such transaction of export for the month of February, 2023 on 7.3.2023 and 21.03.2023 respectively.

6. As the petitioner did not get the credit of the refund after filing Form GSTR-3B, inquiry was made about the status of refund by logging in ICEGATE portal to find out why the refund was not credited in the account of the petitioner. The petitioner came to know that the refund was not credited as there was an error shown as ‘SB003’.

7. The petitioner therefore made further inquiry and found out that while filing shipping bill, the Custom House Agent (CHA) inadvertently filed the SB mentioning the details i.e. IEC code and the GST registration number of M/s.Tulip Turnomatic, which was a partnership firm and which was closed by selling all the assets to the petitioner-firm. The petitioner therefore realizing such mistake took corrective steps and filed the application for amendment in shipping bill on 01.04.2023, which was allowed under Section 149 of the Customs Act by order dated 21^st April, 2023 by approving the following changes.

From	To
Exporter : Tulip Turnomatic	Exporter : Tulip Turnomatic
IEC No. : 2411011440	IEC No. : AANFT6244N
BRANCE SR.NO. : 0	BRANCE SR.NO. : 0
GSTIN :24AMLPP5571E1ZW	GSTIN :24AANFT6244N1ZL
BANL AD CODE : 6360162	BANL AD CODE : 6360162
Bank A/c No.91202000544025	Bank A/c No.918020040865892

8. The petitioner-firm therefore made a representation on 19^th May, 2023 to the respondent no.1 – the Commissioner of Customs, Mundra to sanction the refund since the shipping bill has been appropriately amended. The petitioner also quoted the circular No.15/2018 – Customs, dated 06.06.2018 to sanction the refund. On further inquiry, the petitioner came to know that the refund is not being sanctioned because there is difference in the PAN of the entities mentioned in the shipping bill and PAN mentioned in GST return even after amendment of the shipping bill. The petitioner therefore raised a query on the GST help-desk portal vide e-mail dated 12.06.2023, which was disposed of by e-mail dated 20.06.2023 asking the petitioner-firm to approach port of export or ICEGATE help-desk for further assistance. The petitioner-firm therefore approached the ICEGATE help-desk by e-mail dated 02.07.2023. The petitioner was again asked to approach GSTN help-desk to resolve the issue.

9. The petitioner therefore raised another grievance on CPGRAM portal directing the same to CBIC ICEGATE section on 21.09.2023. However, it was informed to the petitioner that the query was resolved on 11.10.2023 and the petitioner-firm was again directed to approach the GSTN help-desk for further assistance. The petitioner thereafter raised another query on 7.11.2023, which was resolved by stating that the concerned authority of the port has reported that shipping bill 8106393, dated 27.02.2023 and GST Number of exporter are on different PAN and therefore, the error cannot be rectified from the office of the Customs, Mundra.

10. The petitioner was therefore advised to make necessary adjustment in Form GSTR-1 by using the amendment table i.e. Form 9A.

11. Being aggrieved, the petitioner has preferred this petition with the following prayers.

“22.(A) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other writ, orders or directions to the respondent authorities to immediately sanction the refund of IGST paid in regard to the goods exported i.e. ‘Zero Rated Supplies’ made vide shipping mentioned hereinabove;

(B) YOUR LORDSHIPS maybe pleased to direct the respondent authorities to pay interest @9% to the petitioner herein on the amount of refund from the date of shipping bill till the date on which the amount of refund is paid to the petitioner herein, as the same is arbitrarily and illegally withheld by the respondent authorities;

(C) Your Lordships may be pleased to grant an ex-parte, ad interim order in favour of the petitioner herein in terms of prayer clause ‘A’ and ‘B’ hereinabove;

(D) Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your Petitioners shall forever pray.”

12. Mr.H.J.Trivedi, learned advocate for the petitioner submitted that the petitioner is entitled to the refund under Section 54 of the GST Act read with Section 16 of the GST Act immediately after the goods are exported considering the shipping bills as the application for the refund of the IGST paid regarding the exported goods. It was submitted that as the shipping bill was rectified by showing the correct IEC number by the custom authorities by passing an order under Section 149 of the Customs Act, 1962, the respondent authority – GST Authority is required to sanction the refund.

13. It was further submitted that the resolution offered by the Central Board of Indirect Taxes and Customs (CBIC) is thoroughly misconceived as through Table 9A of Form GSTR – 1, the petitioner firm cannot rectify the PAN number in Form GSTR -1, which is already filed as the shipping bill and GST number are having different PAN. It was submitted that the petitioner-firm had made export of goods after payment of IGST and accordingly, the petitioner-firm is entitled to the refund to be sanctioned by the respondent authorities.

14. It was further submitted that the petitioner has complied with Rule 96 of the CGST Rules for getting the refund and also has rectified the mistake by amending the shipping bill realizing that IC Code and GST number of old firm was mentioned in the shipping bill.

15. It was submitted that merely because there is a difference in PAN in shipping bill and the GSTR-1, the petitioner-firm cannot be denied the refund.

16. On the other hand, learned advocate Mr.P.Y.Divyeshvar for the respondent submitted that though the petitioner-firm is entitled to the refund claim, in view of the provision of Section 16(3) of IGST Act read with Section of 54 of the GST Act, the entire process of the refund claim is an automatic process as the shipping bill uploaded on EDI System of customs has an inbuilt mechanism to automatically grant refund after validating the shipping bill data available in ICES against the GST returns data transmitted by GSTN. It was therefore submitted that if the necessary matching is successful, ICES shall process the claim 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 bank account of the petitioner registered with the Customs Authorities.

17. It was submitted that in the facts of the case, the shipping bill status and EDI ICES system is showing as “PAN OF GSTN ID AND SB’S GST ID IS NOT MATCHING.” It was therefore submitted that in view of such mismatch of PAN of GSTN ID and shipping bill GST ID, it is not possible to sanction the refund by the computer system.

18. Considering the above submissions, it appears that the petitioner is the victim of computer software. It appears that there is no system to give effect of amendment of the shipping bill in the ICEGATE so as to remove the mismatch between the PAN of GST and ID and Shipping Bills GST ID. The order passed by the respondent no.1 on 21.04.2023 under Section 149 of the Customs Act, 1962 by approving the amendment of shipping bill no.8106393 by modifying the IEC Code and GSTIN ought to have been amended in the ICEGATE. However, there is no mechanism to give effect to the order dated 21.04.2023 by the computer software and as such, the order dated 21.04.2023 has remained on paper only without being reflected in the ICEGATE system and because of such technical glitch, the petitioner is not granted the refund of the IGST paid by the petitioner under Section 16(3) (b) of the IGST Act read with Section 54 of the GST Act.

19. In order to resolve the issue, we therefore direct the respondents authorities to make suitable amendment to give effect of the order dated 21.04.2023 of amendment of the shipping bill no.8106393, dtd.27.02.2023 in the computer system so as to sanction the refund of IGST paid by the petitioner on export of the goods made in the year 2023. Such exercise shall be completed within 8 (eight) weeks from the date of receipt of the copy of this order.

20. With the aforesaid directions, the petition is disposed of. Rule is made absolute to the aforesaid extent. No order as to costs. Direct service is permitted.