Rejection of IGST Export Refund Solely Based on Struck-Down Circular Is Unsustainable in Law

By | September 17, 2026
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Rejection of IGST Export Refund Solely Based on Struck-Down Circular Is Unsustainable in Law
Issue
Whether an order rejecting a claim for refund of IGST on zero-rated export supplies, based exclusively on Board Circular No. 37/2018 on the ground of claiming a higher rate of duty drawback, is legally sustainable when the underlying circular itself has been declared invalid and inconsistent with the statutory framework.
Facts
  • The petitioner (exporter) made zero-rated export supplies and filed an application for refund of Integrated Goods and Services Tax (IGST) paid on such exports.
  • The third respondent (tax authority) rejected the petitioner’s refund claim exclusively by invoking Board Circular No. 37/2018 dated 09.10.2018.
  • The sole ground for rejection under the circular was that the exporter had availed higher rate duty drawback.
  • Aggrieved by the rejection, the petitioner invoked writ jurisdiction challenging the rejection order and pointed out that Circular No. 37/2018 had already been struck down as invalid by judicial precedent.
Decision
  • The High Court/Court noted that Circular No. 37/2018 dated 09.10.2018 was struck down for being inconsistent with statutory provisions under Section 16 of the IGST Act and Rule 96 of the CGST Rules.
  • A rejection founded solely on an invalid Board circular, without examining the claim under the governing statutory provisions and refund rules, cannot be sustained in law.
  • The impugned rejection order/proceedings were set aside, and the matter was remanded back to the authority for re-adjudication in accordance with statutory provisions.
Key Takeaways
  • Invalidation of Circular No. 37/2018: IGST export refund claims cannot be denied merely because higher-rate duty drawback was claimed, as the circular mandating such automatic rejection has been struck down.
  • Statutory Rules Override Circulars: Revenue authorities must evaluate refund applications strictly under Section 16 of the IGST Act, Section 20 of the IGST Act, and Rule 96 of the CGST Rules rather than relying mechanically on executive administrative circulars.
  • Effect of Remand: Where an order is passed solely on a legally invalid circular, the proceedings are liable to be set aside and remanded for fresh adjudication on merits.
HIGH COURT OF MADRAS
Fives Call – KCP Ltd.
v.
Chief Commissioner of Customs
Hemant Chandangoudar, J.
W.P. No. 30288 of 2023
JUNE  29, 2026
K.K. Sekar for the Petitioner. Rajnish Pathiyil, Senior Panel Counsel and Ms. S. Lydia Steffi for the Respondent.
ORDER
1. The present writ petition has been filed challenging the proceedings dated 09.09.2022 issued by the third respondent, whereby the petitioner’s claim for refund of Integrated Goods and Services Tax (IGST) was rejected on the ground that the petitioner had claimed the higher rate of duty drawback by relying upon Circular No.37/2018 dated 09.10.2018. The relevant portion of the impugned order reads as follows:
“It is seen that the Exporter has suffixed ‘A’ to the Drawback Scheme Code in the Shipping Bills (Sl. Nos.1 to 14), which indicates that the Exporter intended to avail the higher rate of drawback. In this connection, it is submitted that the IGST refund is processed only through the computerized module with inbuilt validations. If the higher rate of drawback has been availed in any Shipping Bill, the system does not permit processing of the IGST refund.
In view of the above, it is submitted that the exporter is not eligible for IGST refund as the higher rate of drawback has been claimed, in terms of Board’s Circular No.37/2018 dated 09.10.2018.”
2. Learned counsel for the petitioner submitted that Circular No.37/2018 dated 09.10.2018 has been declared invalid by the Gujarat High Court in Amit Cotton Industries v. Principal Commissioner of Customs  75 GST 33/29 GSTL 200 (Gujarat). It was further submitted that the said judgment has been followed by this Court in Ashley Alteams India Ltd. v. Asstt. Commissioner (CHN IV) [W.P. No.14847 of 2023, dated 24-3-2026] and also by the Division Bench of this Court in Precot Meridian Ltd. v. Commissioner of Customs, Tuticorin  82 GST 719/34 GSTL 27 (Madras)/2020 (1) TMI 90 .
3. The Circular was struck down on the ground that it was inconsistent with the statutory provisions and the Rules governing grant of IGST refund. Therefore, learned counsel submitted that the present writ petition is also liable to be allowed in terms of the aforesaid decisions.
4. Having considered the submissions and in view of the law laid down in the above decisions, this writ petition deserves to be allowed.
5. Accordingly, the impugned proceedings dated 09.09.2022 are set aside. The third respondent is directed to reconsider the petitioner’s claim for refund of IGST afresh, in accordance with law, keeping in view the judgments referred to above and the relevant statutory provisions and Rules, after affording the petitioner a reasonable opportunity of hearing. Such exercise shall be completed within a period of four (4) weeks from the date of receipt of a copy of this order.
6. The writ petition is allowed in the above terms. There shall be no order as to costs.