High Court Remands Ocean Freight Refund Claim to Appellate

High Court Remands Ocean Freight Refund Claim to Appellate Authority to Allow Production of Legible Documents

Issue

Whether an appellate order setting aside an IGST refund on ocean freight due to illegible shipping documents can be quashed and remanded under Article 226 to grant the taxpayer an opportunity to produce legible records.

Facts

Refund Claim Filed: The petitioner filed an application seeking a refund under Section 54 of the CGST/WBGST Act for Integrated Goods and Services Tax (IGST) paid on ocean freight for imported goods.
Sanction by Initial Authority: The refund sanctioning authority verified the application and allowed the refund claim in favour of the petitioner.
Departmental Appeal: Aggrieved by the sanction order, the Department filed an appeal under Section 107 before the Appellate Authority.
Reversal by Appellate Authority: The Appellate Authority allowed the Department’s appeal and rejected the refund, observing that the sanctioning authority failed to verify whether the shipping line was foreign or Indian, and noting that the Bill of Lading produced by the taxpayer was illegible.
Writ Petition: The petitioner approached the High Court under Article 226, expressing full readiness to submit legible copies of the Bill of Lading and supporting documents to substantiate the refund claim on merits.

Decision

Denial of Fair Opportunity: The High Court observed that principles of natural justice required the petitioner to be afforded a fair opportunity to substantiate its claim on merits before an adverse order was finalized.
Remand for Re-Adjudication: The High Court set aside the impugned order and remanded the matter back to the Appellate Authority for fresh consideration [Paras 6, 7].
Opportunity to File Documents: The Appellate Authority was directed to reconsider the Department’s appeal after granting the petitioner an opportunity to file legible copies of the Bill of Lading along with any other supporting documents [Paras 6, 7].

Key Takeaways

Curing Technical Evidentiary Defects: A substantive tax refund claim should not be definitively rejected solely due to illegible documentary evidence without granting the taxpayer an opportunity to cure the defect.
Natural Justice in Appellate Proceedings: Appellate authorities must afford taxpayers a reasonable opportunity to produce legible records and supporting evidence before overturning a refund order previously sanctioned in their favour.
Pragmatic Exercise of Writ Jurisdiction: High Courts will intervene under Article 226 to set aside procedural rejections and restore matters for fresh adjudication on merits when clear evidentiary proof can be furnished.

HIGH COURT OF CALCUTTA

Indorama India (P.) Ltd.

State of West Bengal

Smita Das De, J.

WPA No. 18024 of 2024

MAY 22, 2026

Avra Mazumder, Ms. Alisha Das, Ms. Rupomita Ghosh and Debdut Banerjee for the Petitioner. Ms. Manasi Mukherjee, Bijitesh Mukherjee, Tanay Chakraborty and Saptok Sanyal for the Respondent.

ORDER

1. The petitioner challenges an order of the appellate authority dated April 26, 2024, passed under Section 107 of the Central Goods and Services Tax Act, 2017, by which the appellate authority rejected a refund sanction order dated February 24, 2023, passed under Section 64 of the Central Goods and Services Tax Act, 2017.

2. It appears that the petitioner submitted a refund application in the prescribed form GST-RED-01 dated December 28, 2022, for a refund of Rs. 72,31,368/- of Integrated Goods and Services Tax paid on the ocean freight component for imports between June 1, 2018 and June 30, 2018 following the judgment of the Hon’ble Supreme Court in the case of Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 92 GST 101/61 GSTL 257 (SC).

3. The refund sanctioning authority, by an order dated February 24, 2023, allowed the refund. The department, however, preferred an appeal under Section 107 of the Central Goods and Services Tax Act, 2017.

4. The essential ground on which the appeal was allowed is apparent from paragraph 5.4.4 of the order of the appellate authority. The said para 5.4.4. is quoted below:

” 5.4.4 However, agreeing with the review of the Reviewing Authority I find that RSA has neither made any analysis nor given any findings as to whether the Shipping Lanes involved in this case were Foreign Shipping Lines or Indian Shipping Lines. The respondent in their reply dated 16.10.2023 stated that in the instant case, foreign shipping line was engaged by the foreign supplier. And according to them to evident the said fact they enclosed bill of lading wherein in the details of the shipping line involved is clearly mentioned. But that enclosed bill is not legible at all to correlate and substantiate the claim of the respondent.”

5. Mr. Mazumder, learned advocate appearing for the petitioner, submits that the petitioner is prepared to produce a legible copy of the Bill of Lading before the appellate authority for consideration.

6. This court is of the view that, in the facts of the case, the petitioner should be provided with such an opportunity so that the case can be considered afresh on merits.

7. In view of the aforesaid, I direct the appellate authority to consider the case of the petitioner, giving an opportunity to produce a legible copy of the Bill of Lading and any other documents required for consideration by the appellate authority in deciding the appeal.

8. The appellate authority shall conclude the proceedings in terms of this order within one month from the date.

9. Accordingly, WPA 18024 of 2024 is disposed of.

10. Urgent Photostat certified copy of this order be supplied to the parties, if applied for, as early as possible.