Appellate Order Rejecting Export Tax Refund Quashed

Appellate Order Rejecting Export Tax Refund Quashed And Remanded For Being A Non-Speaking Order

Issue

Whether an appellate order upholding the rejection of a zero-rated export tax refund claim is legally sustainable under Section 107 read with Section 54 of the CGST/MGST Act, 2017 when the Appellate Authority fails to record specific findings, pass a reasoned speaking order, or address the detailed submissions of the taxpayer.

Facts

The Petitioner: The Petitioner is an Information Technology (IT) software services company that provided customized software services to a recipient located in the USA under a formal service agreement.
Refund Claim: The Petitioner treated these transactions as zero-rated supplies (export of services without payment of tax) and filed a refund claim for unutilized Input Tax Credit (ITC) using Form GST RFD-01 for the period from April 1, 2020, to March 31, 2021.
Rejection by Proper Officer: The Proper Officer initiated proceedings by issuing a Show Cause Notice (SCN) in Form GST RFD-08. Despite the Petitioner submitting a detailed reply in Form GST RFD-09, the officer rejected the refund claim via an order in Form GST RFD-06.
Appellate Proceedings: The Petitioner challenged the rejection by filing a statutory appeal under Section 107. The Appellate Authority issued an SCN, conducted a personal hearing, and subsequently passed an appellate order dated April 24, 2023, upholding the rejection.
Writ Challenge: The Petitioner approached the High Court through a writ petition, asserting that the Appellate Authority’s order was entirely non-speaking and completely failed to deal with or analyze their factual and legal submissions.

Decision

Absence of Specific Findings: The High Court examined the record and explicitly found that the Appellate Authority had failed to formulate or record any specific, clear findings to justify the rejection of the export refund.
Violation of Due Process: The Court held that the impugned order suffered from the fundamental legal vice of being a “non-speaking order,” which directly undermines judicial accountability.
Mandate for Reasoned Orders: Relying on a consistent body of settled law, the Court emphasized that appellate authorities are statutorily and constitutionally mandated to pass reasoned, detailed, and speaking orders that explicitly address the points raised by the appellant.
Outcome: The High Court quashed the invalid appellate order and remanded the entire matter back to the Appellate Authority for a de novo (fresh) consideration. The authority was directed to issue a well-reasoned speaking order after granting both parties a proper opportunity to be heard.

Key Takeaways

Appellate Orders Must Speak: An Appellate Authority cannot simply rubber-stamp a lower officer’s rejection. The final order must clearly articulate the “reasons for the decision” to survive judicial scrutiny.
Right to a Reasoned Counter: Taxpayers have a fundamental legal right to know exactly why their factual evidence and legal submissions (such as export contracts or proof of foreign inward remittance) are being accepted or rejected.
Non-Speaking Orders are Void: Any order passed by a quasi-judicial body that lacks logical reasoning, omits key grounds, or fails to address the core dispute is inherently unsustainable and liable to be quashed under writ jurisdiction.
Restoration via De Novo Remand: When an appellate authority abdicates its duty to write a comprehensive order, the High Court will typically reset the appellate clock, quash the defective order, and force the department to adjudicate the case properly.

HIGH COURT OF BOMBAY

Marathon Electric India (P.) Ltd.

Union of India^*

G. S. KULKARNI and Aarti Sathe, JJ.

WRIT PETITION NO. 15242 OF 2025

APRIL 16, 2026

Bharat Raichandani, Suraj Ghadigaonkar and Y. Sharma, Advs. for the Petitioner. Ms. Shruti Vyas, Addl. G.P. and Aditya Deolekar, AGP for the Respondent.

ORDER

1. This Petition under Article 226 of the Constitution of India has been filed praying for the following substantive reliefs:-

“a) that this Hon’ble Court be pleased to issue a Writof Certiorari or any other writ, order or directionunder Article 226 of the Constitution of Indiacalling for the records pertaining to the Petitioner’scase and after going into the validity and legality ofthe provisions set aside and quash the impugned order dated 24.04.2023 (Exhibit “A”), passed by the Respondent No. 3;

(b) that this Hon’ble Court be pleased to issue a Writof Certiorari or any other writ, order or directionunder Article 226 of the Constitution of Indiacalling for the records pertaining to the Petitioner’s case and after going into the validity and legality ofthe provisions hold that the petitioner is entitled tofull refund of Rs.54,31,283/- (IGST of Rs.12,79,563/-, CGST of Rs.20,75,860/- & SGST of Rs.20,75,860/-), filed vide RFD 01, for the period 1.04.2020 to 31.03.2021;

(c) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner and M/s.RBA, are independent contractors, engaged in business on principal-to-principal basis.

(d) that this Hon’ble Court be pleased to issue a Writof Certiorari or any other writ, order or directionunder Article 226 of the Constitution of Indiacalling for the records pertaining to the Petitioner’s case and after going into the validity and legality ofthe provisions hold that the petitioner is notproviding services as an “agent” of M/s. RBA;

(e) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of Indiacalling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the service rendered by petitioner satisfies the requirement of export of service and accordingly, the petitioner is eligible for refund amounting to Rs. Rs.54,31,283/- (IGST of Rs.12,79,563/-, CGST of Rs.20,75,860/- & SGST of Rs.20,75,860/-), and direct the Respondent No.3 & 4 to process the same along with interest under Section 56 of the CGST Act, 2017;

(f) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions hold that the petitioner is entitled to interest on delayed refund at the rate of 18%;

(g) that this Hon’ble Court be pleased to issue a Writ of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner’s case and after going into the validity and legality of the provisions direct the Respondent No. 3 to grant the interest on delayed refund as per Section 56 of the CGST Act, 2017;”

2. The facts lie in a very narrow compass:-

The Petitioner is inter alia engaged in business of providing information technology software services and had entered into a service agreement with M/s. Regal Beloit America Inc. (hereinafter referred to as “M/s. RBA”), a USA based company for supply of customized information technology services. It is the Petitioner’s contention that as all conditions of export of services had been fulfilled, the Petitioner had shown the supply as an export of services without payment of tax in its Goods and Services Tax (GST) returns.

ii.

On 4^th April 2022, the Petitioner filed a refund claim of Rs. 54,31,283/- in form GST-RFD-01 for the period April 2020 to March 2021. Thereafter, on 20 ^th May 2022, Respondent No. 4 issued a show-cause notice to the Petitioner in Form GST-RFD-08 and in response thereto, the Petitioner filed their reply dated 3^rd June 2022 in Form GST-RFD-09.

iii.

On 10^th October 2022, a personal hearing in respect of the aforesaid showcause notice was granted to the Petitioner, and on 7^th June 2022, Respondent No. 4 vide refund rejection/sanction order in Form GST-RFD-06 rejected the refund of Rs. 54,31,283/-.

iv.

Being aggrieved by the aforesaid rejection, the Petitioner filed an appeal before Respondent No. 3, and thereafter a show cause notice dated 15 ^th December 2022 was issued to the Petitioner by Respondent No. 3, to which the Petitioner responded by reply dated 16 ^th January 2023. A personal hearing was thereafter accorded to the Petitioner on 16^th February 2023, and an order dated 24^th April 2023 (hereinafter referred to as the impugned order) was passed by Respondent No. 3, rejecting the refund of Rs. 54,31,283/- for the period 1^st April 2020 to 31^st March 2021, thereby upholding the order dated 7^th June 2022 passed by Respondent No. 4.

3. It is in the backdrop of the above facts that the Petitioner, being aggrieved by the impugned order, has filed the present petition.

4. Learned counsel Mr. Bharat Raichandani, Mr. Suraj Ghadigaonkar, and Mr. Yashvardhan Sharma appeared for the Petitioner, and Ms. Shruti Vyas, Addl.G.P. and Mr. Aditya Deolkar AGP appeared for Respondent-State. We have perused the papers and proceedings with the assistance of the learned Counsel for the parties.

5. It is the contention of Mr. Raichandani, learned Counsel appearing for the Petitioner that the impugned order has been passed without dealing/adverting to the submissions made by the Petitioner at the time of personal hearing, as well as the contentions raised by the Petitioner in their reply dated 16^th January 2023. He has therefore submitted that the rejection of refund as claimed by the Petitioner has not been correctly made and the impugned order has been passed on a nonapplication of mind. He has therefore submitted that the impugned order needs to be set aside, and a fresh hearing needs to be accorded to the Petitioner wherein the Petitioner’s refund claim has to be adjudicated afresh. He has further submitted that this Court in a series of decisions, which were based on similar facts/circumstances and where impugned orders were passed without considering submissions made by the assessee(s), has remanded the matter back to the Appellate Authority for de novo consideration, referring particularly to the decision rendered by the co-ordinate Bench of this Court in the case of Sundyne Pumps and Compressors India (P.) Ltd. v. Union of India (Bombay). He has sought to place reliance on the following decisions rendered by this Court:-

i. Lubrizol

Advance Materials India (P.) Ltd. v. Union of India (Bombay)/(Writ Petition No. 987 of 2026)

ii. Vistex

Asia Pacific (P.) Ltd. v. Union of India106 GSTL 279 (Bombay)/(Writ Petition No. 4852 of 2022)

iii. V

Ships india (P.) Ltd. v. Union of India (Bombay)/(Writ Petition No. 1534 of 2025)

iv. Magna

Automotive India (P.) Ltd. v. Union of India [Writ Petition No. 6501 of 2024]

v. Sundyne

Pumps and Compressors India (P.) Ltd. v. Union of India (Bombay)/(Writ Petition No. 15228 of 2023)

6. Per contra, Ms. Vyas, learned Addl. G.P. for the State has opposed the reliefs as prayed for in the present Petition and submitted that the impugned order needs to be upheld as the same is a well reasoned and speaking order.

7. Having heard learned Counsel for the parties, and considering that a consistent view has been taken by this Court in the orders referred to by the learned Counsel for the Petitioner as enumerated above, we find substance in the contentions as urged on behalf of the Petitioner. We find that no specific finding has been recorded in the impugned order before rejecting the refund application as claimed by the Petitioner, and therefore a reasoned and speaking order is required to be passed by Respondent No. 3 prior to the rejection of refund. The impugned order therefore suffers from the vice of being a non speaking order vis-a-vis the rejection of refund claim of the Petitioner.

8. In light of the aforesaid discussion, we are inclined to pass the following order which will meet the ends of justice:-

ORDER

Impugned order dated 24^th April 2023 is quashed and set aside.

Proceedings stand remanded to Respondent No. 3 for de novo consideration to decide the refund claim of the Petitioner and for a fresh order to be passed in accordance with law and after hearing the parties. The Appellate Authority shall complete the determination within a period of three months from today.

All contentions of the parties are expressly kept open.

Petition stands disposed of in the aforesaid terms. No costs.