Delhi High Court Orders Reconsideration in Transformative Learning Solutions GST Refund Case
Court Remands Case to Adjudicating Authority for Fresh Evaluation of Foreign Inward Remittance Certificates
In a significant development, the Delhi High Court has set aside an order by the Additional Commissioner, Central Goods and Service Tax (CGST), Delhi East, which had rejected the refund claim of Transformative Learning Solutions Pvt. Ltd. The company, engaged in the export of Ayurvedic cosmetic goods, faced a substantial demand of Rs. 20.14 crore alongside equivalent interest and penalties due to alleged discrepancies in foreign remittance documentation.
The crux of the dispute revolved around the reconciliation of Foreign Inward Remittance Certificates (FIRCs) with invoices, which the CGST Department deemed unattainable due to their voluminous nature. The department argued that the lump-sum foreign remittances credited in Indian Rupees did not corroborate with the invoice-wise export details, prompting the rejection of the refund claims.
In response, Transformative Learning Solutions filed a petition challenging this rejection, asserting that the refund claims were supported by adequate documentation, including proofs of exports and receipts of export proceeds. The petitioner contended that these documents had been verified by the CGST Department during the audit period spanning 2017 to 2022.
Presiding over the case, Justices Prathiba M. Singh and Shail Jain observed that the reconciliation of FIRCs need not be transaction-specific. Instead, they affirmed that periodic reconciliation suffices, provided the total foreign exchange remitted aligns with the claimed benefits. The court emphasized that the rejection of the refund without due consideration of the supporting documents was untenable.
Consequently, the Delhi High Court remanded the matter for fresh adjudication. The court instructed the Adjudicating Authority to issue a new notice for a personal hearing to the petitioner, ensuring a thorough evaluation of the submissions and documents provided.
The decision underscores the judiciary's commitment to ensuring that tax proceedings are conducted with due diligence and fairness, particularly in cases involving complex international transactions. The fresh adjudication is expected to bring clarity to the refund entitlements of Transformative Learning Solutions, potentially impacting similar cases in the export sector.
Bottom Line:
GST - Foreign Inward Remittance Certificates (FIRCs) need not match transaction by transaction; can be considered on a periodic basis if the total foreign exchange remitted corresponds to the benefit claimed - Matter remanded for re-consideration by Adjudicating Authority.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Section 74(1), Section 50(3), Section 50(1), DSGST Act, 2017, IGST Act, 2017
