The Gujarat High Court, in this case of Ruhi Siraj Makda v. Union of India, R/Special Civil Application No. 2507 of 2023, decided on 14.08.2025, directed the Customs authorities to sanction the Petitioner’s IGST refund with interest, holding that a mere technical mismatch in GST returns could not defeat the exporter’s statutory entitlement.
FACTS
Ruhi Siraj Makda (herein referred to as “the Petitioner”), operating under the name Aries Impex, is an exporter who regularly ships goods outside India. As exports are treated as zero-rated supplies under the Goods and Services Tax (hereinafter referred to as “GST”) regime, she was entitled to claim a refund of the Integrated Goods and Services Tax (hereinafter referred to as “IGST”) paid on those exports. In the normal process, when exports happen and the tax is paid, the customs system automatically processes the refund. It does this based on the information in the exporter’s GST returns and the related shipping documents.
In this case, although the Petitioner had indeed paid the IGST and produced all supporting records, such as invoices, shipping bills, and proof of actual export, there was a minor clerical mistake while filing her GST returns. Because of this error, the details in the GST return did not perfectly match the data in the Customs System. As a result, when the customs authorities generated the electronic refund statement, it showed “nil” refund as payable. On this basis, the authorities refused to release the amount.
The Petitioner made several representations explaining that the mistake was purely typographical and provided certificates from her accountant as well as tax payment receipts to demonstrate that the Government had, in fact, received the IGST. However, the authorities insisted that the system mismatch stopped them from issuing the refund.
Aggrieved by this, the Petitioner filed a writ petition before the Hon’ble High Court of Gujarat.
ISSUE BEFORE THE COURT
- Whether the Customs Authorities were justified in withholding the refund of IGST on exports merely because of a clerical error in the GST returns that caused a mismatch with the Customs System.
- Whether a minor technical mistake in return filing can override the exporter’s substantive right to receive a refund when actual export of goods and payment of IGST are undisputed and supported by documentary evidence.
- Whether, in such situations, the principle of substantive compliance should prevail over strict adherence to technical requirements of the electronic system.
- Whether the petitioner was entitled to statutory interest on the delayed refund from the date it became due until the date of payment.
CONTENTIONS OF THE PARTIES
The Petitioner contended that she had fully complied with the substantive requirements of law. Goods were exported, IGST was paid, and the government had received the tax. To prove this the Petitioner placed on record export invoices, shipping bills, bills of lading, GST challans and a certificate from her chartered accountant confirming tax payment. According to the Petitioner, the only reason the refund was not processed was because of a clerical mistake in her GST return which caused the customs system to display a nil refund. The Petitioner argued that such a typographical error cannot take away her statutory entitlement.
The Petitioner emphasised that the principle of zero-rating in the IGST law ensures that exports are not burdened with tax and the right to claim refund is an essential part of that scheme. The Petitioner therefore sought directions to release the refund immediately along with statutory interest from the date it became due.
On the contrary, the Union of India and customs authorities (hereinafter referred to as “the Respondents”) argued that the refund mechanism is an automated one, which functions on the basis of data shared between the GST portal and the Indian Customs Electronic Commerce/Electronic Data Interchange Gateway system. In their view, if the details furnished by the exporter in the GST returns do not match the customs records, the system cannot generate a valid refund scroll.
The Respondents submitted that the insistence on matching data is not a mere formality but a safeguard against fraudulent or erroneous refunds. According to them, public revenue cannot be disbursed unless the electronic reconciliation confirms eligibility.
The Respondents suggested that the Petitioner should have pursued rectification through departmental procedures instead of seeking a writ remedy.
Thus, while the Petitioner asked the court to focus on the substance of the case, the Respondents argued for a strict following of procedural rules to keep the refund system intact.
DECISION AND FINDINGS
The Hon’ble Court noted that the Petitioner had made a mistake in filing GSTR-1 by listing the IGST amount as zero. However, it was not disputed that goods were exported and that IGST of Rs. 9,48,549 had been paid. It recorded that foreign exchange had been realised, shipping bills were duly processed, and all substantive conditions under Rule 96 of the Central Goods and Services Tax (CGST) Rules (hereinafter referred to as “CGST Rules”) 2017, stood satisfied.
The judges emphasised that the refund of IGST paid on exports is a statutory entitlement under Section 16 of the IGST Act, read with Rule 96 of the GST Rules. Such a refund can be withheld only in the limited circumstances set out in Rule 96(4), namely when the jurisdictional Commissioner requests withholding under Section 54(10) or Section 54(11) of the CGST Act, or when the customs authorities determine that goods were exported in violation of the Customs Act. Since neither situation applied in this case, the Court held that the refund could not be denied simply because of a mismatch between GST return data and customs records.
The bench placed strong reliance on its earlier ruling in Amit Cotton Industries v. Principal Commissioner of Customs, Special Civil Application No. 20126 of 2018, where it was held that once export and payment of IGST are established, a refund cannot be refused on procedural or technical grounds. It reiterated that government circulars or system limitations cannot override statutory provisions. To reinforce this principle, the Court cited the Supreme Court in Commissioner of CCE v. Ratan Melting & Wire Industries (2008) 13 SCC 1, which declared that departmental circulars are binding on authorities but cannot prevail over statutory law or judicial precedent. It also referred to J.K. Lakshmi Cement Ltd. v. Commercial Tax Officer (2018) 14 GSTL 497 (SC), where it was clarified that the circulars may be used to guide the tax administrations but cannot restrict rights conferred by statute.
Further, the Court emphasised that the legal fiction created by Rule 96 itself treats the shipment bill as an application for refund. Once payment of export and IGST was demonstrated through duly signed invoices, challans, and a Chartered Accountant certificate, generating a “nil refund” transaction through a system cannot be held to bar the claim. The authorities, it observed, were duty-bound to examine the representations made rather than rely mechanically on mismatched electronic data.
Based on the findings, the Court ruled that the respondents acted unfairly by not approving the refund. It ordered them to promptly release the IGST refund and interest from the date of the shipping bills until the actual payment date at the statutory rate. Hence, the petition was allowed, reiterating that substantive compliance on the basis of proof of payment of tax will always prevail over poor return filing.
AMLEGALS REMARKS
This case reinforces the judiciary’s ongoing commitment to prioritizing substance over form in tax law administration. The Court made it clear that exporters should not lose their valid refunds due to minor clerical mistakes when the exports and tax payments are fully documented. It emphasized that actual legal rights under the IGST Act cannot be undermined by technical errors, government circulars, or issues with automated systems. This decision strikes a balance between being cautious in administration and ensuring fairness for taxpayers by protecting legitimate exporters and maintaining the integrity of the tax system.
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