Madras High Court sets aside govt's IGST refund denial order for Lenovo
New Delhi, Nov 24, 2023
The case is related to a partial denial of refunding IGST paid by Lenovo (India) on these sales between December 2019 and February 2020
The Madras High Court has set aside the orders by tax authorities to deny refunding integrated goods and services tax (IGST) to Lenovo (India), arising from sales of goods and related services to units of a special economic zone (SEZ).
The case is related to a partial denial of refunding IGST paid by Lenovo (India) on these sales between December 2019 and February 2020.
The impugned orders of the assessing officer and the commissioner (appeal) reasoned that Lenovo’s application was filed with inordinate delay and was inappropriate, and it did not state that the goods and services were supplied for authorised operations. The orders also stated the supporting documents were not filed with the application but at the time of personal hearing, etc.
On the issue of delay, the court observed the GST authorities relied on a particular provision of the SEZ rules that gave 45 days to obtain endorsement from the assessing officer from the date of the invoice despite the fact that the company supplied the goods on payment of IGST in accordance with the provisions of the IGST Act.
The court said had the company supplied the goods without paying IGST, the time would be counted in terms of the SEZ rules. But since Lenovo paid IGST, “refund cannot be denied for any reason whatsoever”.
The court observed that the delay in filing documents such as proof of export in full to the SEZ was due to the authorised officer’s fault and not the company’s.
Regarding inappropriate filing, the court said if the authorities thought the company had filed the application with deficiencies, it ought to have issued a memo pointing them out.
Instead, the authorities accepted the company’s application and issued acknowledgment, indicating that they had no deficiencies. The authorities issued show-cause notice to the company only later, the court said.
The court highlighted the requirement of proof that the goods were meant for authorised operations was made prospectively under the IGST rule from October 1, 2023, and since the company undertook the supply before the date, the authorities could not insist on this requirement.
On the point that supportive documents were not given at the time of filing the application, the court dismissed the authorities’ claim that the limitation period for filing an application would be reckoned only when all relevant documents were received in full at the time of application.
Sandeep Sehgal, partner at AKM Global, a tax and consulting firm, said there was enough in jurisprudence showing procedural lapses could not lead to larger benefits being denied.
“The judgment of the court is on similar lines that merely delay in endorsement from the authorised officer leading to no revenue loss or technical irregularity like insufficient endorsement on the documents cannot lead to denial of refund.”
IN A NUTSHELL
- The case is related to a partial denial of refund of IGST paid by Lenovo (India) between December 2019 and February 2020
- Lenovo's application did not state that the goods and services were supplied for authorised operations
- The court observed that delay in filing documents is due to the authorised officer's fault and not the company’s
- Court added that refund cannot be denied for any reason since Lenovo paid IGST
- The court also dismissed the authorities claim thatthe limitation period for filing an application would be reckoned only when all relevant documents are received in full at the time of application
[The Business Standard]
