Apathy Of GSTN To Address Limitations Of System-Driven Processes: Gujarat High Court Recommends Portal To Introduce 'May I Help You' Feature

The bench of Justices Sonia Gokani and Mauna M. Bhatt therefore suggested the portal to consider introducing a 'May I Help You' feature to enable a direct communication between GSTN and assessee.

The Court was dealing with the case of the petitioner, whose refund claim of IGST could not be processed by the Indian Customs EDI System because of some shortcoming in the software.

The Court, while pointing out that there must be constant vigil on the part of the GSTN to rectify the mismatch or the shortcomings in software, recommended the revenue department that there must be a direct communication of the assessee with the GSTN, on the portal of the Department of Administrative Reforms and Public Grievances (DARPG) itself.

The bench opined that this would lessen the work of the Court, since in such cases there is nothing for the Court to adjudicate upon, except to point out the limitations of the software of the revenue department.

After the petitioner- Aartos International LLP, failed to receive refund of IGST paid by it on export of certain goods, it approached the revenue department through the portal of Department of Administrative Reforms and Public Grievances, i.e., the Central Public Grievance Redress and Monitoring System. After the revenue authorities failed to issue the refund, the petitioner filed a petition before the Gujarat High Court.

The petitioner submitted before the Gujarat High Court that in view of Section 16 of the IGST Act, Section 54 of the CGST Act, and Rule 96 of the CGST Rules, an order must be passed by the Deputy Commissioner (Customs) sanctioning 90% of the amount claimed by the petitioner in Form RFD-04, within a period of 7 days. The petitioner argued that the revenue authority had failed to issue the said order.

The Court noted that refund of IGST is automatically granted through an in-built mechanism, after validating and matching the shipping bill data available in the Indian Customs EDI System against the GST returns data transmitted by the Goods and Service Tax network (GSTN). It observed that once the said matching is successful, the Indian Customs EDI System shall process the refund claim. Subsequently, the relevant amount of IGST paid with respect to each shipping bill/ bill of export is electronically credited to the asssessee's Bank account registered with the customs authority, in accordance with Rule 96 of the CGST Rules, 2017.

The revenue department argued that the refund claim of the assessee with respect to the relevant export invoice was not successfully processed by the System because the assessee, who was formerly known as Azuvi International LLP, had changed its name to Aartos International LLP from 08.04.2019.

Dismissing the contention of the revenue, the bench reckoned that the name updation of the petitioner was intimated to the relevant Bank as well as to the relevant government departments, i.e., GST, Income Tax and the Customs department, and the Registrar of Companies (ROC).

Referring to Section 54(6) of the CGST Act read with Section 91(2) of the CGST Rules, the bench concluded that the refund claim of the petitioner being the IGST paid on export, is required to be refunded and it is the obligation of the Customs Authority to pass an order sanctioning 90% of the amount claimed in Form RFD-04, within a period of 7 days from the date of acknowledgment received by the assessee.

Further, the Court observed that there are no separate applications for seeking refund of IGST and that as per Section 96 of CGST rules, the shipping bills are deemed to be refund applications when the goods are exported with payment of tax.

While taking into account that refund of IGST is automatically processed and granted through an in-built mechanism, the Court reckoned that there was a short coming in the software, because of which the refund claim of the petitioner could not be processed.

The Court, while favouring the automatic grant of refund which is system driven over the officer driven process, opined that it is good to be driven through the machines in this electronic age. However, the bench ruled that unless there is a constant vigil on the part of the GSTN to rectify the mismatch or the short comings in software, the issues are bound to multiply in the future.

The Court remarked that there is an apathy at the level of the GSTN to address and rectify the limitations that come with making all the processes system driven.

Thus, the High Court recommended that there must be a direct communication of the assessee with the GSTN, on the portal of Department of Administrative Reforms and Public Grievances itself, which could be response based.

"Therefore, instead of the individual department pleading through their senior through the GSTN, the Assessee of those consultants and others could communicate with the GSTN on portal if a feature like "MAY I HELP YOU" is created by the authority on due deliberation or through the "Grievance Reddressal Mechanism". Essentially, this is for the purpose of lessening the Court work also as per such details the Assessees are not to be dragged to the Court when in fact there is nothing for the Court to adjudicate except pointing out to the limitation of the software of the respondent department," the Court said.

The Court thus allowed the petition, directing the revenue department to refund IGST to the petitioner along with interest.

Case Title: Aartos International LLP versus Deputy Commissioner (Customs)

Citation: 2022 LiveLaw (Guj) 409

Counsel for the Petitioner: Mr. Hardik V Vora

Counsel for the Respondent: Mr. Nikunt K Raval