• Dated 10^th November, 2026

A MAJOR RELIEF FOR EXPORTERS: GSTAT ALLOWS ITC REFUND DESPITE EXPORTS IN SUBSEQUENT PERIOD

BRIEF FACTS:

Assessee filed a refund claim of ₹44,76,900/- towards accumulated Input Tax Credit (ITC) in respect of zero-rated supplies made without payment of IGST under Bond/LUT for the period June 2020 to September 2020. The Adjudicating Authority sanctioned a refund of ₹44,14,988/- vide Refund Sanction Order dated 04.07.2022. However, the Department objected to the inclusion of three export invoices having an aggregate FOB value of ₹1,16,00,000/- in the zero-rated turnover for the relevant period, as the corresponding shipping bills were dated October 2020. The Department accordingly challenged the refund sanction before the Appellate Authority, which rejected the Department's appeal vide Order-in-Appeal dated 19.10.2023. Aggrieved by the same, the Department preferred an appeal before the GST Appellate Tribunal, Chandigarh.

ASSESSEE'S CONTENTION:

The Respondent defended the refund sanctioned by the Adjudicating Authority and the order passed by the Appellate Authority. The issue, as reflected in the Tribunal's findings, was that the three export invoices had been duly issued during the relevant refund period, i.e., June 2020 to September 2020, and the corresponding goods had subsequently been exported. Therefore, the value of such invoices was eligible for inclusion in the turnover of zero-rated supplies for the relevant period, notwithstanding the subsequent dates of the shipping bills.

DEPARTMENT'S CONTENTION:

The Department contended that three shipping bills bearing Nos. 5617635 dated 03.10.2020, 5625474 dated 04.10.2020 and 5595733 dated 02.10.2020, having an aggregate FOB value of ₹1,16,00,000/-, pertained to October 2020 and not to the relevant refund period of June 2020 to September 2020. Accordingly, the Department argued that the said amount should be excluded from the zero-rated turnover as well as the adjusted total turnover while computing the refund under Rule 89(4) of the CGST Rules, 2017. On such recalculation, the Department determined the maximum admissible refund at ₹25,74,907/- and alleged that an excess refund of ₹18,40,081/- had been erroneously sanctioned.

DECISION:

The GST Appellate Tribunal, Chandigarh, rejected the Department's contentions and held that the turnover of zero-rated supplies for the relevant period is required to be computed on the basis of export invoices issued during that period, irrespective of whether the actual export took place within the same period or subsequently. The Tribunal observed that in terms of Sections 12 and 31 of the CGST Act, 2017, the supply of goods involving movement takes place upon removal of goods, and the corresponding tax invoice is required to be issued before or at the time of such removal. Accordingly, where export invoices are issued during the relevant refund period for goods cleared under Bond/LUT, their value is includible in the zero-rated turnover under Rule 89(4) of the CGST Rules, 2017. However, the actual grant of refund remains subject to the exporter establishing that the goods have indeed been exported. Since there was no dispute regarding the issuance of invoices during the relevant period or the actual export of the goods, the Tribunal found no justification for denying the refund. The Tribunal accordingly rejected the Department's appeal and upheld the order passed by the Appellate Authority.

BTA's COMMENT:

This decision reiterates that for computation of refund of accumulated ITC under Rule 89(4) of the CGST Rules, 2017, the relevant period for determining zero-rated turnover is to be considered with reference to the date of issuance of export invoices rather than the subsequent date of the corresponding shipping bills. Therefore, where export invoices are issued during the relevant refund period and the actual export of goods is duly established, the value of such invoices cannot be excluded merely because the corresponding shipping bills are dated in a subsequent period. The Tribunal followed its earlier decision in Shruti Bansal v. Solitaire Pharmacia (P.) Ltd., (2026) 46 Centax 401 (Tri. – GST – Chan.)

Case Reference- Commissioner of CGST, Chandigarh v. Prabha Electronics Pvt. Ltd., APL/132/CHD/2026, decided on 28.10.2026, reported as (2026) 48 Centax 62 (Tri. – GST – Chan.)

Author- Madhurima Bose