GST Refund Cannot Be Denied Merely Because Export Remittance Was
Received In A Different Branch's Bank Account
Case
Overview
The Delhi High Court, in
a landmark ruling, allowed a writ petition filed by Cable and Wireless
Global India Pvt. Ltd., challenging the denial of ₹11.45 crores in
refund of unutilized Input Tax Credit (ITC) under GST. The refund was
rejected by the authorities on the technical ground that the export
remittances were credited to a bank account maintained by the company's Bangalore
branch, while the export services were provided from its Delhi
registered branch.
Rejecting this contention
as “overly technical and unsustainable,” the Court held that the receipt
of export proceeds in a different bank account does not invalidate the refund
claim when the supply and the exporter’s registration are otherwise compliant
with the law.
Parties to the Case
- Petitioner:
Cable and Wireless Global India Private Limited
- Respondents:
- Joint Commissioner of Central Tax
Appeals-II
- Assistant Commissioner, CGST
- Union of India
- W.P.(C):
3432/2025
- Date of Judgment:
19 March 2025
Summary of
the Dispute
Cable and Wireless, a
multinational telecom service provider, had applied for a refund of
unutilized ITC under Section 54 of the CGST Act for FY 2022–23 and Q1 of
FY 2023–24, amounting to ₹11.45 crores. The refund was rejected by the
department on the ground that:
- The export remittances were
received in a bank account located in Bangalore, while the supply
of services was from Delhi, the place of registration of the business
unit.
The petitioner argued
that:
- The location of bank account
where foreign currency is received is irrelevant to determining the
place of supply or export eligibility under GST law.
- The bank account was already
updated in the GST registration by way of core amendment prior
to refund filing.
- The refund was denied purely on technical
grounds, though the genuineness of exports was never in dispute.
Legal
Issues Involved
1. Whether
the receipt of export proceeds in a bank account other than the one
registered at the location of the exporter invalidates the export of
services under GST?
2. Whether
such a technical ground can be a basis for denial of refund of
unutilized ITC?
3. Interpretation
of:
o Section
2(6)
of the IGST Act – Definition of "Export of Services"
o Section
2(15) of the IGST Act – "Location of Supplier of
Services"
o Section
2(71) of the CGST Act – Similar definition in the Central
legislation
o Section
54 – Refund of unutilized ITC on exports
Petitioner’s
Submissions
Represented by Ms.
Fereshte D. Sethna and team, the petitioner submitted:
- The export services were rendered
from its Delhi registered place of business.
- The remittances were made by its
overseas customer (VGSL) into its Bangalore bank account, which
had already been mapped in the GST portal.
- The remittance was towards
services rendered from Delhi, and the customer and transaction
trail clearly linked the payment to the Delhi unit.
- The petitioner relied on an earlier
decision rendered in its own case (2024:DHC:7599-DB) where the Court had
addressed this very issue and ruled in its favor.
- It was contended that Section
2(6)(iv) of IGST Act only requires payment to be received by the supplier,
not in any particular bank account.
Respondents’
Submissions
Represented by Standing
Counsel Mr. Shubham Tyagi, the respondents opposed the petition on procedural
grounds:
- Argued that export remittance not
being received in the Delhi unit’s bank account created a mismatch,
justifying the denial of refund.
- Relied on registration and compliance
framework under the CGST and IGST Acts, where establishments in
different states are distinct persons.
- Asserted that compliance with
procedural formalities is essential to avail benefits like refunds.
However, they did not
dispute the fact that:
- The services were indeed exported.
- The payment was received from the
foreign client.
- The Delhi unit had rendered the
services in question.
Findings of
the Court
The Division Bench ruled
entirely in favor of the petitioner, delivering several key findings:
1. Genuineness of Export
Not Disputed
- The Court observed that the fact
of export of services was not doubted or challenged by the
department.
2. Bank Account Location
is Irrelevant
- The only objection raised by
the department was that the foreign currency was received in a bank
account located at Bangalore.
- The Court held this as an "overly
technical and unsustainable" objection.
“Merely because the
remittance was received in a bank account situated at Bangalore, the same would
neither warrant the location of the supplier being altered nor impact the
determination of the actual supplier of service.”
3. GST Law Recognizes
Supplier by Place of Registration
- The Court analyzed Section 2(15)
of IGST Act and Section 2(71) of CGST Act, which define the "location
of supplier of service".
- It emphasized that the registered
place of business (Delhi) from which supply was made, governs the
identity of the supplier, not the bank location.
4. Statute Does Not
Mandate Specific Bank
- Section 2(6)(iv) of IGST Act,
which defines export of services, does not mandate receipt into a
particular bank account.
- It only requires that payment be
received by the supplier, which was satisfied in this case.
5. Earlier Ruling Binding
and Applicable
- The Court noted that in the
petitioner’s earlier case in 2024, it had already ruled on this precise
issue and found in favor of the petitioner.
Judgment
and Relief Granted
The Court concluded that
the rejection of refund solely on the basis of the bank account
location was legally unsustainable.
Accordingly, it ordered:
1. Quashing
of the impugned order dated 31 December 2024, which had
rejected the refund claim.
2. Directed
that the refund application be reconsidered afresh by the authorities in
light of this judgment.
3. Ordered
that the claim for statutory interest on the refund amount should also
be considered while processing the matter.
Conclusion
This judgment sets an
important precedent in GST jurisprudence by reiterating that:
- Substance should prevail over form,
especially in matters of refund of accumulated ITC.
- Technical lapses,
like receipt of export proceeds in a bank account of another branch of the
same legal entity, cannot defeat a legitimate refund claim.
- Authorities must interpret refund
provisions liberally, in consonance with the objective of promoting
exports.
The ruling reinforces
judicial resistance to hyper-technical denial of statutory tax benefits
and provides clarity for multi-state enterprises engaged in exports.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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