GST refund- risky exporter - Logitax

GST refund- risky exporter

In 2019, CBIC published list of risky exporters and withheld their GST refunds. These were the persons who fraudlently claimed excess refunds on the basis of invalid documents. These parties were directed to pay the taxes along with interest and penalties. Can we say that once the assessee is declared as risky exporter, he can never claim GST refund?

Case Details : GST- withholding of refund- risky exporter

Case Related To : Choksi Exports

Declared By : Gujarat – High Court on 03-02-2023

What Happened Exactly :

  1. Petitioner is a partnership firm having its registered office in the State of Gujarat, which is engaged in the business of manufacturing and exporting of Organic pigments and is registered under the GST law.
  2. The petitioner had been marked as “risky exporters” by the department.
  3. The petitioner had purchased the goods supplier who is placed in the list of L2 risky supplier and ITC of the same was also claimed.
  4. The petitioner submitted that inspite of various letters and reverting ITC along with interest and penalty, neither the department has replied back to the petitioner nor the name of the petitioner was removed from the list of risky exporters.
  5. Earlier the firm has exported various goods and had duly received the refund of IGST on those exports. However, since the firm has been marked as Risky Exporter, the firm is not in receipt of the refund of IGST.
  6. Petitioner challenged withholding of refund despite reversing the Input Tax Credit along with interest and penalty.

Court's Decision :

  1. The petitioner has reversed the Input Tax Credit along with penalty and interest towards the purchases made from said ‘risky supplier’.
  2. Further, none of the provisions of the CGST Act or the IGST Act mandate the petitioner to verify the genuineness of the suppliers of the supplier.
  3. In this case, the supplier’s supplier is placed in the list of L2 risky supplier and even then, with a hope to get the IGST refund, the petitioner has paid the ITC, but still the refund is not processed and given to the petitioner.
  4. Department ought to have granted the provisional refund to the extent of 90% as provided under Section 54(6) of the CGST Act read with Rule 91 of the CGST Rules.
  5. Since the petitioner has filed shipping bills for all the exports and the petitioner is not prosecuted for any offence under the Act or under the existing law and has also reversed the ITC, there is no reason for respondents to withheld the refund.
  6. Authorities are directed to grant the amount of IGST refund to the petitioner, as claimed by the petitioner.
  7. Petition is allowed.

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