Denial of ITC refund on the grounds of technical glitches in GSTN software is unfair

Last updated: 14 May 2021

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Quick Summary

The Madras High Court has ruled that businesses should not be denied Input Tax Credit (ITC) refunds simply because of technical errors within the GSTN software. In a case involving Tvl. Mehar Tex, the court found it unfair to reject a refund claim when the entire amount was auto-populated under a single tax head (SGST) due to a system glitch, rather than being correctly split across SGST, CGST, and IGST. The court emphasised that if a business is otherwise eligible for a refund, such claims should not be rejected due to software malfunctions.

Court :
Madras High Court

Brief :
The Hon'ble Madras High Court in Tvl. Mehar Tex v. the Commissioner of CGST & Ors. [W.P.(MD) Nos. 22996, 22999 & 23001 of 2019 and W.M.P.(MD) Nos. 19733, 19736 & 19739 of 2019 dated March,18 2021] set aside the order rejecting refund claim of CGST and IGST of the assessee wherein, the entire refund liability of Input Tax Credit ('ITC') got auto populated under a single head i.e. State Goods and Services Tax ('SGST') instead of SGST, Central Goods and Service Tax ('CGST') and Integrated Goods and Services Tax ('IGST'). Held that, if the assessee was otherwise eligible to refund, the refund claim ought not to be denied on the ground of technical glitches and error occurred due to auto-population in Goods and Service Tax Network ('GSTN') software. Nothing can be more unfair.

Citation :
W.P.(MD) Nos. 22996, 22999 & 23001 of 2019 and W.M.P.(MD) Nos. 19733, 19736 & 19739 of 2019 dated March,18 2021

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