The Goods and Services Tax Appellate Tribunal (GSTAT), Thiruvananthapuram Bench, has mandated the immediate refund of excess Integrated Goods and Services Tax (IGST) to an exporter, ruling that technical filing errors cannot empower the tax department to retain double payments. In a significant decision for taxpayers navigating the complexities of the automated Customs and GST portal, the bench of Vice-President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram set aside the previous orders that had denied refund claims worth ₹19.79 lakh to Associated Cashews, a cashew kernel exporter based in Kerala.

The dispute originated from export shipments made between November 2018 and February 2019, during which the firm paid IGST at a 5% rate. While the company successfully disclosed these transactions in its GSTR-1 returns, a mechanical oversight during the filing of its GSTR-3B returns resulted in the export data being entered under the category for domestic taxable supplies instead of the specialized zero-rated column. This clerical misalignment prevented the Customs Electronic Data Interchange (EDI) system from triggering the automatic refund mechanism, leaving the taxpayer’s initial IGST payments unrecognized by the system.

In an effort to rectify this discrepancy and secure the export benefits, the company later reported the same transactions in its August 2019 return under the correct zero-rated category and remitted the tax a second time. This subsequent payment successfully cleared the Customs automated verification, and the corresponding refund was processed. However, the initial payments from 2018 and 2019 remained lodged within the government ledger, with the tax authorities rejecting subsequent refund applications for those amounts on the grounds that the refund had already been processed and that discrepancies existed between the return filings.

In its assessment, the GSTAT bench criticized the lower authorities for failing to distinguish between the two distinct payment cycles. The Tribunal found that the first appellate authority, the Joint Commissioner (Appeals), had arrived at a mechanical rejection of the claims without conducting a granular review of the GSTR-1 and GSTR-3B filings. The Tribunal emphasized that the appellant had provided comprehensive reconciliation statements that clearly demonstrated the identical nature of the export turnovers and the resulting double collection of tax by the Revenue department.

Addressing the core principle of tax collection, the bench observed, “The clerical mistake which is on the face of record is a minor one and properly explained for which the appellant cannot be penalised by not refunding the amount paid in excess of what was due to be paid. There is no warrant for the Revenue authority concerned to retain the amounts found to have been deposited twice and reject the application for refund claimed by the appellant.”

The legal proceedings underscored the broader constitutional mandate against the unauthorized retention of funds. By citing Article 265 of the Constitution, which restricts the state from collecting or retaining taxes without the explicit authority of law, the GSTAT highlighted that procedural hurdles cannot serve as a justification for unjust enrichment by the Revenue. The bench observed that the government's refusal to return the erroneously held funds lacked a substantive legal foundation, particularly when the taxpayer had sufficiently evidenced the error and the subsequent corrective measures.

Support for this ruling was drawn from various judicial precedents, including the judgment of the Orissa High Court in Rajendra Narayan Mohanty v. Joint Commissioner of State Tax , which affirmed that excess payments made under a mistaken notion of liability must be returned regardless of internal procedural limitations. The Tribunal also relied on the Karnataka High Court’s ruling in Merck Life Science Private Limited v. Union of India , which reinforced that statutory timelines in refund claims should be interpreted as directory rather than mandatory when the underlying payment was made in error or by inadvertence. The GSTAT observed that the principles of restitution apply squarely to these circumstances, where the Centre is obligated to refund amounts it was never entitled to hold.

Furthermore, the bench noted that it had previously addressed identical scenarios, including in Choice Cashew Traders v. Commissioner of SGST, Keralam State , asserting that clerical errors should not be treated as substantive infractions that disqualify an exporter from recovering excess tax. The Tribunal concluded that the department’s reliance on show-cause notices for recovering already sanctioned refunds—misidentifying the August 2019 payout as the source of the dispute—further evidenced a failure to properly audit the appellant's actual return history.

The final order mandates that the Revenue department immediately process the refund for the original payments made during November 2018, December 2018, and February 2019, totaling ₹19,79,405. By granting the appeals with consequential relief, the GSTAT has effectively shielded the exporter from the financial impact of a non-substantive administrative error. The outcome establishes a critical safeguard for businesses, ensuring that taxpayers are not unduly penalized by automated system failures or clerical inconsistencies when the actual tax liability has been discharged in full, and in this instance, inadvertently surpassed. The decision marks the final resolution of the appeals numbered APL/52, 53, and 54/TVP/2026, and the Revenue is now required to take the necessary steps to facilitate the release of these funds to the appellant in accordance with the ruling.