The Gujarat High Court has delivered an important ruling reinforcing that technical limitations of the GST portal cannot override a taxpayer’s substantive statutory right to refund. The Court held that where the GST system itself prevents filing a refund under the correct category, the tax department cannot reject the claim solely because it was filed under the “Any Other” category.
The judgment came in Jyoti Agro vs Deputy Commissioner of State Tax & Anr. (Special Civil Application No. 5982 of 2023) and addresses a recurring and systemic problem faced by exporters and refund applicants under GST.
Core Issue Before the Court: Jyoti Agro vs Deputy Commissioner of State Tax & Anr.
The central issue was whether a GST refund claim can be rejected on procedural grounds when the GST portal makes correct filing impossible. Specifically:
- Can the department deny a refund merely because it was filed under “Any Other”,
- when the GST portal itself blocks the filing of a fresh refund under the appropriate category, and
- the taxpayer otherwise satisfies all eligibility conditions?
The Court answered this in the negative.
Facts of the Case: How Portal Design Forced Procedural Deviation
The petitioner, M/s Jyoti Agro, was engaged in zero-rated supplies (exports) and sought a refund of accumulated Input Tax Credit (ITC) for the period October 2021 to May 2022.
Step-by-step sequence:
- First refund application was filed for accumulated ITC on zero-rated supplies.
- The department rejected the claim, citing alleged non-compliance with Circular No. 125/44/2019-GST.
- Following rejection, the ITC amount was re-credited to the electronic credit ledger.
- The assessee then attempted to file a fresh refund application under the correct category.
- However, the GST portal blocked the filing, stating that a refund for the same period had already been filed.
- With no alternative available, the assessee filed the refund under the “Any Other” category.
- The department issued a deficiency memo, rejecting the claim only because the category was incorrect.
Importantly, the rejection was not based on ineligibility, excess claim, limitation, or double benefit, but purely on procedural classification.
High Court’s Legal Reasoning
The Gujarat High Court strongly disapproved of the department’s approach and reaffirmed settled principles of tax jurisprudence. Key observations:
1. System-Created Impossibility Cannot Defeat Statutory Rights
The Court held that when the GST portal itself prevents correct filing, the taxpayer cannot be penalised for choosing an alternate route provided by the system.
Procedural impossibilities created by the system cannot be used to deny substantive benefits granted by law.
2. Refund Is a Substantive Right, not a Discretion
The Court reiterated that refund of accumulated ITC is a vested statutory right under the CGST Act, especially in the case of zero-rated supplies.
Such a right cannot be defeated by mechanical or hyper-technical objections, particularly when the taxpayer has acted bona fide.
3. Authorities Must Look at Substance, Not Form
The Court emphasised that the department is required to:
- Examine eligibility and correctness of the refund on merits, and
- Not reject claims merely due to procedural labels imposed by portal design.
The Court relied on its earlier decision in Shree Renuka Sugar Ltd., reiterating that technology is meant to facilitate tax administration, not frustrate it.
Safeguards Against Double Benefit Considered
The Court took note of the assessee’s affidavit, which clarified that:
- The entire ITC amount had already been reversed through Form GST DRC-03, and
- There was no risk of double utilisation or unjust enrichment.
This assurance played a key role in granting relief.
Relief Granted by the Gujarat High Court
The Court:
- Allowed the writ petition
- Permitted the assessee to file a fresh refund application (electronically or manually) for verification
- Directed the department to process the refund on merits, without raising objections on limitation or category mismatch
- Clarified that interest, if payable, shall be computed from the date of the fresh refund application, not from the earlier defective filing
- Directed completion of the entire exercise within six weeks
Why This Judgment Is Important
This ruling has wide implications for GST taxpayers:
- Protects exporters and refund applicants from GSTN portal design failures
- Prevents arbitrary rejection of refunds on purely procedural grounds
- Reinforces the doctrine that procedure is handmaiden to justice
- Offers judicial backing where taxpayers are forced into “Any Other” category due to system constraints
- Signals that courts will not allow technology to dilute statutory entitlements
Practical Takeaway for Taxpayers
- If the GST portal blocks correct refund filing, document the error (screenshots, logs).
- Filing under “Any Other” due to system restriction cannot be a ground for outright rejection.
- Courts expect tax authorities to prioritise substantive compliance over rigid formality.
Source: Gujarat High Court Judgement dated 08/01/2026: Jyoti Agro vs Deputy Commissioner of State Tax & Anr. (Special Civil Application No. 5982 of 2023)