Principal Global Services PVT. LTD. vs. The State Of Maharashtra And Ors
Original PDF →Facts
The Petitioner, Principal Global Services Pvt. Ltd., filed a writ petition challenging an order dated 22 April 2022 by the Deputy Commissioner of Sales Tax, Pune. The Deputy Commissioner rejected the Petitioner's refund application of Rs.7,53,20,729/- for Input Tax Credit (ITC) on export of goods and services without payment of Integrated tax. The rejection was primarily based on discrepancies found in the Petitioner's invoices, specifically mentioning 'Lowa State' in the United States, which the Deputy Commissioner deemed a significant error as no such state exists. The Petitioner argued it was a typographical error for 'Iowa State' and provided other evidence of export. The Deputy Commissioner found the explanation unacceptable, especially for services, and noted the absence of dispatch proofs.
Held
The Court held that the Deputy Commissioner's predominant reason for rejecting the refund application, which was the mention of 'Lowa State' in the invoices, was based on an obvious typographical error. The Court found the Petitioner's explanation that it should have been 'Iowa State' to be plausible and that this aspect should have been considered by the Deputy Commissioner. The Court quashed and set aside the impugned order dated 22 April 2022. The Court directed that the refund application be restored to the file of the Deputy Commissioner for a fresh examination. The Petitioner was permitted to submit additional documents, and the Deputy Commissioner was directed to provide a personal hearing and endeavor to dispose of the application within twelve weeks from the date of uploading the order. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the Deputy Commissioner erred in rejecting the refund application solely on the ground of a typographical error ('Lowa State' instead of 'Iowa State') in the recipient's address on the invoices, thereby disregarding other evidence of export of services? (Question of law and fact, concerning the interpretation and application of relevant GST provisions related to proof of export and refund eligibility). Petitioner's arguments: The Petitioner contended that the mention of 'Lowa State' was a clear typographical error, which should have been accepted by the Deputy Commissioner, especially since the correct state is 'Iowa'. They argued that they had submitted other documentary evidence beyond the invoices to prove the export of services. Furthermore, the Petitioner pointed out that refunds had been granted on identical facts in prior periods. Respondents' arguments: The Respondent-State argued that the Deputy Commissioner was justified in scrutinizing the documents carefully due to the magnitude of the refund sought. They maintained that the Petitioner should have corrected the typographical error and that the Deputy Commissioner was not obligated to do so. The Respondent also indicated that other grounds existed for rejecting the refund, which were not fully elaborated in the impugned order.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
30-WP-1225-2023.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURI ICTION WRIT PETITION NO. 1225 OF 2023 Principal Global Services Pvt. Ltd. )...Petitioner V/s. The State of Maharashtra & Others )...Respondents Mr. Prakash Shah a/w. Mr. Mihir Mehta and Mr. Jas Sanghavi i/b. PDS Legal, Advocate for the Petitioner. Smt. S.D.Vyas, ‘B’ Panel Counsel, for the Respondent-State. CORAM : NITIN JAMDAR AND ABHAY AHUJA, JJ. DATE : 29 MARCH 2023 P.C. By this Petition, the Petitioner has challenged the order dated 22 April 2022 passed by the Respondent no.2 Deputy Commissioner of Sales Tax, Pune. By the order dated 22 April 2022, the Respondent no.2 rejected the prayer of refund sought for by the Petitioner. 2 The Petitioner had filed an application for refund of Rs.7,53,20,729/- on 11 January 2022 on account of refund of Input Tax Credit (ITC) on Export of Goods and Services avk 1/5
30-WP-1225-2023.doc without payment of Integrated tax. The Deputy Commissioner of Sales Tax scrutinized the application and having found discrepancies, issued a show cause notice to the Petitioner. The Petitioner replied to the show cause notice. The Deputy Commissioner rejected the application for refund observing thus :
“1. First query was regarding difference in turnover of rupees 3648911/-. This difference was between the turnover as per returns and as per actual books. As per the submission the difference is due to difference in conversion rates of foreign exchange, prevailing. The contention is accepted.
Lowa State - The invoices show the export of services to recipient located in Lowa State of United States. However, no such state exist in United States. The dealer has submitted that this is a “typo error”. Actual name of the state should be Iova (iova). He requested to accept the submission. However the request is not acceptable. Typo error can only be committed rarely. Where as in this case dealer’s each invoice has mentioned the same name of the state, that is Lowa. Also this is an export of services and not goods. Hence no any other evidences of exports such as dispatch proofs has been produced by the dealer. Hence invoice being foremost important document in the export of services, the defective address of the recipient cannot be ignored.” 3
We have heard the learned Counsel for the parties. avk 2/5
30-WP-1225-2023.doc 4 Bare perusal of the reasoning of the Deputy Commissioner would indicate that the Deputy Commissioner has given emphasis to the spelling of a State in the United States of America mentioned in the invoices produced by the Petitioner. The invoices mention the State as Lowa. According to the Petitioner it is a typographical error and it should have been Iowa. The Deputy Commissioner has found that this explanation is not acceptable as there is no State as Lowa in the United States. Though certain secondary reasons are given, the predominant reason is that there being no State as Lowa in United States, the documents i.e. invoices produced by the Petitioner cannot be accepted and hence there is no proof of export of services. 5 The learned Counsel for the Petitioner submitted that on the face of it, the invoices contain typographical error, as even the Deputy Commissioner accepted that there is no such State named Lowa in United States and the invoices should have mentioned Iowa State. The learned Counsel submitted that the Petitioner had produced other evidences apart from the invoices to demonstrate that services were provided to entities in Iowa. The learned Counsel has also submitted that as for the period prior to the one in question, the Deputy avk 3/5
30-WP-1225-2023.doc Commissioner had granted refund on identical facts and circumstances. 6 The learned Counsel for the Respondents tendered reply affidavit and has sought to add more grounds than contained in the reasoning produced above. The learned Counsel for the Respondents submitted that considering the magnitude of the refund sought, the Deputy Commissioner was careful in scrutinizing of the documents and having found that the typographical error had to be corrected by the Petitioner and not by the Deputy Commissioner, rejected the refund application and there is no error in the same. The learned Counsel for the Respondents states that there are other grounds on which the Petitioner is not entitled to refund. 7
As regards the position of the invoices mentioning Lowa State in the United States of America is concerned, we find that there is an obvious typographical error as there is no such State in the United States. The corresponding name to that place is Iowa State, and therefore, the explanation of the Petitioner is plausible and should have been considered by the Deputy Commissioner. Therefore, we are of the opinion that with this finding / correction the Deputy Commissioner needs to examine the Refund Application made by the Petitioner afresh, avk 4/5
30-WP-1225-2023.doc also examine the evidence that is produced by the Petitioner in addition to the invoices and take a decision. 8 The impugned order dated 22 April 2022 passed by the Respondent no.2 Deputy Commissioner of Sales Tax, Pune, is quashed and set aside. The application of the Petitioner for refund is restored to the file of the Deputy Commissioner. 9 It is open to the Petitioner to supply additional documents in support of its claim for refund. During the hearing the Petitioner would also keep the originals of the documents to enable the Deputy Commissioner to scrutinize and ascertain the veracity thereof. The Deputy Commissioner would give personal hearing to the Petitioner and will make an endeavour to dispose of the application within a period of twelve weeks. The period of twelve weeks will come into effect from the date the order is uploaded. 10 The Writ Petition is allowed in the above terms. (ABHAY AHUJA, J.) (NITIN JAMDAR, J.) avk 5/5 ARTI VILAS KHATATE KHATATE Date: 2023.03.31 16:43:59 +0530
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.