Bombay HC: State GST Authorities Can’t Own Tax Amount on Export Transactions

In a recent ruling, the Bombay High Court declared that CGST/MGST authorities would not have the authority to keep the sum of tax on export transactions.

The two-member bench comprising Justice G.S. Kulkarni and Justice Jitendra S. Jain has instructed the state government to transact the sum to the Central Government.

The petitioner needed to deposit tax on the said export transaction with the authorities under the CGST Act and/or the MGST Act. The petitioner had taken a clear stand that authorities would not have the power to ask for any tax on the export of services.

The petitioner submitted GST refund applications for the tax payments made to the CGST, MGST, and other relevant entities. These refund applications were denied based on instructions issued on October 15, 2020, and November 27, 2020, respectively.

The petitioner requested that the State authorities transfer the tax amount deposited by them, along with the appropriate statutory interest, to the Central Authority responsible under IGST Act.

The court cancelled the directive given by the Deputy Commissioner of Sales Tax and rejected the refund application of the petitioner.