In a significant ruling for exporters under the Goods and Services Tax (GST) regime, the Gujarat High Court has held that the non-submission of Foreign Inward Remittance Certificate (FIRC) alone cannot be a ground to reject Input Tax Credit (ITC) refund under Rule 89 of the CGST Rules, if the net foreign exchange earnings are duly certified by a Chartered Accountant (CA). The decision strengthens the rights of exporters engaged in zero-rated supplies and ensures that procedural lapses do not override substantive compliance.
Case Title: M/s. Global International v. Union of India & Others
Court: Gujarat High Court
Bench: Justice Biren Vaishnav
Date of Judgment: July 2025
Primary Legal Issue: Whether ITC refund can be denied for non-furnishing of FIRC when net foreign exchange realization is certified by a CA.
Background of the Case
M/s Global International, a registered taxpayer under the GST Act, filed a refund claim for unutilized ITC on account of export of services without payment of tax under Rule 89(2)(c) and Rule 89(2)(d) of the CGST Rules. The petitioner provided a Chartered Accountant’s certificate certifying the receipt of net foreign exchange, as mandated under Rule 89.
However, the department rejected the refund application solely on the ground that FIRCs were not submitted, arguing that FIRC is the only acceptable proof of realization of export proceeds in convertible foreign exchange.
Aggrieved, the petitioner approached the Gujarat High Court challenging the refund rejection order.
Petitioner’s Arguments
- The petitioner contended that Rule 89(2)(c) allows submission of either FIRC or a CA certificate certifying receipt of payment in foreign exchange as proof.
- The CA certificate was duly submitted in Form GST RFD-01 as required under the rules.
- Rule 89 does not mandate FIRC as the sole documentary proof for the realization of export proceeds.
- Rejection of refund solely for non-submission of FIRCs, despite submission of the CA certificate, is arbitrary and violative of Article 14 and 19(1)(g) of the Constitution.
Revenue’s Arguments
- The department argued that FIRC is an authentic document issued by banks and the only acceptable proof of actual inward remittance in foreign currency.
- A CA certificate, according to the department, cannot substitute the FIRC, and allowing such practice could lead to fraudulent refunds.
High Court’s Observations and Ruling
The Gujarat High Court allowed the writ petition, holding that:
- Rule 89(2)(c) of the CGST Rules clearly permits submission of a Chartered Accountant’s certificate in cases of services exported without payment of tax. There is no statutory mandate that only FIRCs must be submitted.
- The purpose of Rule 89 is to ensure that exports result in actual receipt of foreign exchange. The CA certificate serves this very objective, provided it is in the prescribed format and contents.
- Denying refund on the ground of non-submission of FIRCs, when other valid documents are on record, frustrates the substantive intent of zero-rated export provisions.
- The principle of proportionality and fairness must be upheld in tax administration. Procedural lapses or alternate documentation should not be fatal when core conditions are met.
- The Court emphasized that exporters should not be harassed or penalized due to rigid insistence on a particular form of documentation, especially when the law provides for an alternative.
Accordingly, the Court quashed the refund rejection order and directed the department to process the refund in accordance with law, treating the CA certificate as valid compliance.
Conclusion and Significance
This judgment is a progressive interpretation that balances statutory compliance with trade facilitation. It reinforces the idea that procedural requirements must not override substantive rights, especially in matters involving export promotion.
Exporters and GST practitioners can rely on this ruling to challenge arbitrary refund denials where proper alternative evidence of foreign exchange realization is available. The decision also serves as a guiding precedent for similar disputes across India, ensuring consistent application of Rule 89 of the CGST Rules.
Key Takeaways for Taxpayers and Professionals:
- FIRC is not the exclusive mode of proof for foreign exchange realization under GST refunds.
- A CA certificate under Rule 89(2)(c) is legally valid and must be accepted by authorities if properly issued.
- Refund rejection must not be based on technicalities, especially when the substantive condition—receipt of foreign exchange—is fulfilled.
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This decision promotes ease of doing business and judicial discipline in GST refund mechanisms.