• Dated 30^th January, 2026

Refund of IGST on Exports Cannot Be Denied Solely for Delay in Filing LUT: Karnataka High Court

Brief Facts

M/s Prime Perfumery Works, the petitioner, had exported goods during the financial year 2022–23. After completing the exports, the firm applied for a refund of Integrated Goods and Services Tax (IGST) by filing a refund application in Form GST RFD-01 on 03-12-2023. The department issued a show cause notice asking why the refund should not be rejected. The petitioner submitted a reply, but the Assistant Commissioner rejected the refund claim on 31-01-2024 through an order in Form GST RFD-06.

The refund was rejected on only one ground that the petitioner had not furnished a Bond or Letter of Undertaking (LUT) before exporting the goods, as required under Rule 96A of the CGST Rules. According to the department, this was a mandatory requirement for claiming a refund on zero-rated supplies (exports).

Aggrieved by this rejection, the petitioner approached the High Court of Karnataka by filing a writ petition. The petitioner requested the Court to quash the rejection order and direct the department to grant the refund after considering their case properly.

Assessee's Contention

The petitioner argued that the main reason for rejecting the refund is pertaining to non-submission of LUT before export which was not a serious or permanent defect. They relied on a CBIC Circular numbering 37/11/2018-GST dated 15-03-2018, which clarified that delay in filing LUT could be condoned and that exporters could be allowed to submit LUT even after exports on an ex post facto basis.

It was contended that the benefit of zero-rated exports (i.e., exports without payment of tax and eligibility for refund) should not be denied merely because of a procedural delay. The petitioner emphasized that the exports were genuine and properly documented, and therefore the substantive benefit should be granted.

The petitioner further argued that the department failed to consider this binding circular while passing the rejection order. Because of this, the order was passed without proper application of mind and in violation of the principles laid down by the tax authorities themselves.
On these grounds, the petitioner requested that the matter be sent back to the department with permission to submit the LUT along with an application for condonation of delay.

Department's Contention

The department (respondents) defended the rejection order. They argued that furnishing a Bond or LUT before making exports is a mandatory legal requirement under Rule 96A of the CGST Rules. Since the petitioner failed to comply with this condition at the correct time, the refund was rightly rejected.

According to the department, procedural requirements cannot be ignored simply because the exporter later seeks to regularize them. They maintained that the law clearly requires compliance before export, and failure to do so disentitles the exporter from claiming a refund.
The respondents therefore submitted that the rejection order was valid and legal, and the writ petition should be dismissed.

Decision

The Hon'ble High Court examined the above-mentioned CBIC Circular dated 15-03-2018 in detail. The Court noted that the circular clearly states that delay in furnishing LUT should not automatically result in denial of export benefits, and that such delay can be condoned based on the facts of each case. The Court observed that the requirement is procedural and not meant to defeat genuine export claims.

The Court found that the department had rejected the refund without considering the CBIC circular. Since the circular is binding on tax authorities, ignoring it made the rejection order improper and legally unsustainable.

The Court held that non-filing of LUT before export is not an incurable defect and can be regularized later. Therefore, the petitioner should be given an opportunity to submit the LUT and seek condonation of delay, after which the refund claim must be reconsidered on merits.
Accordingly, the Hon'ble High Court set aside the refund rejection order and sent the matter back to the Assistant Commissioner for fresh consideration in light of the circular and the Court's observations. The writ petition was allowed.

BTA's Comment

This judgment reinforces that procedural lapse should not override genuine export benefits under GST law. The Court protected the principle that substantive rights are more important than technical formalities. It also highlights that departmental circular are binding on tax officers and the officers are required to make their judgement based on any Circular, Notification etc., issued by the authority. The decision is helpful for exporters who face refund issues due to delayed filing of LUT or similar procedural delays.

Case Reference: M/S Prime Perfumery Works V/s Assistant Commissioner of Central Tax, Bengaluru South Commissionerate - WPA 11076 OF 2024 (T-RES) decided by Hon'ble High Court at Karnataka at Bengaluru on 02-12-2025.

Author: Harsh Kr Gupta

Edited By: Saket Shaw