The Hon’ble Karnataka High Court in the case of Prime Perfumery Works vs Assistant Commissioner of Central Tax [Writ Petition No. 11076 OF 2024 (T-RES), order dated December 2, 2025] held that non-submission of LUT/Bond prior to export under Rule 96-A of the CGST Rules is not an incurable defect and is merely directory. Further held that refund cannot be rejected where delay can be condoned and LUT/Bond permitted on an ex post facto basis in light of Circular F. No. 349/47/2017-GST dated March 15, 2018.
Facts:
M/s Prime Perfumery Works (“the Petitioner”) exported goods during FY 2022-23 and filed a refund application dated December 03, 2023 seeking refund of IGST.
Assistant Commissioner of Central Tax (“the Respondent”) issued a show cause notice dated December 28, 2023 and thereafter rejected the refund vide order dated January 31, 2024 on the ground that the Petitioner had not furnished LUT/Bond prior to export as required under Rule 96-A of the CGST Rules, 2017.
The Petitioner contended that the requirement of furnishing LUT/Bond prior to export is directory and curable, relying upon CBIC Circular dated March 15, 2018, which permits condonation of delay and filing of LUT/Bond on an ex post facto basis.
The Respondent contended that furnishing LUT/Bond prior to export is mandatory, and therefore refund was rightly rejected.
Aggrieved by the refund rejection order, the Petitioner approached the High Court by way of a writ petition seeking quashing of the rejection order and direction to grant refund under Section 54 of the CGST Act read with Rule 92 of the CGST Rules.
Issue:
Whether non-submission of LUT/Bond prior to export under Rule 96-A of the CGST Rules is a mandatory condition warranting rejection of refund?
Held:
The Hon’ble Karnataka High Court in Writ Petition No. 11076 OF 2024 (T-RES) held as under:
- Observed that, the refund was rejected solely on the ground that the Petitioner did not submit LUT/Bond prior to export.
- Noted that, Circular F. No.349/47/2017-GST dated March 15, 2018 (“Circular”) clarifies that substantive benefits of zero-rated exports should not be denied and delay in furnishing LUT may be condoned with ex post facto permission.
- Observed that, non-furnishing of LUT/Bond under Rule 96-A is not an incurable defect nor mandatory, particularly when authorities themselves permit subsequent filing.
- Held that, the Respondent failed to consider the binding Circular while rejecting refund.
- Directed that, the refund rejection order dated January 31, 2024 be set aside and the matter be remitted for fresh reconsideration of the refund claim after permitting the Petitioner to furnish LUT/Bond along with condonation application in terms of the Circular.
Our Comments:
The Court applied the CBIC’s Circular F. No. 349/47/2017-GST dated March 15, 2018, particularly para 4.1, which states that delay in furnishing LUT may be condoned and zero-rating benefits cannot be denied where exports are established. The judgment reiterates the settled principle that procedural infractions cannot defeat substantive export benefits, aligning with the jurisprudence that GST is destination-based and exports must remain tax neutral.
The reasoning is consistent with the doctrine that beneficial circulars are binding on the department, and failure to consider them vitiates administrative orders.
Relevant Provisions:
Rule 96-A of the CGST Rules, 2017
“96A. Export of goods or services under bond or Letter of Undertaking.-
(1) Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of –
(a) fifteen days after the expiry of three months or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or
(b) fifteen days after the expiry of one year, or the period as allowed under the Foreign Exchange Management Act, 1999 (42 of 1999) including any extension of such period as permitted by the Reserve Bank of India, whichever is later, from the date of issue of the invoice for export, or such further period as may be allowed by the Commissioner, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India.
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Section 16(3) of the IGST Act, 2017
“16. Zero Rated Supply-
(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non- realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 (42 of 1999.) for receipt of foreign exchange remittances, in such manner as may be prescribed.”
CBIC Circular F. No. 349/47/2017-GST dated March 15, 2018
“Subject: Clarifications on exports related refund issues regarding
Board vide Circular No. 17/17/2017-GST dated 15 November 2017 and Circular No. 24/24/2017 – GST dated 21″ December 2017 clarified various issues in relation to processing of claims for refund. Since then, several representations have been removed seeking further clarifications on issues relating to refund. In order to clarify these ins and with a view to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 164 (1) of the Central Goods and Services Tax Act, 2017 (CGST Act), hereby clarifies the issues raised na below:
2. Non-availment of drawback: The third proviso to sub-section (3) of section 54 of the CGST Act states that no refund of input tax credit shall be allowed in cases where the supplier of goods or services or both avails of drawback in respect of central tax.
2.1 This has been clarified in paragraph 8.0 of Circular No. 24/24/2017-GST, dated 21 December 2017. In the said paragraph, reference to “section 54(3)(ii) of the CGST Act is typographical error and it should read as “section 54(3)(i) of the CGST Act”. It may be noted that in the said circular reference has been made only to central tax, integrated tas, State/Union territory tax and not to customs duty leviable under the Customs Act, 1962. Therefore, a supplier availing of drawback only with respect to basic customs duty shall be eligible for refund of unutilized input tax credit of central tax/State tax/Union territory tax/integrated tax/compensation cess under the said provision. It is further clarified that refund of eligible credit on account of State tax shall be available has availed even if the supplier of services or both has availed of drawback in respect of central tax.
Amendment through Table 9 of GSTR-1: It has been reported that refund claims are not being processed on account of mis-matches between data contained in FORM GSTR-L FORM GSTR-3B and shipping bills bills of expert. In this connection, it may be allows for amendments of invoices/ shipping hills details furnished in FORM GSTR-1 noted that the Dacility of filing of Tahle in FORM GSTR-La amendment table which earlier tax period, is already available. If a taxpayer has committed error while entering the details of an invoice / shipping bill/bill of export in Table 64 or Table 6 of FORM GSTR-1, he can rectify the same in Table 9 of FORM GSTR-1.
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4. Exports without LUT: Export of goods or services can be made without payment of integrated tax under the provisions of rule 96A of the Central Goods and Services Tax Rules, 2017 (the CGST Rules). Under the said provisions, an exporter is required to furnish a bond or Letter of Undertaking (LUT) to the jurisdictional Commissioner before effecting zero rated supplies. A detailed procedure for filing of LUT has already been specified vide Circular No. 8/8/2017-GST dated 4th October, 2017. It has been brought to the notice of the Board that in some cases, such zero rated supplies have been made before filing the LUT and refund claims for unutilized input tax credit have been filed.
4.1. In this regard, it is emphasised that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case.”
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