GST Refund of ₹5.08 Crore Quashed: Bombay High Court Upholds Natural Justice in Refund Rejection Proceedings
Background and Overview
The Bombay High Court recently adjudicated a significant matter concerning the procedural requirements that tax authorities must follow before rejecting a GST refund application. The case — Infinx Services Private Limited Vs Union of India — arose from the rejection of a refund claim amounting to ₹5,08,93,798/- filed by a private limited company engaged in IT and IT-enabled services, particularly in the domain of healthcare revenue cycle management and business process outsourcing.
The Court's intervention was sought through a writ petition filed under Article 226 of the Constitution of India, wherein the assessee challenged both the show cause notice dated 20.05.2025 and the subsequent refund rejection order dated 02.07.2025. The reliefs prayed for included quashing of both instruments and a direction to the authorities to sanction the claimed refund along with applicable interest.
This judgment carries considerable weight for assessees dealing with GST refund proceedings, as it reaffirms the non-negotiable nature of the opportunity of hearing mandated under the proviso to Rule 92(3) of the Central Goods and Services Tax Rules, 2017.
Profile of the Assessee and the Nature of Supplies
The assessee, Infinx Services Private Limited, operates with its corporate office at Unit No. 5, SDFI, SEEPZ, SEZ, Mumbai, and its principal place of business situated in Navi Mumbai. Two distinct GSTN registrations were relevant to the proceedings:
- Corporate Office GSTN: 27AAACT2558B2ZL
- Principal Place of Business GSTN: 27AAACT2558BIZM
The company's core operations involve rendering Information Technology and IT-Enabled Services (ITES), with a particular focus on Business Process Outsourcing (BPO) — specifically healthcare data management and revenue cycle management services.
Since all clients of the assessee are located outside India, the services rendered qualify as zero-rated supplies under the Central Goods and Services Tax Act, 2017. Consequently, the assessee does not discharge any Integrated Goods and Service Tax (IGST) on such exports of services.
Filing of the Refund Application and Issuance of Show Cause Notice
On 26th April 2025, the assessee filed a refund application seeking a refund of the unutilised and accumulated Input Tax Credit (ITC) on account of zero-rated supplies made without payment of IGST, covering the period January 2024 to June 2024.
Following the submission of this application, the department issued a show cause notice on 20th May 2025 in Form GST RFD-08 (Ref. No. ZD270525073580A), proposing to reject the refund on the following grounds:
- Non-submission of export invoices
- Non-furnishing of Foreign Inward Remittance Certificates (FIRC) / Foreign Inward Remittance Advice (FIRA)
- Failure to demonstrate co-relation between Electronic Bank Realisation Certificates (e-BRC) and the relevant export invoices
The notice directed the assessee to file its reply within seven days from the date of service and to appear for a hearing on or before 26.05.2025 at 11:30 hours.