HC Sets Aside Refund Rejection on Software Export Under Section 54(3)

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Refund Rejection Under Section 54(3)

Case Details: Varian Medical Systems International India (P.) Ltd. vs. Union of India - [2026] 186 taxmann.com 788 (Bombay)

Judiciary and Counsel Details

  • G. S. Kulkarni & Aarti Sathe, JJ.
  • Bharat Raichandani & Bhagrati Sahu, Advs. for the Petitioner.
  • Ms Shruti D. Vyas, Addl. G.P. & Aditya R. Deolekar, AGP for the Respondent.

Facts of the Case

The petitioner, was engaged in providing software development and related services to its overseas associated enterprises and exported such services under LUT without payment of tax. For the period May 2023 to January 2024, the petitioner filed a refund claim of accumulated ITC under Section 54(3) of the CGST Act read with Section 20 of the IGST Act on account of export of services. A show cause notice was issued proposing rejection of the refund claim. The petitioner filed a detailed reply along with supporting documents and also appeared for personal hearing. However, the adjudicating authority rejected the refund claim by treating the petitioner as an intermediary service provider and holding that the services did not qualify as export of services. Aggrieved by the impugned order, the petitioner filed the present writ petition before the Bombay High Court.

High Court Held

The Bombay High Court held that the impugned order was a non-speaking order as no specific findings had been recorded while rejecting the refund claim. The Court observed that the adjudicating authority had failed to consider the submissions and documents furnished by the petitioner and had erroneously classified the petitioner as an intermediary service provider without proper examination of the nature of services rendered. Accordingly, the Court quashed and set aside the impugned order and remanded the matter to the adjudicating authority for fresh adjudication after granting an opportunity of hearing and passing a reasoned order in accordance with law.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied