Facts of the Case

Chegg India Private Limited filed four writ petitions challenging different Orders-in-Appeal passed by the Appellate Authority rejecting, either fully or partly, its claims for refund of unutilised Input Tax Credit under Section 54 of the CGST Act. The petitioner is engaged exclusively in providing software development, content development and IT/ITES services to its parent company, Chegg Inc., USA, and claimed that such services constitute export of services, being zero-rated supplies.

Refund applications relating to multiple tax periods between September 2018 and March 2022 were either fully rejected or partly allowed by Orders-in-Original and thereafter upheld or modified by the Appellate Authority. In certain periods, refunds were rejected on the ground that the petitioner was an intermediary or that services did not qualify as export of services, while in other periods partial refunds were allowed on identical facts.

Issues Involved

Whether the Appellate Authority was justified in rejecting refund claims on grounds of non-export of services and lack of documentary evidence while granting partial refunds on identical facts in other periods, whether the Appellate Authority had the power to consider additional documents, and whether staggered and inconsistent adjudication of refund claims was sustainable in law.

Petitioner’s Arguments

The petitioner contended that the nature of services, contractual arrangements and supporting documents were identical across all refund periods. It was argued that contradictory findings by the Appellate Authority, granting partial refunds in some matters while rejecting others, were arbitrary and unsustainable. The petitioner further submitted that Foreign Inward Remittance Certificates and other documents were available and, where not filed earlier, were produced at the appellate stage.

Respondent’s Arguments

The Department argued that refunds were rightly rejected due to lack of documentary evidence and failure to establish export of services. It was contended that the Appellate Authority could not undertake fresh factual adjudication or consider documents not examined by the Adjudicating Authority.

Court Order / Findings

The Delhi High Court examined Section 107(11) of the CGST Act and relied on its earlier decision in Sonu Monu Telecom Pvt. Ltd. v. Union of India (2025:DHC:5781-DB) to hold that the Appellate Authority has wide powers to confirm, modify or annul an order and to consider the entire material on record. The only statutory embargo is against remanding matters to the original authority.

The Court observed that refund claims were adjudicated in a staggered manner, resulting in irreconcilable and contradictory outcomes, despite identical facts and nature of services. It held that the Appellate Authority ought to have examined all refund claims comprehensively instead of rendering piecemeal decisions.

Important Clarification

The High Court clarified that in refund matters involving export of services and unutilised ITC, consistency of findings is essential. Where partial refunds are granted in some periods on identical facts, wholesale rejection in other periods without cogent reasons is impermissible. The Appellate Authority is empowered to examine documents and evidence afresh to render a reasoned and consistent decision.

Final Outcome

All the impugned Orders-in-Appeal were set aside. The matters were remanded to the concerned Appellate Authority for fresh adjudication of all refund claims together, after granting personal hearing and permitting the petitioner to file additional documents within two months. The Appellate Authority was directed to pass reasoned orders after taking a comprehensive view so that no contradictory findings are rendered. All writ petitions and pending applications were disposed of accordingly.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/75408092025CW117182025_105936.pdf

 

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